If an independent contractor wants to be paid his earnings (base salary + commission) to an existing LLC he has used previously, how can the payments be structured?

[allenkors]

Payments would be made bi-monthly, consisting of a fixed base salary and commissions based on performance.  Payments would be made to a pre-existing LLC wholly owned by the individual receiving payments.

[SweetieJean]

Do you have an income tax question?

[rjs]

The payments that an independent contractor gets from a client are not salary. An employee gets a salary. An independent contractor doesn't. I'm not sure what you mean by "structured." The checks should be made payable to the LLC. You should give the client the EIN of the LLC, and make sure they issue the Form 1099-MISC at the end of the year to the LLC, not to you personally. To avoid any confusion, do not give them your Social Security number. If you have to submit invoices, the invoices should come from the LLC and should have the EIN of the LLC on them. You will need to have a bank account for the LLC.

[allenkors]

Yes.  I will be paying an independent contractor a base salary + commission for services rendered.  That independent contractor would like to receive payments through their LLC.  I was looking for some guidance on how to set up the compensation payments coming from my business to the independent contractor's LLC (using EIN vs. SSN, if any applicable taxes need to be withheld, etc.).

[rjs · Accepted solution]

I misunderstood your question. I thought you were the contractor. Now I understand that you are the client. But the same principles apply. Use the EIN of the LLC, not his SSN. You should ask the contractor to give you a Form W-9 with the name and EIN of the LLC. You pay the gross amount. You do not withhold any taxes. Taxes are the contractor's responsibility. Make the checks payable to the LLC. The base and commissions can be combined in one check. At the end of the year issue a 1099-MISC to the LLC, using the name and EIN of the LLC. You don't even need to know the contractor's SSN. Keep in mind that he's a contractor, not an employee.