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If you are a business owner or contractor who provides services to other businesses, then you are generally considered self-employed.
If you are a business owner or contractor who provides services to other businesses, then you are generally considered self-employed. For more information on your tax obligations if you are self-employed (an independent contractor), see our Self-Employed Individuals Tax Center.
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Your employer cannot simply call you an independent contractor to avoid federal and state legal requirements if the characteristics of your job resemble those of an employee, then your employer must treat you as an employee. An independent contractor's job is characterized by independence.
An independent contractor is a self-employed person or entity contracted to perform work foror provide services toanother entity as a nonemployee. As a result, independent contractors must pay their own Social Security and Medicare taxes.
Remember that an independent contractor is considered to be self-employed, so in effect, you are running your own one-person business. Any income that you earn as an independent contractor must be reported on Schedule C. You'll then pay income taxes on the total profit.
Some ways to prove self-employment income include:Annual Tax Return. This is the most credible and straightforward way to demonstrate your income over the last year since it's an official legal document recognized by the IRS.1099 Forms.Bank Statements.Profit/Loss Statements.Self-Employed Pay Stubs.
Being self-employed means that you earn money but don't work as an employee for someone else. It can include anyone from the owner of a convenience store to an artist who displays in galleries, to a freelance designer, to the founder of a large company.
The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. If you are an independent contractor, then you are self-employed.
The net income you earn from your own trade or business. For example, any net income (profit) you earn from goods you sell or services you provide to others counts as self-employment income.