My answer to When can employing an independent contractor in CA establish sales or income tax nexus for a Seattle c…
Answer by Wray Rives:
Just using an independent contractor in California would not create nexus in CA; however, there are several common, potential issues that typically come up in this scenario.
- If the independent contractor is authorized to act as an agent of the company. This could be as simple as being able to approve customer refund or authorize return of items sold. An agency relationship would create nexus.
- If the independent contractor uses, stores or maintains any assets of the company in CA. Inventory, vehicles, equipment or samples for example.
- If the company is determined to misrepresent the relationship between the company and the independent contractor. It is very common for companies to effectively use an independent contractor as an employee. Just the fact that you phrase your question as “employ an independent contractor” might be construed that you in truth consider the relationship to be that of employer/employee.