The distinction between a dependent and independent agent is important because different tax and labor liabilities are engendered by the distinction.

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The classification of an individual as a dependent or independent agent can have significant implications for both tax and labor laws. For example, independent contractors are generally responsible for paying their own taxes and are not entitled to benefits such as minimum wage or overtime pay, while employees are typically entitled to these benefits and have taxes deducted from their paychecks. Therefore, it is important to accurately distinguish between dependent and independent agents in order to comply with applicable laws and regulations.

The Distinction Between a Dependent and Independent Agent Is Important