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  1. #11
    Join Date
    Jan 2006
    Posts
    38,714

    Default Re: How to Create a Profit-Sharing Agreement for Potential Employee and for an Invest

    Quote Quoting budwad
    View Post
    One would assume that when you signed a contractor agreement with the individual, that there is a non-disclosure clause in the contract that you can hold him to.

    You can't have it both ways. He can't be an employee and an IC at the same time.

    If you want him to be an employee, you hire him as an employee and you don't try to limit his independent business if in fact he also works for other clients. If he doesn't have an independent business where if he lost his economic relationship with your company he would be considered joining the ranks of the unemployed, then he is and probably has always been an employee under the laws of your state and for the purposes of the Federal Government.

    I suggest you read this link and determine for yourself if you think his treatment and control over his work would make him an employee or an IC.

    How is he paid, hourly or by contract. Where does he work. Does he work at your facility using your resources. Does he do the same thing as other employees of your company. These are all questions you have to answer.

    You may already have an employee that was misclassified as an IC.

    denimkaty is our local spam farmer. If you reread her post you will see her question is a copy and paste of the ops post.

  2. #12
    Join Date
    Aug 2019
    Posts
    25

    Default Re: How to Create a Profit-Sharing Agreement for Potential Employee and for an Invest

    Yes. My advice is to consult both a business attorney and a tax attorney about this. Your options depend a audacity temp mail origin bit on how the business is organized (corporation, LLC, partnership, etc), how it is treated for federal tax purposes, what kind of product or service your company does, the time frame you think it is likely that the company may be profitable, what your goals are, and what the employee and contractor are willing to accept. In other words, this is not something for which I can give you a stock or canned answer. How you do it will also have significant tax implications. Some of the more tax favorable methods result in some significant non tax limitations, for example. So there are a lot of potential trade offs here that you and your partner will need to consider. Startups need to consult experts if they want to do things right. Sure, it costs you some fees up front now to get that advice. But it could save you many time more than the cost of the fees over the long run, especially if the company does become very successful. So don't be penny-wise and dollar foolish here. You need more than an internet forum can provide on this.

  3. #13
    Join Date
    Jan 2006
    Posts
    38,714

    Default Re: How to Create a Profit-Sharing Agreement for Potential Employee and for an Invest

    So now denimkaty copies and pastes taxing matters post, but can’t even do that properly. I’m still trying to figure this out:

    Your options depend a audacity temp mail origin bit on how the business is organized...


    wow, just wow.

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