LLC Overview
An LLC, or limited liability company, is a legal business entity you form to protect your personal assets from liability. It is not the only business entity that does this. A limited liability company (LLC) is a kind of business entity that offers its owners liability protection.
An LLC has rights, responsibilities, debts, and assets separate from those of its owners. Unlike a sole proprietorship, an LLC has rights, responsibilities, debts, and assets separate from those of its owners. This separation guarantees that the company’s obligations and liabilities will not be passed on to its members.
An LLC provides flexibility in terms of the number of members it can have, allowing for both single-member LLCs and multi-member LLCs. This flexibility makes it an attractive option for both small businesses and large enterprises. In addition to limited liability, another key feature of an LLC is its pass-through taxation.
Independent Contractor Licensing
Is being an independent contractor the same as owning a business? An independent contractor is self-employed. You pay self-employment taxes. Independent contractors receive a 1099 tax form. They pay their income taxes. Independent contractors are similar to sole proprietors. They don’t register their business as a separate legal entity.
Do you need a license to be an independent contractor? Most states do not require a business license. But laws vary. Some cities or counties require permits to conduct business. Health professionals may need to finish licensing requirements.
What is a business license? It is a tax receipt from the city. Contractors could operate by paying a fee where they work. Some places may not require a license, but need a permit.
Does an independent contractor need a business license? Many states only require licenses for certain work. Check your state and local rules. But being licensed shows you are a legitimate business.
Contractor Licensing in Hawaii
To start, apply as a sole proprietor or business entity. There are three Hawaii contractor license types: general engineering, general building, and specialty. Licensing ensures fair and ethical businesses. Exams test trade knowledge and business law. Licenses are important for safety.
Hawaii requires licensing for general engineering, building, and specialty contractors. A license is required for any project costing $2,500 or more. Anyone claiming to perform construction work must be licensed.
You must have a license before offering contracting services. Supplying materials does not require a license. But installation does, even if subcontracted.
To become a contractor in Hawaii, meet licensing and education requirements. This includes an exam, proof of experience, fees, and more.
The application form can be requested by phone or email. Provide your mailing address and which application you need.
General Contractor Information
Every state taxes income earned there. Your Wyoming LLC still needs to register in Hawaii if working there. Apportionment determines how much tax is owed to each state.
Most states only license certain occupations like doctors and lawyers. Software developers generally don’t need a license. But local licenses may be required even for home businesses.
You must issue a 1099-NEC to anyone paid $600 or more for services or other work. It does not apply to personal payments. Independent contractors receive a 1099 showing what they were paid.
LLC and Taxation
Can an LLC get a 1099?
If the LLC is taxed as a partnership or is a single-member LLC, the contractor needs to receive a 1099 form. But for all other contractors who are set up as LLCs, they are considered 1099 vendors.
In an LLC, your personal finances and business finances are separate entities. An S-Corp is similar to an LLC in that it provides limited liability protection, but it also helps to reduce self-employment taxes.
A private limited company by shares is mostly used by individual contractors and freelancers. A private limited company by guarantee is mostly used by people looking to set up a charity or non-profit organization.
An LLC is a hybrid form of partnership that offers many of the advantages of a corporation and a partnership without the business being taxed. Owners are shielded from personal liability. A corporation can be taxed and held legally liable for its actions. An S-corporation helps avoid double taxation.