Businesses often prefer using the services of independent contractors (sometimes also called “subcontractors” or “freelancers”) rather than employees.
Independent contractors are usually a better deal for businesses. With independent contractors, businesses do not have to pay the required employer contributions to Social Security and Medicare, the burden of which is shifted to the independent contractor through the so-called “self-employment” tax. Businesses also do not have to worry about tax withholdings—that is the independent contractor’s responsibility too. By using independent contractors instead of employees, businesses can often avoid workers’ compensation and unemployment insurance requirements for those individuals, as well other labor law requirements such as mandatory lunch breaks.
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