independant contractor vs employee?

[ChuckLane]

in the small tutoring center that i am a part of there is the owner who takes no salary and 1 full time employee who gets a salary. The owner wants to not deal with taxes and such so she would like to call her full time employee an independant contractor iso that she does not have to withhold any taxes. is this ok? does the employee need to only go fill out a 1099 form to declare her earnings?

also we would like to become a non profit and right now funds are pretty thin so we would like to do some fund raising but we dont have a non-profit number yet are we able to fund raise without a non-profit number?

thanks for your help

chuck

[eightmanagement]

First question, yes the employee can be switched to a 1099 contractor as long as you have not withheld any payroll taxes. Just have them fill out a W-9. The owner will need to put himself on payroll eventually as the US government frowns on owners who do not pay medicare and unemployment from their income. Wait until you're around $300K in revenue.

Yes you can begin collecting funds as at any time, but the tax benefit (if any) to your contributors does not come until your application is approved. The non-profit stipulatoin involves the way you track your income.

Good luck.