QuickBooks HelpQuickBooksHelpIntuit

Understand the difference between employees and contractors

by Intuit Updated 7 months ago

Learn the basics about classifying a new worker as an employee or a contractor.

Deciding if you can hire someone as an employee or contractor is a big decision. It impacts taxes, what you need to do for payroll, and more. The government has a lot of rules around this, but here is a basic overview and some links that may help you.

Employee vs contractor

An employee is a person hired by the employer. The employer generally has more control over an employee. A contractor is a self-employed person who provides services to businesses, generally on their own terms.

Use the ATO's guidelines to determine your worker classification.

If your worker is an employee, you must:

  • Withhold payroll taxes (PAYG withholding).
  • Pay super (for eligible employees).
  • Withhold Medicare levy.
  • Report and pay fringe benefits tax (FBT) (for eligible employees).

Sign in now for personalized help

See articles customized for your product and join our large community of QuickBooks users.

More like this