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Can I hire employees as independent contractors to save money on taxes in Louisiana? What are the requirements?

According to Louisiana law, it is not recommended to hire employees as independent contractors to save money on taxes. Instead, businesses should consider taking advantage of tax credits by hiring regular employees and providing them with health insurance. Additionally, businesses should consider meeting the eligibility requirements for the Corporate Tax Apportionment Program to potentially benefit from the single sales factor apportionment [1.3].

However, Louisiana does have a program called the Louisiana Entrepreneurial Business, which provides tax exemptions for eligible businesses. To qualify, a business must provide the department with a business plan that includes all appropriate long and short term forecasts and contingencies of business operations, including research and development, profit, loss and cash flow projections and details of expenditure of angel investor funding in accordance with Act 414 and shall also include the following: a. the principal business operations of the business are located in Louisiana including Louisiana as the primary place of employment for the employees of the business; b. demonstrating a plan or progression through which more than 50 percent of its sales will be from outside of Louisiana; c. employs 50 or fewer full-time employees; and d. the business has either gross annual sales of less than $10 million or a business net worth of less than $2 million [1.2].

The taxes that may be exempted include the corporation franchise tax, sales and use taxes imposed by the state on any goods, services, material and supplies necessary for or used in manufacturing or production of a product or consumed by the applicant, sales and use taxes imposed by the state on machinery and equipment to be used by the applicant, or materials and building supplies, whether purchased directly or through a contractor, to be used in the repair, reconstruction, modification or construction of plant and facilities, the corporation income tax, and any other taxes imposed directly by the state on the applicant [1.5].

In summary, it is not recommended to hire employees as independent contractors to save money on taxes in Louisiana. Instead, businesses should consider taking advantage of tax credits by hiring regular employees and providing them with health insurance. Additionally, businesses should consider meeting the eligibility requirements for the Louisiana Entrepreneurial Business program to potentially benefit from tax exemptions.

Source(s):
Jurisdiction

Louisiana