Should I have a LLC when working as a independent contractor real estate agent receiving a 1099?

UPDATED: Oct 1, 2022

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Should I have a LLC when working as a independent contractor real estate agent receiving a 1099?

Will be working for a small brokerage and receiving a 1099 as an independent

Asked on April 11, 2018 under Real Estate Law, Michigan


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

Yes, you should, for three reasons:
1) Since an LLC is both a distinct and separate legal "person" from you and is also not a human being (and so cannot be an employee), having an LLC reinforces and supports that you are an independent contractor and are being paid properly. It helps avoid misclassification claims.
2) It will provide you substantal personal protection from business-related liability--e.g. if you do something while working from the brokerage that could get you sued for negligence (careless work) or breach of contract.
3) By having an LLC and establishing a separate LLC bank account and as necessary getting a seperate credit card for use with/for it, you create a better and cleaner paper trail of business (as opposed to personal) expenses, which will facilitate taking the business expenses as tax deductions.

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 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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