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Nov 3, 2009 9:17 PM
by: jjr6124
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Contract to Contract Requirements
Posted:
Nov 3, 2009 9:58 AM
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Hi,
Does anyone know, to support a Contract to Contract relationship with a company, does the contractor actually need to be incorporated? Or can the contract just be established as a sole proprietorship (i.e. using a standard business license)?
Thanks in advance.
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Posts:
87
Registered:
9/29/08
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Re: Contract to Contract Requirements
Posted:
Nov 3, 2009 9:17 PM
in response to: DwayneT
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I think you are talking about CORP 2 CORP employment relationships. If so, these are done for three big reasons:
[1] To shield the middleman from liability (and avoid carrying insurance), and
[2] To avoid the downside of the 1099 Sole Proprietor (Independent Contractor) whereby the IRS might say the consultant is really an employee, not a true independent contractor.
[3] To avoid the hassle of H1 visa tranfer.
To meet these goals, the consultant must be incorporated, likely as a S-Corp, but possibly also as a LLC.
The corporation is almost always required to carry insurance for general liability and probably also for professional errors and omissions.
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