Contractor or employee
- Gross pay per pay period
- $2,115.38
- Hourly equivalent
- $26.44
- Paid time off, hours a year
- 120
Every figure on this page is computed from the inputs you enter, by the method stated below it. The only constants HeadcountDesk supplies are the published federal payroll tax rates and the overtime multiplier, each cited where it is used. The defaults are a worked example to replace with your own.
Contractor or employee is decided by the work, not by the business's preference: who controls the hours and the method, who supplies the tools, who bears the risk of profit and loss, whether the relationship continues, and whether the work is the core of the business. An employee is paid through payroll with withholding and the employer's taxes; a contractor invoices. The employee contract builder on this site writes the employee's contract, free and without an account; HeadcountDesk Pro keeps it with the classification recorded.
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Control
Who sets the hours, the place and the method. Direction means employment; accepting a result means contracting.
Economics
Whose tools, whose risk, whose other clients. A contractor can lose money on a job; an employee cannot.
Relationship
Ongoing and core points to employment; a defined project with an end points to contracting. The IRS, the Department of Labor and the state each apply a test, and the facts decide.
The consequence
The IRS gives the employer's share of Social Security as 6.2% of wages up to the $184,500 base for 2026 and Medicare as 1.45% with no limit, and FUTA as 6.0% on the first $7,000 of each employee's wages, reduced to 0.6% with the full 5.4% credit. Misclassification means those, the overtime and the penalties, back-dated. The free employee contract builder on this site writes the employee's contract. From the vendors' own pricing pages: Homebase lists Essentials at $24 per location per month billed annually or $30 monthly, with a free Basic plan for one location of up to ten employees; BambooHR lists Core at $10 and Pro at $17 per employee per month; Deputy lists Core at $6.50 per user per month. HeadcountDesk Pro is $24 a month per location.
Contractor or employee: common questions
Who decides whether someone is a contractor?
The facts of the work, judged by the IRS's and the state's tests; not the agreement's title.
Can a contractor become an employee later?
Yes, when the facts change: set hours, your tools, ongoing work. Reclassify then, in writing.
Is the contract builder free?
Yes, with no account. Pro keeps the contract with the classification.
Will it do what you need for Contractor or employee?
Tell us what your business needs and we will tell you straight whether HeadcountDesk Pro does it today, whether it is coming, or whether you are better off with something else. A person reads these and replies.