Board member/owner as independent contractor?

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Board member/owner as independent contractor?

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MakeMeSustainable

posts: 2

Jun 15, 2009 11:02 AM ET Quote Report Abuse

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Hi,
I have a board member I`d like to pay for her services on an infrequent, project by project basis. Can I hire her as an independent contractor without running into legal/tax issues of not hiring her as an employee? Do I have to change my board agreement with her in order to reflect the change in compensation? Thanks for any insight!

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www.MakeMeSustainable.com

nevadascul

posts: 651

Jun 18, 2009 11:37 AM ET Quote Report Abuse

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Is she a board member or a consultant?

Board of Directors

Definition
Individuals elected by a corporation`s shareholders to oversee the management of the corporation. The members of a Board of Directors are paid in cash and/or stock, meet several times each year, and assume legal responsibility for corporate activities.

consultant

Definition
Experienced professional who provides expert knowledge for a fee. He or she works in an advisory capacity only and is usually not accountable for the outcome of a consulting exercise.

from http://www.businessdictionary.com/definition/consultant.html

You also need to review the IRS guidelines for independent contractors. Many companies have gotten into trouble with the IRS by classifying someone as an independent contractor who is actually an employee. There are 20 issues the IRS looks at to make the distinction between the two. Here is the link to the IRS.

http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

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Board member/owner as independent contractor?

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