My wife is a contract massage therapist at a local Baltimore hospital and usually operates as an LLC. If the hospital pays her based on her personal Social Security number, rather than using her LLC taxpayer ID number, does she lose the legal protection of being an LLC? (Consider the context of a patient suing her for some reason.)
To enjoy the limited liability of the LLC, your wife needs to conduct her business through the LLC. That means, among other things, having payments made to the LLC rather than to her individually. Ideally there would be a consulting or services agreement between the hospital and the LLC.
The foregoing discussion does not establish an attorney-client relationship, is qualified by the limited facts presented above, and should not be relied upon as legal advice. To obtain definitive legal advice upon which one can rely necessitates retaining an attorney who is qualified in this particular area of the law.
You should speak with local Maryland counsel, but here's a preliminary stab at an answer.
First, the LLC is a pass-through entity for tax purposes, and the profits or losses are reported by your wife, not the LLC. Accordingly, I don't see anything particularly troubling about the hospital paying your wife on the basis of her SS#.
Second, assuming your wife observes the formalities of LLC operations and does not commingle her personal assets with the assets of the LLC, the LLC structure should protect your wife's personal assets. Your wife may want to consult with an insurance professional to provide additional protection.
I agree with Attorneys Zink and D'Esposito. In addition, and especially since this LLC is actively conducting business, there are a number of issues regarding day-to-day operation of the entity that need to be carefully adhered to in order to maximize liability protection; some of those are in the posts of my colleagues here. I suggest retaining an attorney who will not only advise your wife as to these issues, but also memorialize it in writing so she may refer to it as she goes about conducting her business. Be sure to ask these questions before agreeing to representation. Also, find out who will be working with you and performing the work on your wife's case. Will it be an experienced attorney, or an employee of the firm with less experience?
This entry answer is for informational purposes only. It is not intended to be, and should not be relied upon, as legal advice. Please seek the services of a qualified attorney who can advise you regarding your specific situation.
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