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Inc. Yourself, 11th Edition: How to Profit by Setting Up Your Own Corporation by Judith H. McQuown

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9Your Employees

Up until now, we’ve been discussing the sometimes-idyllic situation where you are truly a one-man band: in your one-person corporation, you are everything from president down to file clerk.

But what if you have employees? Then it gets more complicated, though not necessarily more expensive.

If your corporation is able to hire what the IRS calls “independent contractors,” you will not have to withhold taxes on their pay or cover them for Social Security. At the end of the year, the corporation just sends them an IRS Form 1099, which shows how much you paid them. Obviously, then, your corporation does not have to include independent contractors in its pension or profit-sharing plans because they are not considered to be the corporation’s ...

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