One of the main subjects that I have continuously encountered during my time at the Small Business Development Center is the subject of contract labor. It is basically work that is carried out by an independent contractor, and if misclassified by an employer, can lead to penalties including back taxes and interest.
The Texas Workforce Commission states an employee is someone over whose work an employer exercises direction or control and for whom there is extensive wage reporting and tax responsibility. Meanwhile an independent contractor is self-employed, bears responsibility for his or her own taxes and expenses, and is not subject to an employer’s direction and control.