1099 NEC payments

[kennybanya]

I am an independent contractor and receive payments from another company as 1099 NEC payments. They have told me they could not pay me directly as an individual (to my personal bank account) but rather needed to make payments to an LLC or other business entity that I set up using my name. Is there some law about this or is this just their preference? Thanks

[ClarissaA1]

Some companies do require their contractors to create a business entity to receive payment for services rather than make a payment to the contractor as an individual.  This could be due to an internal policy in place to aid in demonstrating to the IRS (and state agencies) that you are an independent contractor and not an employee of the company.   This makes it clear that they do not need to provide benefits or withhold taxes from your payments.  

However, this is not an IRS requirement.  The IRS treats a single-member LLC is as a disregarded entity for federal income tax purposes, which means any W9 form that you complete for potential jobs, will be completed using your SSN, rather than the the LLC's EIN.  https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-compan...  While the company you are working with may require you set up an LLC to get paid, you are still going to be providing them with your SSN for tax reporting purposes.  

[dburns1]

There is no tax law that you need to pay an LLC for work performed as an individual. It could be a requirement of the type of work you do or just the preference of the company. Forming an LLC does have some attributes such as asset protection, tax savings and enhancing your credibility, but it is not required by law.

[xmasbaby0]

Or....do you have an EIN?   If not, get an EIN to avoid giving out your Social Security number.

https://www.irs.gov/individuals/international-taxpayers/taxpayer-identification-numbers-tin