WorkerStatus.com | The Incorporated Independent Contractor

The INCORPORATED
Independent Contractor

A worker that chooses to engage in business as a corporation presents a strong case for independent contractor status. When possible, the hiring party (payer) should use workers (payees) that are incorporated. While it is technically possible for an IRS or State auditor to reclassify an incorporated worker, in practice, that rarely happens. When presented with an incorporated worker, 98 percent of the time the IRS or State auditor will not disturb independent contractor treatment so long as the payer-firm had nothing to do with the incorporation by the worker.

There are several reasons:

A corporation is a separate legal entity
As a separate legal entity, a corporation operates only through its officer or officers
Corporate officers are always employees of their corporation
As an employee, the owner/officer/worker will receive an IRS Form W-2 from his or her corporation
There is little or no reason, therefore, for an auditor to determine that the client should have issued a Form W-2 to the worker when the worker is already a W-2 employee of the worker's corporation
The worker's corporation has presumably already paid employment taxes with respect to the officer/worker, i.e. Filed IRS Form W-2s, IRS Form 941 quarterly returns, and IRS Form 940 annual returns.

To form a California corporation, visit Click2Inc.Com. The incorporation process takes seven (7) to fourteen (14) days and costs less than you think. Pre-formed, shelf corporations are also available.

The INCORPORATED Independent Contractor

The INCORPORATED
Independent Contractor