New startups often establish their employees as independent contractors so they don’t have to pay employment taxes since these taxes can be very expensive. However, whether or not someone qualifies as independent can only be determined by the IRS or the State of California. They’ve recently set out new rules and regulations that make it tougher for an individual to be ruled as an independent contractor. More often than not, if somebody is only working for one business they won’t qualify as independent. Somebody who has two or three people that they are working for and receiving checks from can likely be considered an independent contractor. It also helps if they have set up their own company, they have their own insurance, and/or they pay their own taxes.
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