Why is my new employer asking me to form a corporation?

UPDATED: Oct 1, 2022

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Why is my new employer asking me to form a corporation?

I received a job offer at a therapy group private practice. They are asking me to first form a corporation, then sign a contractor agreement, and then paperwork for credentialing to be in network with insurance companies. Why do I need to form a corporation? They said it’s so I’m an employee but I’m unsure

about doing this as a friend of mine works in a group private practice and she said she just signed a contractor agreement and credentialing paperwork.

Asked on September 24, 2017 under Employment Labor Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

They want you to do this because they do NOT want to employ or pay you as an employee, and have to pay FICA for you and potentially give you health insurance, vacation days, or other employee benefits. Instead, they want to pay you as an independent contractor (no benefits), and it is much easier (should you or the government later challenge your status as an independent contractor) to establish that someone is an independent contractor if they have (and are paid through) their own LLC or corporation.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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