Subcontract vs. Consulting Agreement vs. Independent Contractors vs. Employees

Subcontract vs. Consulting Agreement vs. Independent Contractors vs. Employees

Subcontract vs. Consulting Agreement vs. Independent Contractors vs. Employees

Subcontract vs. Consulting Agreement vs. Independent Contractors vs. Employees

Subcontract vs. Consulting Agreement vs. Independent Contractors vs. Employees

Subcontractor

Subcontracts are a financial assistance mechanism used when the intent is to have another entity carry out an essential portion of the project’s scope of work. Subcontracts are a formalized agreement that spells out the fiscal arrangements, defines the scope of work to be carried out by the subcontractor, and flows down the Prime Contract terms and conditions to the sub-recipient. Subcontract vs. Consulting Agreement vs. Independent Contractors vs. Employees

There are Subcontractors usually when there is a Prime Contract, also known as a General Contract. When a Subcontractor will perform work as part of the team or will have decision-making responsibility or will manage technical and administrative aspects of a portion of the overall project statement of work Subcontract vs. Consulting Agreement vs. Independent Contractors vs. Employees

Subcontractor must abide by terms and conditions of subcontract, work within the budget

Subcontractors usually owns all the data, reports, drawings, materials and inventions developed under the agreement for work done at their institution. Subcontract vs. Consulting Agreement vs. Independent Contractors vs. Employees

Consultant

An individual and/or firm/organization retained to provide professional advice or services for a fee.  A consultant is supposed to consult (tell you how to do something) rather than do (actually completing the work).  For example, a Consultant would review something and provide a summary of its findings.  Generally, consultants are ‘experts’ in an area and work on the project for short time frame.  Prime contract clause terms are not flow down in Consultant Agreements and the scope of work is more limited than subcontract.

Consultant Agreements are used when the Consultant is not participating in any decision making. Furthermore, the IRS code does not permit independent consultants to provide monitor and control of other employees within an organization. Subcontract vs. Consulting Agreement vs. Independent Contractors vs. Employees

Customers of Consultant usually owns all the data, reports, drawings, materials and inventions developed under the agreement. 

IRS Code – What is an Independent Contractor?

Independent Contractors are individuals who render a service and meet independent contractor conditions as established by IRS criteria. They generally have a separate work place, are not supervised when they are working within the organization, and have a set of skills generally not available within the organization. An Independent Contractor generally will offer his/her services to other organizations and may advertise in the local newspaper or telephone directory. They are usually paid a flat fee by the job or project and are generally not paid by an hourly, daily, weekly, or monthly rate.

What is an Employer/Employee relationship?

Based on IRS regulations, the relationship of employer and employee will exist when the Hiring Party has the right to control and direct the individual who performs the services, not only as to the results to be accomplished by the work, but also as to the details and means by which the result is accomplished. That is, an employee is subject to the will and control of the Client not only as to what shall be done, but also as to how it shall be done. In this connection, it is not necessary that the Client actually direct or control the manner in which services are performed; it is sufficient if the Client has the right to do so.

The IRS will generally apply the twenty “common law factors” to determine whether an individual is an employee or independent contractor. For details, call this law office at (443)413-5756.

 

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