So, business is picking up. You’re swamped, deadlines are breathing down your neck, and you’ve realized – you need help. Whether it’s a virtual assistant, a social media freelancer, or someone to handle your invoicing, you’re ready to hand off some tasks.
But there’s a catch. You’re still operating informally. No LLC. No business bank account. No legal structure to speak of. Just you, your hustle, and a handful of clients.
And now you’re wondering: Can I really bring someone on without an official business entity?
Technically? Maybe. But legally, financially, and practically? You’re stepping into a minefield.
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Why Legal Structure Matters When You Bring on Help
Hiring – even just a contractor – isn’t as casual as it might seem. As soon as you start paying someone else for business-related tasks, you’re exposed to a web of liability, tax requirements, and potential disputes. And without a legal entity, you’re personally holding the bag for all of it.
Here’s what a business entity like an LLC does when it comes to hiring:
- Separates personal liability from business liability
- Gives you legal standing in contracts and agreements
- Lets you pay others through a business account (not your personal funds)
- Allows for proper tax reporting (1099s or W-2s)
Without these protections in place, you’re just one misstep away from a costly mess.
The IRS Is Watching (Even If You Think You’re Small-Time)
Think you’re flying under the radar? Not so fast. The IRS pays close attention to contractor payments. If you’re paying someone more than $600 in a calendar year, you’re expected to issue them a 1099-NEC. That means:
- Collecting a W-9 from them
- Having an EIN or SSN to issue the form
- Reporting the payment properly on your own return
And here’s the kicker: If you’re still operating under your own name, you’re issuing that 1099 from you personally – not a business. That can get murky fast, especially if the IRS decides your “business” isn’t structured properly.
Contracts Without a Business Are Risky Business
Let’s say you bring on a contractor and things go south. Maybe they miss deadlines. Maybe there’s a dispute over payment. Maybe they ghost you.
Now you’re in a legal grey area. If you signed a contract as “John Smith,” not “Smith Creative LLC,” the contract is tied directly to you. And if they sue – or if you have to sue – your personal finances are exposed.
That’s a lot of risk for a few hours of help.
Employees? Now You’re Really in the Deep End
Thinking of hiring an employee rather than a contractor? Buckle up.
Hiring employees triggers a whole different set of responsibilities:
- Payroll tax obligations
- Workers’ compensation requirements
- State unemployment insurance
- W-2 issuance
Doing any of that under your own name without a business structure is not just unwise – it’s practically begging for penalties, audits, or lawsuits.
Even Contractors Want to See That You’re Legit
It’s not just the IRS or your state government that cares. Freelancers and contractors themselves want to know who they’re working with.
When you reach out to hire help, here’s what they notice:
- Is this a real business or just a side hustle?
- Will I get paid on time?
- Are there contracts in place?
- Is there a real entity behind this project?
The more professional you appear – and the more structured you are – the better talent you attract. People want to work with businesses that look like they know what they’re doing.
The Solution: Form an LLC First
Before you post that job listing or slide into a freelancer’s DMs, pause. Take the time to:
- Form an LLC (it’s easier than you think)
- Get an EIN from the IRS (free and quick)
- Open a business bank account
- Create a simple contract template under your business name
This gives you:
- Legal protection
- Professional credibility
- Smoother tax handling
- Peace of mind for you and your hires
You’re not just doing this for compliance. You’re doing it to run a real operation.
The Bottom Line
Yes, you can technically hire help without a business entity. But you’re stacking risk on risk – legal, financial, and professional.
If you’re ready to grow your business by bringing on others, you need the structure to support it. An LLC isn’t just paperwork – it’s your foundation for growth.
Don’t build a team on a wobbly setup. Take care of your structure first, and the rest becomes a whole lot easier (and safer).
