Tax and sub contracts

I'm not sure if there are any issues, but if:

- I own a company
- I subcontract work to an individual who is a sole proprietor
- we have a suitable sub contract in place, specifying all the normal things like scope of work, renumeration etc.
- I pay from my business account
- she pays taxes etc.
- she 'delivers' the work as specified
- the renumeration is counted as a loss on my company accounts
- the sub contractor is somebody I am in a relationship with (not the wife!)
- she sends invoices according to work completed

Are there any issues I need to be worried about? What documents need to be in order in case of an audit? Is it better if she sets up a separate business bank account and registers a sole proprietor company?

On the face of it, there is nothing to worry about, but maybe I am missing something? What if the work is something she is under qualified to perform?

Don't ask me WHY I may want to do this. It is nowhere near P4P or anything similar.

Does she have Workers Comp Insurance? I know my W/C Insurance requires all my subs to have it or I have to pay a premium on the amount I write a check to them for. If she's a sole proprietor, she can get a cheap policy for around $600 a year to make this seem more legit.

It sounds like you've been trying to think of some way to write your hobby expenses off. Of course, by doing this, she'll know who you are and what you own, which is dangerous.

It is not hobby or P4P, it is a long term wifelet relationship.