Determine the status of workers
The status of your workers for tax purposes is important, as employees and contract workers involve different obligations.
An employee is a worker you employ in your business - you generally have to withhold tax from payments you make to them.
A contract worker is a worker who is self-employed and has a contract with you to provide services. You don't have to withhold tax from payments to them, unless you enter into a voluntary agreement with them.
What to do...
- Visit our Independent contractors topic.
- Use the Employer obligations checklist to find out what you need to do when a new worker starts, during employment or when a worker leaves.
- Read about voluntary agreements with contract workers.
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