How does the ability to realize a profit or loss affect financial control?
The ability to realize a profit or incur a loss is probably the strongest evidence that a worker controls the business aspects of services rendered. [Audit Guidelines, p 2-21.] This is the ultimate point of the other factors showing financial control. If the worker has a significant investment or unreimbursed expenses, that obviously presents the opportunity to generate a loss, or to increase profits by wise management of the expenses. A worker who advertises and makes services generally available will (hopefully) have more customers and hence realize more profits. Payment by the job rewards efficient workers and increases the opportunity for profit, or raises the possibility of loss if the job takes too long. Contrast the independent contractor for whom all these issues are present with the average employee who is paid a wage and who bears no real expenses, other than, perhaps, the sunk cost of training for the job. The only way for the employee to affect seriously his or her bottom l
