The classification of a business entity may affect an individual's social security
status. For example, if an entity is treated as a corporation for federal tax purposes,
a member might receive wages on the same basis as an officer of a corporation. If
the entity is instead treated as a partnership for federal tax purposes, the member
may receive net earnings from self-employment subject to self-employment tax as a
partner.
To determine the status or proper classification of a business entity for social security
purposes, make every effort to obtain all of the information and evidence necessary
to resolve the issue. The material is general in nature. Some questions will arise
that we cannot answer in this section.