Employee or contractor
- 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.
Employee or contractor is the first question at hiring, and it is answered by the work, not by what the business would prefer to pay. An employee works the employer's hours with the employer's equipment under the employer's direction and is paid through payroll with withholding, overtime if non-exempt and the employer's taxes on top; a contractor controls how and when the work is done, uses their own tools, serves other clients and is paid on invoice with no withholding. The label on the contract does not decide it; the IRS's and the state's tests do. The employee contract builder on this site writes the employee's contract from your figures, 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. An employer directs an employee; a client accepts a contractor's result and does not manage how it is reached.
Economics
Whose tools, whose risk, whose other clients. A contractor can make a loss on a job and works for others; an employee cannot and usually does not.
Relationship
Ongoing work that is the core of the business points to employment; a defined project with an end points to contracting. The written agreement records the intent; the facts decide, and the IRS, the Department of Labor and the state each apply their own test.
The consequence and the contract
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.
Employee or contractor: common questions
What decides it?
The facts of the work: control, economics and the relationship. Not the title on the agreement.
Can I make someone a contractor to save the taxes?
Not without changing the work to meet the tests; the same work under the same control is employment whatever it is called.
Is the contract builder free?
Yes, with no account. Pro keeps the contract with the classification.
Will it do what you need for Employee or contractor?
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.