Employees vs contractors
- 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.
Employees versus contractors is a classification the law decides by the facts, not by the label: an employee works your hours under your direction with your tools and is paid through payroll with withholding and the employer's taxes; a contractor controls the work, supplies their own tools, serves other clients and is paid on invoice. Get it right at hiring, because getting it wrong is back taxes and penalties. 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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What an employee looks like
Set hours, your equipment, your direction, your training, ongoing work that is the core of the business, paid by the hour or the salary through payroll. The free employee contract builder on this site writes the contract.
What a contractor looks like
A result agreed, the method theirs, their own tools, other clients, invoices, the risk of profit and loss theirs. Engaged by an agreement, not employed.
The tests and who applies them
The difference between a contractor and an employee is control and economics, not the title: who sets the hours, who supplies the tools, who bears the risk of profit or loss, whether the relationship continues, and whether the work is the core of the business. The IRS, the Department of Labor and the state each apply a version; the strictest one that applies to you is the one that counts.
The cost of the wrong answer
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 adds those, the overtime and the penalties, back-dated. 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.
Employees vs contractors: common questions
Can someone be both?
Not for the same work at the same time. The facts of the work decide which.
Does a signed contractor agreement settle it?
No. The facts settle it; the agreement records the intent.
Is the contract builder free?
Yes, with no account. Pro keeps the contract with the classification.
Will it do what you need for Employees vs contractors?
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.