Worker classification (W-2 vs 1099)

Whether a business's workers are employees (W-2) or independent contractors (1099), decided by how much control the business has over the work, not by what the agreement calls them.

Treating employees as contractors to avoid payroll taxes and workers' compensation is a liability that transfers with the business; a labor-heavy trade (painting, fencing, cleaning, moving, home care) belongs in diligence for exactly this.

In numbers: A crew of 15 paid as 1099 subcontractors while working set hours under supervision can trigger a reassessment of back payroll taxes and penalties, often 20% to 40% of the misclassified wages, and the buyer usually inherits the bill.