A contractor is a person who offers his or her services to the general public. A person is classified as a contractor when he or she has control over how the work will be done. The buyer only controls the specifications for the completed work. Examples of contractors are independent auditors, attorneys, and doctors.

A contractor must pay self-employment tax. The buyers of a contractor's services have no obligation to pay payroll taxes related to the amounts paid to the contractor.

Related Courses

Human Resources Guidebook 
Payroll Management