Do I need to form an LLC to clean offices if I work contracts under a business?

I currently receive contracts under a cleaning business to clean offices. Some of these offices I clean myself, others I bring others on to help clean. The head cleaning business will give me a 1099 at the end of the year and in turn I will give 1099s to the guys working for me. My understanding is that I need to pay my self-employment taxes quarterly. But do I also need to form an LLC or am I ok just issuing 1099s? I plan on doing my own bookkeeping. Other then the LLC question, is there anything else I need to consider?

Asked on December 21, 2018 under Business Law, South Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 1 year ago | Contributor

There are advantages to having an LLC (like being personally protected from most potential business-related liability and obligations), but it is not strictly required: you can just receive for yourself and issue to your workers the forms 1099.
HOWEVER, your workers probably are not contractors and actually need to receive a W-2 (and have you pay the employer share of social security and medicaid taxes, plus withhold from them); you also most likely have to pay overtime if they work more than 40 hours per week. For detailed information about when someone is a contractor (1099) vs. employee (W2), go to the U.S. Dept. of Labor's and the IRS's websites and look up "independent contractor." The short answer is, if you set their hours, tell them where to go/work, and can tell them how to do their jobs (i.e. manage how they do their jobs), and in particular if they only work for you and do not have other clients whom they provide services for, they are almost certainly employees, not contractors. If you treat employees as contractors when they are not, you can face legal liability, so you need to make sure you are treating and paying them properly.


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