It can get exhausting wearing all…the…hats. And some of those hats, you don’t really enjoy.

• Maybe you’d love to focus on creating new collections, not packaging and shipping orders.
• Maybe you want to write course content, not the sales page, email funnel, or social media posts.
• Maybe you want to design brands, not schedule appointments or follow up on the details you need from clients.

And so you’ve decided to grow your creative business by bringing on help.

Once you decide to do this, you face a dilemma: is she an employee or an independent contractor?

Before we get to the “employee or independent contractor test”, let’s start with the basics.

Legal names for team members

In legalese, 99% of those helping you run your creative business will be given one of two names:

• independent contractor
• employee

As the business owner, you’d likely prefer them to go by the legal name of an independent contractor. And that’s because it’s far less headache for you.

Because with independent contractors, you don’t have to do things like:

• report them to your state agency
• set up payroll
• get worker’s compensation insurance

All you really need to do is to create a contract outlining what they’ll do and how they’ll be paid.

But according to my sister, an HR director, and based on my own experience…

The #1 mistake most small businesses make is calling team members independent contractors when legally they are employees.

And making this mistake can lead to some stiff fines and penalties.

So calling someone an independent contractor when they are legally an employee isn’t worth it.

The employee or independent contractor test

Sadly, there’s no magic formula I can give you.

There is no list that says, “if they do X task” they are definitely an employee or independent contractor.

Instead, you’ll answer the following questions to answer if she’s an employee or an independent contractor:

• Do you have the right to control how she performs her job?
• Do you have the right to control when she performs her job?
• Do you provide her with the tools and equipment to do her job?
• Do you pay her on an hourly, weekly, or monthly basis?
• Do you reimburse her expenses?
• Do you offer her benefits?
• Is the work she does core to the products or services you offer your customers/clients?

The “employee or independent contractor test” is really examining how much independence and control she has in performing her job.

The more that you are in charge, the more likely she is an employee.

The more control and flexibility she has, the more likely she is an independent contractor.

Basically, it all boils down to control. Who is in charge: you or them?

The IRS has given some guidelines and offers a 20-point test that you can use to determine if your team member is an employee or an independent contractor. (For an IRS publication, it’s actually quite readable.)

7 example businesses’ answers to the employee or independent contractor test

In the artist’s Courtyard, my legal library and membership community, we have seven Creative Business Guides. And each of our Creative Business Guides runs into the same problems you do. So I use them to highlight how you might handle your problem. (Click here to learn more about membership!)

And lucky for you, each of our Creative Business Guides is looking to bring on a team member. And you can see how they completed the checklist to decide if the new hire is an employee or an independent contractor.

Is production help an employee or an independent contractor?

Molly makes jewelry and needs production help. She enjoys creating her jewelry but could use help packaging and shipping it. She plans on hiring to get help with this part of the production. The team member will also list Etsy items, share on social media, and send out Molly’s email marketing.

Molly only needs help about 10 hours a week. Molly’s studio mate has a college student that comes in to help with similar tasks and the student is open to doing the same for Molly. The student will come to Molly’s studio and Molly will pay her on an hourly basis. She’ll use Molly’s computer as well as Molly’s shipping and packaging supplies so they match her branding.

Molly downloads the checklist and fills it out (as shown below) to decide if her team member will be an employee or an independent contractor.

Verdict: Production help is an employee.

Because Molly is in control of exactly what, when, where, and how the student does the work, she should hire the student as an employee (even though her studio mate pays her as an independent contractor).

Is social media help an employee or an independent contractor?

Courtney needs help with her social media content. She’s struggling to get the engagement and reach that she knows she needs to grow her business.

Through a friend, Courtney connects with a woman who consults with small creative businesses about their social media strategy. The woman is a mom of two young kids and usually only works with one client at a time. But she is wrapping up a project and will be available to work with Courtney in a few weeks.

She’ll be working out of her own home, using her own computer, and will be setting her own schedule. And Courtney will be paying her a flat weekly rate to curate and post content that appeals to Courtney’s ideal client.

Courtney downloads the checklist and fills out (as shown below) to decide if her team member will be an employee or an independent contractor.

Verdict: (This kind of) social media help is an independent contractor.

Even though the team member Courtney will be bringing on only works with one business at a time, this is a choice based on her personal life, rather than a business one. Courtney will be hiring her for her expertise and Courtney won’t have control over when and how the work is performed. Because of that, Courtney can bring her on as an independent contractor.

Note: Once your social media manager starts interacting with your audience (responding to comments, doing customer service), then you likely are back in the employee bucket. (Watch this episode of Ask Kiff to learn why this likely turns her into an employee.)

Is a community manager an employee or an independent contractor?

