if you have an ein and work for someone, can you hire someone under you to do the job you are being paid to do?

UPDATED: Oct 1, 2022

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if you have an ein and work for someone, can you hire someone under you to do the job you are being paid to do?

I’m a secretary attempting to start a employment agency that employs part time
employees to assist with clerical services. I trained a lady for my position. I
pay her out of the salary i receive. I have an EIN and have been with holding the
correct amount of taxes. Recently i was advised that i can not do business this
way. Is this correct and if so what steps must I take to proceed with this

Asked on April 30, 2018 under Business Law, Maryland


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

When you are personally paid to do something as an employee, you cannot legally subcontract out your work. But you can be a contractor and subcontract out. To put it another way: if you receive a W2 and have payroll taxes taken out of your salary and/or receive employee benefits (insurance, vacation or sick days, etc.), this is illegal, because those taxes and benefits are based on you personally doing the work. But if you get a 1099 and are an independent contractor, you can hire people to do the work for you (as least so long as your contract with the employer does not specifically prohibit his), since there are no payroll taxes and no employee benefits. So the answer is to form an LLC (which helps show/prove you are an independent contractor), contract to provide the work as an independent contractor (and not as an employee), then hire whomever you like to sub the work out to.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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