Business model that pays people who contribute to it - Questions!

Hi everyone! Newbie here!



I co-own and manage a business that is looking to expand to a new market. We are an LLC in California, dealing exclusively with online / digital content. One of our new business strategies would work (very simply described ) as follows:

• 3rd party, non-employees from all over the world would contribute to a website's content


• As a "reward" for their contributions - Every month, the top 10 contributors according to a "score" would be paid.


• Contributors would compete with each other to get in the top 10 spots, so that they too could get paid.

My questions:

1. Regarding taxes and expenses, what sort of documentation will I need to keep tabs on from the contributors?


2. Considering they are coming from all over the world, a standard W2 wouldn't work. Would I need to have W8-Ben's on everyone? Would it matter? Could I just count their "winnings" as flat expenses, or would they need to all be treated as "employees"?


3. What sort of red flags with this sort of business come to mind? (The technical side isn't the issue for us - it's the specific legality of having potentially 100+ people to have paid throughout the year as contributors from all over the world.)

We obviously want to make sure our "ducks are in a row" for something like this before we invest too heavily into the tech. We already manage a dozen or so contributors in a given year, but we've never done this sort of concept or volume before. Any information or questions anyone has I am all ears and happy to clarify!



Thank you!





-Don