Thomas runs a membership community and needs someone to function as the eyes and ears of the community. The team member will answer members’ questions, help moderate the online community and provide all customer service.

Thomas will be paying the team member an hourly wage. While this is a long-term need for his business, Thomas is capping the hours at 20 hours a week. Thomas also will provide training and customer service scripts. But, the team member will work out of his home, on his computer, and set his own hours.

Thomas downloads the checklist and fills out (as shown below) to decide if his team member will be an employee or an independent contractor.

Verdict: A community manager is an employee.

Even though the team member is not full-time and may have another job, Thomas will need to hire this team member as an employee. Because she is providing the core services of Thomas’ business: helping those in his membership community. Thomas also will be providing all the tools and resources required to do the job.

Note: Even if Thomas didn’t provide the tools and resources this one likely still ends up as an employee. (Watch this episode of Ask Kiff to learn why.)

Is a designer an employee or an independent contractor?

Frank is working with Thomas to refresh his brand and provide online and print collateral.

As part of the project, Thomas wants Frank to create an e-book template that he can use. Book layout is not one of Frank’s skill sets, but he has a friend that designs books. So Frank is planning on bringing his friend onto the project to help with the ebook design.

Frank will need his friend only to create Thomas’ ebook template. And his friend will use his tools and software, but follow the style guide that Frank will provide him.

Frank downloads the checklist and fills out (as shown below) to decide if his team member will be an employee or an independent contractor.

Verdict: (This kind of) designer is an independent contractor.

Since Frank’s friend does this for other businesses and will be brought on for a discrete project, Frank can bring him on as an independent contractor.

Is an art curator an employee or an independent contractor?

Claire runs a brick-and-mortar shop and wants to bring a team member on to curate art shows within her store.

She would like this person to curate and hang one show a month, attend the opening party, and provide Claire’s shop employees with materials on the artwork since they’ll be responsible for selling the work outside of the opening.

Claire is providing the curator instructions on the kinds of artwork that she would like shown. Claire has ultimate approval over the artists appearing in her shop, but not the individual artwork hung by that artist.

She’ll also be providing space in the shop office to do the work and paying the curator on an hourly basis.

Claire downloads the checklist and fills out (as shown below) to decide if her team member will be an employee or an independent contractor.

Verdict: (This kind of) curator is an employee.

While some of the factors might favor an independent contractor, since Claire will have a fair amount of control over how the curator will do the job, Claire should hire the curator as an employee.

Is someone that helps sell products at a show an employee or an independent contractor?

Ezra is getting ready to go on tour and needs someone to come along to sell merchandise. Ezra’s already printed the CDs, shirts, and stickers that his friend will sell. And his friend will travel in the van with Ezra and share hotel rooms with him.

Ezra wants to pay his friend a flat rate for each gig. And the venue will be providing everything else the friend needs to set up the merch table.

Ezra downloads the checklist and fills out (as shown below) to decide if his team member will be an employee or an independent contractor.

Verdict: Helping sell products at a show is an employee.

While Ezra would prefer to have his friend be an independent contractor, he’ll need to bring him on as an employee because Ezra is totally in control of when, where, and what is sold to customers at the show. (Psst…the answer is exactly the same for all of you attending craft fairs and other shows where you sell your handmade products.)

Is hiring a VA to interact with customers an employee or an independent contractor?

Jillian has multiple revenue streams in her business. She’s looking to bring on an admin assistant that will help her both with her coaching (Courtney the Coach) and teaching (Thomas the Teacher) revenue streams.

The VA will be the main point of contact for all inquiries, help coaching clients book their appointments, and provide them with their pre-session materials. And the VA will serve as customer service for all course participants.

Jillian has found a woman who offers VA services to small creative businesses like hers. And she the VA the capacity to take on the approximately 10 hours a week that Jillian needs.

Jillian downloads the checklist and fills out (as shown below) to decide if her team member will be an employee or an independent contractor.

Verdict: (This kind of) VA is an employee.

Even though the team member Jillian will be bringing on owns her own business, she’s likely an employee.

And that’s because as I explain in this episode of Ask Kiff once someone starts directly interacting with your customers, they turn into an employee.

Note: If she only worked behind the scenes, then she probably can go back in the independent contractor bucket!

TL;DR

When it comes to the “Is she an employee or independent contractor test”, it’s not about which column has the most check marks (employment or independent contractor).

Instead, it’s about who is in control of how the work is done.

• If you are in control, your team member is an employee.
• If they are in control, your team member is an independent contractor.

Another really important note: you’ll never get in trouble for calling someone an employee that legally could be called an independent contractor.

But the reverse is not true. Calling someone an independent contractor that the law deems an employee can lead to stiff fines and penalties.