Can an LLC Member be a W-2 Employee?
LLCs can have W-2 employees and 1099 independent contractors.
Can a Partner Take a Salary?
Partners in an LLC, also known as members, aren’t considered employees.
Single Member LLC and W-2 Salary
A single member LLC taxed as a corporation can pay itself a salary as a W-2 employee.
Understanding W-2 vs 1099 Workers
- W-2 Employee: Works for a company, receives benefits, and follows the company’s schedule.
- 1099 Worker: Self-employed, sets their own schedule, and receives a 1099-MISC.
W-2 Employee Benefits
W-2 employees may receive health insurance, retirement contributions and paid leave.
Eligibility for W-2 Employment
Citizens, green card holders, and H-1B visa holders can work as W-2 employees. Only citizens and green card holders can work as 1099 contractors.
Combination of W-2 Employee and 1099 Contractor
You can work as both a W-2 employee and 1099 contractor if the roles are different. Proper classification avoids IRS penalties.