Can employees be hired in an LLC?

Limited liability companies offer liability protection to their members and also allow for pass-through taxation, a thing that is beneficial to them. As your LLC grows bigger, the workload will also likely be huge, thereby necessitating help in the form of employees. You and the other members can opt to become employees of your LLC, but alternatively, you can hire external employees to work in your company.

When it comes to hiring employees for your limited liability company, there are no limits to the number. You can hire as many employees as possible to help your company achieve its short and long term goals. However, your LLC will need to follow the right practices in employing people. For example, the recruitment team may have to find out what questions they can legally ask candidates during job interviews. The LLC is also responsible for doing background checks on their prospective candidates to be sure that they are allowed to work in the US and that they have a social security number. Also, some states may require disability insurance, so you have to check that with your state and set it up if applicable.

On the flip side, you and the other members of your limited liability can also become employees. But for this to happen, your LLC has to elect to be taxed as a corporation, where members themselves do not pay tax on their profits. Be sure to ensure that you and other members serving your LLC as employees receive a reasonable salary like others in the industry. You can conduct quick research to know the salary range of professionals in your niche in your area. Note that when you become an employee of your LLC, you are obliged to pay tax on the income while the LLC is also obliged to withhold taxes for you.

The truth is that different states have different rules when it comes to making members of limited liability companies employees, so you will need to check your state’s rules regarding it before proceeding.

In a nutshell, limited liability companies are flexible business entities that can either recruit professionals externally or allow their members to serve as employees.