Agency

Agency

February 10, 2012

BUS3055-Business Law for Commercial Transactions

South University

Walter Does It His Way

An employee is not hired as a representative of the employer to make contracts with third persons. The employer also has a certain control over an employee, such as hours worked and how business should be conducted. An independent contractor is a “contractor who undertakes to perform a specified task according to the terms of a contract but over whom the other contracting party has no control except as provided for by the contract.” (Twomey & Jennings, 2011, p. 852) Essentially, an independent contractor is considered self-employed. The main characteristics that differentiate an employee from an independent contractor are authority and control.

Walter also wants to determine which of the two options have the best tax benefits to him before he decides between becoming an employee or an independent contractor. According the to IRS, an independent contractor is considered to be self-employed and must pay self-employment tax and income tax. Self-employment tax is the Medicare and Social Security taxes for the self-employed, or independent contractors, but only if the individual makes a profit. Also, as a self-employed individual you pay estimated taxes quarterly as well as file an annual return. (IRS.gov, 2012) On the other hand, as an employee, Walter would be subject to Social Security tax and Medicare (FICA) and income taxes.

Looking at all the information, Walter should become an independent contractor. He will have more of a say of what his hours will be, how he will conduct business, and have better tax benefits as an independent contractor compared to an employee.

Cleveland’s Conflict

Authorization of an agent by appointment is created by express authorization. This means that an individual is appointed to act on behalf of another individual. This authorization may be oral, but a written authorization may be used...