Ask Reggi Your Question Now
Can I hire employees as independent contractors to save money on taxes in Colorado? What are the requirements?
Based on the context documents, it is important to note that Colorado law recognizes the distinction between employees and independent contractors. While it may be tempting to hire employees as independent contractors to save money on taxes, doing so may result in legal consequences.
Requirements for Independent Contractors in Colorado
To determine whether a worker is an independent contractor or an employee, Colorado law considers several factors, including the degree of control the employer has over the worker, the worker’s opportunity for profit or loss, and the worker’s investment in equipment or materials.
According to CORS 40-11.5-102, leases between motor carriers or contract carriers and independent contractors may contain provisions that establish an independent contractor relationship between the parties. However, leases containing provisions pursuant to paragraphs (a), (b), (e), (f), (g), (h), and (i) of subsection (1) of this section shall be presumed prima facie evidence of an independent contractor relationship between the parties to the lease. This presumption may be overcome by clear and convincing evidence of an employment relationship between the parties to the lease considering only factors not in the lease.
Furthermore, any lease or contract executed pursuant to CORS 40-11.5-102 must provide for coverage under workers’ compensation or an occupational accident insurance policy that provides similar coverage. If an operator of a commercial vehicle obtains similar coverage pursuant to this subsection (5), then the operator is excluded from the definition of employee for purposes of section 8-40-202 (2).
Weekly Payment of Employees
It is important to note that any contractor who is awarded a contract for a public project by an agency of government in the amount of five hundred thousand dollars or more, and any subcontractors working on the public project, shall pay their employees at weekly intervals and shall comply with the enforcement provisions established in section 24-92-209 [2.1].
Conclusion
In summary, while Colorado law allows for the use of independent contractors by motor carriers and contract carriers, it is important to ensure that the worker meets the requirements for independent contractor status. Hiring employees as independent contractors to save money on taxes may result in legal consequences. It is recommended to consult with a legal professional to ensure compliance with Colorado law. Additionally, contractors working on public projects must pay their employees at weekly intervals [2.1].
Source(s):
Jurisdiction
Colorado