A:

A limited liability corporation (LLC) can have an unlimited number of employees. An employee is defined as any individual who is hired for wages or salary. There is a distinction between employees, who work for the company, and independent contractors, who do not.

Steps to Hiring an Employee

For LLCs to hire employees, they must first obtain an employment identification number from the U.S. Internal Revenue Service (IRS). This is required in order to report taxes and other documentation to the IRS. LLCs must keep records of employment taxes for at least four years.

Before hiring an employee, federal law requires the business to verify an employee's eligibility to work in the United States. After hiring an employee, the business must report newly hired or rehired employees to its state of residence within 20 days.

Any business with employees is required to carry workers' compensation insurance. Certain posters notifying employees of their rights and their employers' responsibilities under labor laws must be posted in the workplace.

LLCs and Employees

LLCs are popular for the liability protection they provide to the owners of a company. In the event an employee action leads to liabilities for the company, these protections remain in place only for owners, not for employees. Even though owners of the company are not personally liable for actions of the employees, the LLC is liable. The LLC can be held liable for any damages employees cause.

LLC members, or owners, are self-employed according to the IRS. LLC employees are not. This requires the filing of returns and payroll taxes similar to every other business type.

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