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Do you have the opportunity for profit or loss?

Excerpted from "Social Security Handbook". See the up-to-date, official Social Security Handbook at ssa.gov.

819. Do you have the opportunity for profit or loss?

819.1 Are you in a position to realize a profit or suffer a loss resulting from your services?

If you have an opportunity for profit or loss resulting from your services, you are generally considered an independent contractor. If you are not in such a position, you are likely to be considered an employee.

819.2 How is the opportunity for profit or loss established?

Opportunity for profit or loss may be established by one or more circumstances. Examples of such circumstances are if a person:

  1. Hires, direct, and pays assistants;

  2. Has his or her own office, equipment, materials, or facilities for doing work;

  3. Has continuing and recurring liabilities or obligations;

  4. Succeeds or fails depending on the relation of receipts to expenditures;

  5. Agrees to perform specific jobs for prices agreed upon in advance; and

  6. Pays expenses incurred in connection with work performed.

Last Revised: March, 2001

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