From the Tax Law Offices of David W. Klasing [Video]

IRVINE, Calif., Aug. 6, 2024 /PRNewswire/ — In California, Loan-out corporations are a common way of doing business, especially in the entertainment industry. However, these types of corporations have recently come under fire, and many are afraid that California lawmakers might take additional steps to limit or even outright ban loan-out corporations.

Why Should I Care if I don’t live in California?

California law changes with subsequent tax enforcement that raise revenue are commonly viewed by other states in the union as an “awesome idea”. Most states raise a significant portion of revenue through W2 withholding which comes in much faster through payroll withholding than through quarterly estimated tax payments. Audits of loan out corps often produce unsupported deductions which are rightfully viewed as fraudulently lowering California’s revenueeven where the independent contractor behind the loan out corporation is employed and paid as an employee of the loan out …