Reminder: Please don’t be too specific when you send me a question.I was asked a very specific question about independent contractors. I will remind folks to keep your questions general, since I cannot provide legal advice. Any very specific question will get an answer of, please see a lawyer.
Question: I will summarize the issue. The person wanted to know if they could replace third party businesses with independent contractor relationships.
Answer: The answer really will depend on a variety of issues, which will be both legal and business questions. Regardless, you will want to have some form of a contract between your business and the other business detailing the relationship and each side’s responsibilities and expectations. Then, whether you are required to provide tax forms to that business will depend on a variety of factors, including the type of business. Given the potential issues, it would do anyone exploring this issue well to make certain they understand both the legal and tax requirements. However, generally speaking, yes, a business can be an independent contractor to another business, absolutely.