What companies will hire people with a criminal background?

Why do certain companies (especially startups) mostly hire people as freelancers? Do they pay less taxes, etc. this way?

• I hear a lot of the following situation: after going through the interview process, the person is told that they need to register as "self-employed" and then the company (the startup) will transfer money to the newly established company account of the "employee". The problem with this is, of course, that a freelancer typically cannot  provide services to only one client - they might be liable if the tax people find out most of their income comes from one particular client (so they need to, indeed, find other clients or "fake it" - taking a risk to get in trouble with the tax people). My question is, why is this necessary at all? Does the startup company pay less taxes this way? If this is not the case, I guess It either helps them save some money in a certain way (perhaps they don't need to hire people to handle the payroll administration, etc.) or it transfers some of the liability to the "employees" in case the tax people go after them.

• Answer:

  Take a look at http://www.irs.gov/taxtopics/tc762.html on the IRS Web site, and the link to Publication 1779. A startup that intends to do this must relinquish both behavioral and financial control over the worker and must establish a contractual relationship with the worker that clearly describes the relationship that the parties intend to create. If the company doesn't and continues to treat the worker in the equivalent of an employer-employee relationship, the company is violating the law.