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IT Consulting |
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IT consulting has been around for years. The term can be confusing though, because in the true sense a consultant is considered an independent contractor and is paid on a 1099. Very few IT consultants are paid on a 1099 by an IT consulting firm, however. Most are considered temporary employees providing IT consulting services for a specified period of time and are paid hourly W-2. This is because of the way employment law in the US identifies an independent contractor.
Per the EDD State of California Employment Determination Guide a 1099 consultant is considered a nonemployee independent contractor if he or she is not instructed or supervised by the person he or she is working for, cannot quit or be discharged at any time, and does not perform work that is a regular part of the company’s business, i.e. work that is normally done by the company’s employees. If the worker can answer "Yes" to any of the above three it is a strong indication the worker is an employee and there is a high probability of risk if the worker is classified as an independent contractor.
There are other strong indicators, i.e. does the worker have a separately established business? Is the worker free to make business decisions which affect his or her ability to profit from the work? And, does the individual have a substantial investment which would subject him or her to a financial risk of loss, i.e. does the independent contractor furnish tools, equipment or supplies needed to perform the work. A "No" answer to any of these three questions may indicate the individual is not in a business for himself or herself and would therefore normally be an employee.
Finally these additional factors should be considered. A "Yes" answer to any of these questions could be an indication the worker is an employee, but no one factor by itself is deciding. All factors must be considered and weighed together to determine which type of relationship exists. However, the greater the number of "Yes" answers the greater the likelihood the worker is performing services as an employee.
Here are the questions.
Does the company the worker is performing services for have employees who do the same type of work, i.e. is the work being done basically the same type of work that is normally done by the company’s employees? Does the company furnish the tools, equipment, or supplies used to perform the work? Is the work considered unskilled or semi-skilled labor? Does the company provide training for the worker? Skilled contractors usually do not need training. Is the worker paid a fixed salary, an hourly wage, or based on a piece rate basis? Payments to independent contractors are usually made upon completion of the project or a portion of the work. Did the individual previously perform the same or similar services for the company as an employee? If the individual previously worked for the company as an employee it is an indication the individual is still an employee.
And one final question, does the individual believe that he or she is an employee? Intent is a strong indicator when making an employment or independent contractor determination. If both the worker and the company believe an independent contractor relationship exists the argument is stronger.
The above questions are considered as a guide only and should be discussed with your tax accountant and EDD State of California in order to make a proper determination. See EDD Employment Determination Guide.
That being said, an IT consulting job is usually a W-2 temporary job in which the employee is working on behalf of another entity for the company and is performing IT consulting services on a daily basis at the company that has the need. In most cases the consultant is a W-2 employee working for an IT consulting firm and the job is temporary in nature lasting from a few weeks to several weeks during a specified course of time. IT consultants can be System Administrators, DBA’s, Networking or Storage Engineers, Business Analysts, Data Warehouse specialists and functional or technical database developers.
TechReq is an IT consulting company providing IT consulting services to companies in Southern California and Northern California serving San Diego, Orange County, Irvine, Los Angeles, Riverside, San Francisco and San Jose.
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