Home / Digital marketing & agencies / Contractor vs employee
VAs, freelancers & offshore help: who is actually a contractor?
The short answer
Agency teams are built from VAs, freelancers, and offshore help — and most owners have never tested a single classification. The rough map: genuine freelancers with many clients and their own methods are contractors; a full-time VA working your hours in your systems looks like an employee, especially in ABC-test states where core-service work is presumptively employment; foreign contractors abroad sit largely outside US payroll tax with W-8BEN paperwork. Deeper dive in our classification guide.
The practical sort
- List everyone who invoices you and where they physically work.
- US workers: run the control test (and ABC where it applies); convert the fails to payroll.
- Foreign workers abroad: collect W-8BENs, contract clearly, and note their local-law obligations are theirs — or use an employer-of-record to be sure.
- File the 1099-NECs on the US contractors, every January.
Frequently asked questions
Are overseas VAs subject to US classification rules?
US payroll-tax classification generally concerns US workers; foreign contractors performing services abroad are typically outside US employment tax, documented with Form W-8BEN instead of a W-9. Their local law is its own question.
My VA works set hours in my systems every day — contractor?
That fact pattern leans employee under the control tests, and fails prong B outright in ABC states if the work is your core service. Set hours, your tools, your training, one client — the labels do not save it.
What about freelancers who work for many agencies?
Multiple clients, their own tools and methods, project-based engagement — classic contractor signals. Keep the W-9, the agreement, and the 1099-NEC trail clean.
What is the cheapest way to fix a misclassified role?
Convert it going forward — payroll or an employer-of-record service — before an audit converts it for you with back taxes and penalties attached.
Roster of ten invoices and no W-9s?
One cleanup engagement: classify, paper, convert where needed — before a state agency does it with penalties.
Book a free consultation