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Question added to topic Legal Basics For StartupsOctober 19, 2008

I'm starting a landscaping business as a sole proprietor. Can I hire an employee and 1099 him or use a staff leasing company without filing for an EIN number?

By definition, you cannot hire an employee as a 1099. A "1099" is an independent contractor. Lack of clarity about whether you have hired an employee or an independent contractor can get you into serious trouble when it comes to handling employment taxes.

To avoid those problems, using a staff leasing company can be a very attractive option, although you will pay a little more for its administrative services. However, be aware that the staff leasing company may need you to have your own EIN (separate and apart from your SSN), so don’t be surprised if it requests that.

Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.

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