A person can be one or the other but not both simultaneously.
There are various tests states and the IRS use to determine whether an individual is truly an independent contractor or an employee.
There is nothing inherently wrong with using subcontractors that are legitimately subcontractors. But trying to claim someone is a subcontractor who is really an employee is a good way to get in a world of hurt financially, and often retroactively.
all of that, a +1.
in the people's republic of socal, you get caught doing this, and you are so screwed.
your "subcontractor" falls off a ladder, and goes to the hospital. he is there with a
spinal bruise.
your soon to be defunct company can now pay ALL of his medical expenses, PLUS
the overburden state fund attaches for their trouble, about 40%.
and as the state fund has now has an issue with you, your C-10 will be flagged and suspended.
CSLB shares info with state fund.
CSLB also shares info with the state franchise tax board. expect an audit. penalties are
normally 100% of the tax shortfall in this state. don't ask how i know this.
the franchise tax board shares info with the IRS. the penalty there for a shortfall is 100%
of the shortfall, and interest at 28%, on the shortfall and the penalty, from the time the
shortfall occurred, not from the time of assessment.
don't ask how i know that, either.
now, if you are a sole proprietor, you are on the hook for all this, even if out of business.
if you are a corporation, both fed and state can breach the corporate wall, and attach your
assets personally, if you are an officer of the corporation.
however, if you are assessed all of this, and have filed your tax returns in a timely manner,
37 months after the assessment of said taxes and penalties, when they are recorded with
the clerk of the court in the county you operated in, you may have the liabilities discharged
with a bankruptcy.
article 602, subparagraph (C) note three of the bankruptcy code permits this.
it is not common knowledge, but it is a point of law.
however, be advised that the state of california does not recognize that statute, and will
simply seize any assets they find, without due process, and unapologetically.
welcome to calif. you've been warned.
the aforementioned information cost me $1,950,000.00 to learn. it's yours for free.
additional note:
a quick google, pulls up your name, c-10 license info, license status, workers comp status,
and this conversation, so it's all in the public domain at this point.
sometimes a unusually spelled name isn't a good thing to have up on the net, tied to
a discussion like this.