Filed the articles last month for a South Dakota LLC. It's just me right now doing consulting work. I keep going back and forth on whether to bring on a part-time helper or keep it solo. The LLC is formed but I haven't done the EIN or operating agreement yet. Am I overthinking the employee question at this stage?
Hiring
I formed a South Dakota LLC but haven't decided whether to hire employees
you haven't done the EIN yet? Do that first. You literally can't payroll anyone without it. The employee question answers itself once you have the paperwork in order.
SD is pretty light on regs but the moment you hire, you're dealing with withholding, unemployment insurance, workers comp depending on the work. For a part-time helper that's a lot of overhead. Have you priced out what a 1099 contractor would cost vs an employee? Because if the role is truly part-time and flexible, contractor might sidestep a bunch of this.
lol @ "just me doing consulting work" and "hire a helper" — what does the helper even do? That changes everything. If they're answering phones from their couch, contractor. If they're showing up at your site with your equipment, probably employee.
Fair. Mostly admin and some client follow-up, remote. No equipment, no set hours. I was leaning contractor but I don't want to misclassify and get dinged later.
Misclassification is the real trap. The IRS looks at control, not what you call them. If you're telling them when to work and how, congrats, they're an employee.
Also worth noting: SD doesn't have a state income tax, which makes payroll withholding simpler than most states, but you still have federal. Don't let the "no state tax" thing lull you into thinking hiring is free of admin
Honestly for a solo consulting shop, stay solo as long as you can. Every hire is a relationship and a liability. If you're not turning away work, why add the headache?
Counterpoint: if the admin stuff is eating your billable hours, a contractor at $25/hr who frees up 10 hours of your $100/hr time is a no-brainer. The math decides, not the fear of paperwork.