As your company begins to gain ground, you will soon be considering how to incorporate. A question to ask yourself: what is your company identity? You may be a company that is offering a service to its customers. Or, your company may be doing more than just providing that service and making a profit—your company’s ultimate goal may be to offer a public benefit, making a positive impact on society or the environment. Many companies have moved towards some form of a hybrid corporate identity, and California has kept up with the movement by offering two new types of corporations: the Benefit Purpose Corporation, and the Flexible Purpose Corporation. While both corporations aim to accommodate companies who want to identify themselves by the social benefits they create, the two corporations differ not only in identity, but also in purpose.
As your company starts to grow, and you begin to hire individuals to help you keep up with expansion, there is the daunting task of determining whether you should be hiring individuals as employees, or as independent contractors. Why does it matter? I’ll tell you why: the IRS cares, and so should you. If you misclassify your new hire, you will be liable for employment taxes for that worker. To avoid the unpleasant series of consequences, we offer guidance to avoid this misstep.