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Independent Contractor vs Employee

id : 109 Payroll Tax   
posted by : Admin
 DOQ : 2021-04-07 16:41:05
   Admin
  
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By
John Muiruri
Reviewed April 06, 2021

The difference between being an independent contractor or an employee can have an impact on your income tax, particularly if you think you're a contractor but the Revenue authority decides that you're not after you've already filed several tax returns.

Specific criteria may be used to determine your status and you can take steps to protect your status as an independent contractor if you understand them and how to implement them.

The biggest tax advantage for an independent contractor is the potential for tax deductions that aren't available to employees. A self-employed person can generally deduct all reasonable business expenses.

Employers Love to Hire Independent Contractors from a business's perspective, hiring a contractor is much preferred to hiring an employee because means a lot less paperwork and responsibility.

Contractors don’t receive benefits packages or pensions. They must pay their own NSSF and NHIF contributions. Businesses don't have to provide them with

- health insurance,
- life insurance, and
- other common employee benefits.

A company that uses an independent contractor doesn't have to do payroll, which involves PAYE and paying pension or gratuity.

It's assumed that a contractor is proficient at the service being provided and therefore doesn't require paid training.


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