1099 Contractors: Filing as a business vs Individual

When onboarding a new contractor, you have the option to set the worker up as either a business or an individual. Please Note: We are not able to advise whether a contractor should be set up as an individual or business.

There are two questions to answer when setting up a contractor profile:

Do you offer your services as an individual or a business?

As a business = If the contractor intends on filing their 1099 through their sole proprietorship, LLC, or corporation, they would typically select this option. 

As an individual = If the contractor will report their income from their 1099 on their personal tax return, they would select this option.

What type of tax identification number do you use?

I use a Social Security Number (SSN) 

• Format XXX-XX-XXXX
• The contractor would enter their personal SSN when the answer to the first question is 'As an individual' 

I use an Employer Identification Number (EIN) 

• Format XX-XXXXXXX
• The contractor would enter their business EIN when the answer to the first question is 'As a business' 

If the contractor is unsure of which options to select, they will need to consult with a CPA or other tax professional.