Services3 min read
Best LLC for a virtual assistant business: classification and cross-border pay
A virtual assistant working set hours for one client, using their systems, under their direction, is describing an employment relationship. That is not a reason to avoid the work — it is a reason to understand who carries the risk.
The short answer
A single-member LLC once you have more than one client. Multiple clients is not just good business here; it is the fact that makes you a contractor rather than a remote employee.
Published
Virtual assistance is the service model where the gap between what the contract says and what the relationship looks like is widest. That gap is the whole risk, and both sides usually prefer not to think about it.
The short answer
A single-member LLC once you have several clients. Model the S-corp election at roughly $90,000 of profit — see the freelancer guide for the arithmetic.
Classification, and who it actually threatens
The tests differ between the IRS and individual states, and several states apply a considerably stricter standard, but they all circle the same idea: who controls how the work is done.
| Looks like a contractor | Looks like an employee |
|---|---|
| Several clients | One client, full time, for a long period |
| You decide when and how the work gets done | Set hours, set methods, day-to-day supervision |
| Your own equipment and software | Their laptop, their subscriptions, their accounts |
| Paid per project or per deliverable | Paid a fixed amount every month regardless of output |
| You can send a substitute | It has to be you |
For you, the practical consequences are real but smaller: no withholding, so estimated tax payments are your responsibility; no benefits or paid leave; and a single-client business that a lender or a buyer will discount heavily.
You hold the keys, which is its own risk
VAs routinely have access to inboxes, calendars, CRMs, social accounts, payment systems and customer data. That access is the service, and it is also an exposure that most VA agreements never mention.
- Confidentiality in writing, covering everything you see rather than only what is marked confidential.
- A limitation of liability capped at fees paid. Without one, a mistake in a client's ad account or payment system is theoretically unlimited.
- Use a password manager and shared access rather than shared passwords. Both parties benefit, and it makes offboarding clean.
- Never move money without written authority for each instance. Invoice fraud targeting assistants is common and convincing.
- Say what happens at the end — credentials returned, access revoked, data deleted.
Cross-border payment, in both directions
A large share of this market is a US client paying a VA abroad, or a US-based VA subcontracting overseas. Either way, documentation before the first payment is what keeps it simple:
- A US client should collect a W-8BEN from a foreign contractor, and a W-9 from a US one. Doing it at onboarding takes a minute; doing it in January does not.
- Payment rails cost real money at these amounts. FX spread on a $600 monthly invoice is a meaningful share of the margin.
- Your own country taxes your income whatever entity you invoice through.
If you are not a US person
- No S-corp election — Section 1361 bars non-resident alien shareholders.
- Form 5472 with a pro-forma Form 1120 annually, $25,000 penalty for failure to file.
- Work performed where you sit is not automatically US-connected, which is a good starting position — but it is the fact-dependent analysis described in the freelancer guide, not an exemption.
- A US LLC is often formed here purely for payment rails and client credibility. That is a legitimate reason, and it comes with the filing obligation above.
When to revisit
| Trigger | What to reconsider |
|---|---|
| A second client | Form the entity; you now look like a business. |
| One client at full-time hours | Classification, and whether employment is the honest description. |
| Subcontracting to other assistants | You are an agency now — different guide, different risks. |
| Net profit approaching $90,000 | Model the S-corp election. |
| Taking on payment or bookkeeping access | Higher liability, and a cap in the contract. |
Be a supplier, not an unofficial employee
Founders 8 forms the entity and holds the filings, which is what client procurement wants to see.
Build your workspaceFounders 8 does not provide tax advice. Tax residency depends on facts and rules specific to each jurisdiction — review your position with a qualified adviser.