Fortunately, my business has been getting busier lately, and I am looking into hiring an independent contractor. I have an LLC and would love to know what documents and tax information I need to hire someone. What steps do I need to take to make sure they have their tax information come next year? Also, does hiring an independent contractor change my taxes at all? This is very new to me, so any and all details on this would be extremely helpful!
Hi agtt5,
Thank you for your questions today. Congratulations on your successful business!
When you have an independent contractor do work for you, you will want each individual to complete and submit to you a Form W-9 for your records, https://www.irs.gov/pub/irs-pdf/fw9.pdf.
You will issue a Form 1099-NEC to each independent contractor depending on the amount you paid them , according to the IRS filing requirements. https://www.irs.gov/faqs/small-business-self-employed-other-business/form-1099-nec-independent-contractors/form-1099-nec-independent-contractors
The amounts you pay to independent contractors will be a business expense, Contract Labor, that you will report on your Schedule C, along with your business income and business expenses. The good news is this is a deductible business expense, which will lower your self employed profit, and lower your taxes.
I hope you find this information helpful. Have a great day!
Connie