Worker classification

In accounting, worker classification means deciding whether a worker is an employee or an independent contractor — federally by the common-law control test (behavioral, financial and relationship facts), in some states by the stricter ABC test. It decides who withholds and pays employment taxes.

Layer: Lexicon
Defined in: Lexicon
Nearby: 4

Authority

This definition follows IRS — Independent contractor or employee.

Every citation in this system, with the text we read and the date we checked it, is in US GAAP and where these rules come from.

For founders

The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.

Form 1099-NEC for startups: threshold, deadline, e-filingWho gets a 1099-NEC, the new $2,000 threshold, why a W-9 comes first, what goes on a 1099-K instead, and the deadlines, penalties and state copies.

What it is not called

Each of these is a real word for a different thing. Using it here is what makes a product read as though it was built by someone who has not done the work.

contractor status chosen by contract alone

Nearby in the catalog

No component names this concept outright. These are the ones in its part of the system, which is a weaker claim — but a component nothing links to is a component nobody finds.

11Payables (AP)

2 of 2 builtFamily spec

12Close, controls & consolidation

1 of 2 builtFamily spec

Terms this one depends on

ABC testA state test presuming a worker is an employee unless the hiring entity proves all three: (A) free from its control, (B) work outside the usual course of its business, and (C) customarily engaged in an independent trade — California (AB 5), Massachusetts, and New Jersey for unemployment

Also in Tax

Defined in Lexicon. This page is generated from that document, so the two cannot disagree.