QUESTION
If working as a independent professional consultant on a 4-mo. project assign. do I need to setup a LLC & obtain EIN or can I use my name and SSN?
Asked on Mar 16th, 2017 on Business Law - Pennsylvania
More details to this question:
I am considering working as an independent professional consultant for a Pittsburgh consulting company. The project is contracted through this consulting company and I will be working at a client site for a 3-4 month commitment and will be paid via 1099 through a recruiting company. Should I be setting up an LLC or can I use my name and SSN #? I am uncertain at this point if this will be a long time direction for me, however, the contract can possibly be extended.
1 ANSWER
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The primary reason to form the LLC at this point would be risk mitigation. If you mess something up in doing your work, can it cause financial loss? Even if there is some risk, I've yet to encounter a case filed by the "client" in your case suing the 1099 person for the damages. They'd sue the consulting company I think. You can probably protect yourself by making sure the consulting company has insurance that protects you in the event of such a suit. If you are going to be working as an IC long term, then a LLC may have some tax advantages over the long term that make it worth discussing.
Answered on Mar 16th, 2017 at 8:27 AM