Expert advice >> Am I an Employee or Self-Employed?
Without a doubt, this is the most frequently asked question we get from clients, individual or corporate. In fact, a mystique seems to surround this whole subject as people have the general perspective that 'being self-employed' is equivalent to keeping more of one's earnings on an after tax basis. This is the subject of a separate article. The issue here is how does one determine whether or not a person is an employee or self-employed.
In law each case must be judged on its own set of facts. The fundamental test to be applied is this: is the person who chosen to perform these services performing them as a person in business on his own account? If the answer is yes, the person is self-employed.
In the determination of whether a person is an employee, two series of tests are usually used. First, you can apply a four-fold test of:
Whether the worker was subject to complete control of the payor as to the use of time and the way in which services were to be performed.
Whether the worker provided his own tools.
Whether the worker has an opportunity for profit (from an accounting perspective) from his services.
Whether the worker has a risk of loss from his enterprise.
Secondly, the other common test used is the "organization" test. Asking if the person offering services offers them in the context of a coherent business enterprise rather than merely putting himself in the service of a particular person paying for the service may summarize this test.
By following the two tests above, you can usually determine whether you are considered as an employee or self-employed, although professional interpretation of the above may be required.
