The title of the thread sounds like a heck of a story doesn't it? Ok, let me lay out the story for you guys and see whether you can lay some knowledge on me. Even though I am going to talk to an insurance guy tomorrow and my accoutant I thought that maybe I would talk with you first. This is not set in stone, but my wife has options as stated below. This is the situation, my wifes employer can't afford to pay my wife anymore at her current salary. So the option is (which the employer presented to my wife) is to do a cut in her pay, or sub-contract work out to her and pay her her normal gross wage (basically not taking out the taxes, just paying her the whole amount). Which I already sat down and figured out, that the employer would only save about $1,300 a year by doing that (payroll and taxes) since the employer still has to have workers comp for sub-contracting. My wife would only make approx $200 more a year if being sub-contracted work (my figures). Questions now: 1. Since work is being sub-contracted out to my wife, doesn't she now fall under being self-employeed and have to pay in the regular 15% taxes? 2. Doesn't my wife now need insurance since work is being sub-contracted to her? Even if the employee gives her a 1099? And even if the employer already has insurance? 3. Does my wife only need liability insurance or both workers comp and liability since she is being sub-contracted work to? If anybody could offer me any advice that would be great.