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This question is about salaries.
What is nonemployee compensation?
Nonemployee compensation, also referred to as self-employment income, is the income a worker receives from an employer who classifies the worker as an independent contractor instead of an employee.
Nonemployee compensation refers to the money paid to an independent contractor, from a company or client, for agreed-upon work or services that have been completed. Nonemployee compensation may include fees, commissions, awards, and prizes for any services rendered.
Nonemployee compensation differs in terms of taxes when compared to traditional full-time employee compensation. Companies, or employers in general, do not withhold taxes on payments to independent contractors, as these workers are not affiliated with a company or employer's payroll.
Independent contractors might work on one job for an employer and receive nonemployee compensation, or they might work on several jobs, throughout their fiscal year, and receive nonemployee compensation.
Traditionally nonemployee compensation is given once a job, service, or product is completed. Independent contractors are also referred to as freelancers, meaning they take jobs with multiple different entities and receive nonemployee compensation from each entity as their payment.
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