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The distinction between independent contractor and employee is an important one in the United States, as the costs for business owners to maintain employees are significantly higher than the costs associated with hiring independent contractors, due to federal and state requirements for employers to pay FICA (Social Security and Medicare taxes) and unemployment taxes on received income for ...
These taxes are generally not paid by the employer on the compensation of a worker classified as an independent contractor. Instead, the contractor is responsible for their employer's share of the taxes when paying self-employment taxes at the end of the year. [2] Classification affects whether a worker can receive unemployment benefits.
In Cost-Volume-Profit Analysis, where it simplifies calculation of net income and, especially, break-even analysis.. Given the contribution margin, a manager can easily compute breakeven and target income sales, and make better decisions about whether to add or subtract a product line, about how to price a product or service, and about how to structure sales commissions or bonuses.
Cost of goods sold (COGS) (also cost of products sold (COPS), or cost of sales [1]) is the carrying value of goods sold during a particular period. Costs are associated with particular goods using one of the several formulas, including specific identification, first-in first-out (FIFO), or average cost.
The firms then spend all of this income on factors of production such as labor, capital and raw materials, "transferring" all of their income to the factor owners (which are households). The factor owners (households), in turn, spend all of their income on goods, which leads to a circular flow of income. [20] [18] [22]
An Independent contractor is a type of worker. Independent contractor may also refer to: Independent contracting in the United States; Independent Contractors Australia; Misclassification of employees as independent contractors
Total cost of ownership (TCO) is a financial estimate intended to help buyers and owners determine the direct and indirect costs of a product or service. It is a management accounting concept that can be used in full cost accounting or even ecological economics where it includes social costs .
Target income sales can be computed as the point where Contribution equals Fixed Costs plus Target Income. In cost accounting, target income sales are the sales necessary to achieve a given target income (or targeted income). It can be measured either in units or in currency (sales proceeds), and can be computed using contribution margin ...