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

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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

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 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.


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