Independent contractors in Texas must be separate from the business that hired them to do the work, which necessarily means they must be their own company. This will also prevent any kind of personal liability with an LLC.
Texas worker classifications are done on a 20 point basis that was developed from Common Law by the Texas Workforce Commission. This 20 point analysis goes over the variables that may determine if someone is either an independent contractor or an actual employee. One of the more prevalent concerns that comes up in this analysis is the separation of the independent contractor’s business from that of their employer, and how freely and independently the contractor is allowed to operate.
Employees in Texas do not have their own business that employers pay their salary to. Employees are hired by the company, must perform work according to company guidelines, use the tools and equipment provided by the company, and are part and parcel to the company itself. For independent contractors, the exact opposite must be true: the business of the independent contractor must be entirely separate from that of the employer, and an LLC is one of the simplest means to this end. This avoids personal asset liability in LLC Management.
Creating a separate business as an independent contractor allows you to fully identify and separate your business from that of your employer. Which is the major difference between an LLC VS Partnership agreement in Texas. As an independent contractor, you cannot be made to only work for one employer or work full time for that employer—You are a separate business with independence! Having a business structure such as an LLC reinforces this idea and puts employers on notice that you will not be subject to the same oversight that they may be used to in dealing with employees.
For example, freelance writers often find themselves being hired by companies to perform multiple assignments over a period of time, such as articles and blogs for a local business looking to increase their online presence. It is easy for employers to blur lines between the duties and responsibilities of employees versus those contractors hired to perform certain tasks when there is no “business” that they are dealing with and instead an individual person or even sole proprietorship. Using an LLC, the freelance writer can clearly define the boundaries between them and the employer.
If you are an independent contractor and need an LLC for your business, Attorney Nathaniel Gilbert in San Antonio offers packages tailor fit to your needs, no matter how great or small, from the “Quick LLC” for full time business management strategies. For a free consultation, reach out to Nate here, or to learn more about Texas LLCs and business law, Click Here.