Can I make all my staff Independent Contractors and Issue them a Form 1099?

In our business law practice, we work with small business owners in a variety of industry segments. Sometimes we get the question from a new small business owner asking, “Can I just make all the people who are working for me independent contractors and pay them that way and have the company issue them a Form 1099?” Well the answer is maybe, it depends. That’s really the best we can do without analyzing what each person is going to do. You see, the IRS has very strict requirements over who can be paid as an independent contractor and who has to be paid as an employee. If your small business classifies people as an independent contractor when they really are employees, you can create a real big headache for yourself and there might be some serious financial penalties that go along with that as well.

The bottom line that you need to know is this: No, not everybody can be classified as an independent contractor. Before you put classify somebody as a contractor, make sure that you’ve talked with your lawyer and accountant so that you understand what people can be classified as employees and what people can be classified as independent contractors to help protect yourself and your company.

If we can be of help to you and your business with your legal needs, I invite you to call on us. We’d be happy to speak with you for a few minutes to see if we can be of assistance.