If a Worker is a Partner, Can That Worker Also Be Considered an Employee?

In Northern California, and especially in Silicon Valley, it has become more and more common for a startup business to be organized as a Limited Liability Corporation. The LLC format provides simplicity and flow-through tax treatment, as well as fairly easy future conversion to a corporate form. Such companies are normally cash poor but have a pristine capital structure, permitting them to offer ownership rights to their workers. But if a worker is a partner, can that worker also be considered an employee for tax purposes?

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