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From:  Charles
Date:  Wed, 11 Dec 2002

I am currently considered a subcontractor. The service I provide is cleaning. I receive a 1099 each year and I do not have a business license. I do not wish to perform services for anyone else. Do I need to apply for a business license? Is there an advantage for applying for one?

Thanks
Charles
Columbia, SC

Answer

Date:  Fri, 03 Jan 2003

Hello Charles,

Thanks for writing.

Applying for a business license strengthens the argument that you are an independent contractor. If you are only providing services for one customer, your classification as an independent contractor is a weak one, likely to fail if challenged. Some tax considerations are whether you are subject to self-employment tax, whether deductions should be claimed for business expenses on Schedule C and the ability to have your own retirement plan.

Good luck!

Mike Gray

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