Can anyone give me some good advice? I'm single, 25 and live in Oregon. I have worked for a real estate investment company since August 2005. I get paid at the end of the year through a 1099-Misc. I will gross around $50k this year. I know that deductions will help with reducing my taxes, but is there any reason for me to start my own business and have my employer pay my business instead of me, to help reduce all the taxes that I will end up paying to the Feds and State?
I would appreciate any advice!
Thank you much!
2006-08-07 08:23:11 · 3 answers · asked by Max 1 in Business & Finance ➔ Taxes ➔ United States
From a tax standpoint, there probably isn't a great advantage to incorporating, even as an LLC. The real advantage, though, might be in liability. I don't know what you do for the r/e investment firm, but is it anything that you could be held personally liable if you make a mistake? At the very least, make sure that you have darned good insurance to protect yourself and your non-business assets. If you were incorporated, you would be protected by what is referred to as "the corporate veil", meaning that only the assets of the corporation could be attached, not your personal assets if you were sued.
Also, why is your employer calling you an independent contractor? Are you allowed to make your own hours, determine how the job is completed (and by whom), and are able to work for other clients? If you can't answer yes to those questions, you should be an employee and your employer is getting off cheaply to save himself some money.
2006-08-07 10:36:48 · answer #1 · answered by SuzeY 5 · 2⤊ 0⤋
I Have had a good tax accountant since I was 18 I'm 48 now!
It is worth every penny! Call and get refferrals make sure its a CPA and they can help you find the ded. you need and set you up on a quarterly estimate so you don't get into trouble! Hope this helped!
2006-08-07 08:35:22 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Unlikely there would be any benefit. The corporation would have to pay tax on net income then would pay you. This income to you would then be taxed again.
Even if you paid yourself enough so that there was no taxable income to the corporation the expense (legal, extra tax prep, franchise fees to your state) would outweigh any tax advantage on $50k.
2006-08-07 08:34:08 · answer #3 · answered by Oh Boy! 5 · 0⤊ 0⤋