Can I be a sole proprietor and use indipendent contractors to do all the work I send out for? They would be paid a flat rate and 1099 at the end of the year. Is that ok to do?

Well, the IRS is now getting a little tough with sole proprietors and small businesses using contractors to perform service work for them at your sole direction and direct supervision and then classifying them as independent contractors!

If the independent contractors work exclusively for you, then you may not meet the test for being eligible to consider the contractors as independent contractors. I suggest that you perhaps at least employ 1 of the contractors who works exclusively for you under your sole direction and guidance.

Please also review the following link below to determine whether or not your employees qualify for being treated as independent contractors.

http://www.asktaxguru.com/347-will-y...ontractor.html

__________________
Find a CPA near you!

Ask TaxGuru Please refer to the legal disclaimer.