What is an Independent Contractor?

An independent contractor is a person, business or other organization that provides service under contract to another business entity. An independent contractor is not a regular employee of the organization to which the service is provided. As such, the organization does not pay payroll taxes for the contractor, nor is the contractor entitled to regular company benefits except as provided by contract.

An independent contractor can provide work skills and service that an organization might not have internally. The work can be short- or long-term but is typically considered temporary or freelance. Organizations can save money by using independent contractors through pay and benefits cost-savings. The Internal Revenue Service (IRS) has strict guidelines regarding employment status when considering whether someone is an independent contractor or a regular employee.