Best Practices for Interior Design Bookkeeping: Employee Vs Contractor

by | Jan 3, 2023 | Interior Design, Process | 0 comments

Your interior design business requires you to work with various employees and contractors. These work relationships can ebb and flow depending on your particular projects and needs. Every season of your business is different – you don’t always need painters, additional design consultants, or electricians. Over time, you may find that you rely on certain contractors more than others. 

In general, there are different agreements and expectations for employees and contractors. It’s easy to assume that everyone is on the same page, but it’s important to have clearly defined terms so that expectations aren’t left unspoken, and so that your relationship with the worker remains consistent with their role.

In addition to having a working knowledge of these different business relationships, it’s also important for your financial and legal well-being. There are IRS guidelines for how to classify both employees and contractors, and this has implications for how your workers should be paid. 

Let’s learn about the differences between these roles. 

Eligible Employee

  • Your company controls when and where the individual works
  • Your company pays for equipment and work-related expenses 
  • Employees may receive benefits such as insurance and PTO. 
  • The employee’s work is necessary for the day-to-day operations of your business.

Independent Contractor 

  • The IC controls when, where, and how they work.
  • They have the freedom to contract their work out to other businesses.
  • ICs do not receive benefits. 
  • They submit an invoice for payment.
  • Their work is contingent on company needs, often on a project-by-project basis. 

Distinguishing between these terms is important because, as a business owner, it’s your responsibility to understand the compliance requirements. If your State’s Department of Labor audits you, you could pay hefty fines for misclassifying your workers. Thankfully there are additional resources to determine how to classify your workers if you need to. 

If you need an interior design bookkeeper to help readjust your financial plan to pay contractors and/or employees, we invite you to schedule a call with AccountSolve today to learn how we can bring clarity to your interior design accounting. 



Lori Peterson


Lori Petersen

Lori Petersen has seen the frustration and loss that business owners experience when they don’t have command of their finances. Growing up, she watched her father work incredibly hard as a contractor. He’d come home late, eat the dinner kept warm in the oven, and do it all over again the next day. But it all came crashing down when he had to close the business and Lori’s family applied for food stamps. The business had failed and all of his hard work was for nothing. 

Today, Lori views every one of her clients as an opportunity to make this right. She firmly believes no one should work as hard as her dad did and not have a profitable business. No family should suffer because business finances were poorly managed. 

Lori has helped hundreds of business owners make sense of their finances, implement proven money management systems and create unimagined profitability for their business. She ensures they experience the return they deserve for their hard labor.

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