As an independent contractor should I start an LLC?

Question

I am starting a career in 100% commissioned sales as an independent contractor paid through a 1099. The business will have general office expenses. Would it be a tax benefit for me to start an LLC and have my checks paid to the LLC.

Answer 1

From a tax perspective, there is no difference between how a sole proprietorship is taxed and a LLC is taxed. The benefit from an LLC is legal liability protection.

Depending on the income, you could form an LLC and elect to be taxed as an S-Corp but there are other issues. You may save a little in taxes but you would have to issue yourself a paycheck, withhold payroll taxes and pay unemployment taxes on yourself.

I wouldn't go the S-Corp route right away though. Many people form an S-Corp long before they need to and end up paying thousands of dollars in legal and accounting fees.

Walk before you run. See a tax professional in your area and he or she can run some numbers for you.

Answer 2

NO, there is no tax benefit to setting up an LLC. The purpose of an LLC is to shield your personal assets from any business liability. The added costs in setting up an LLC are normally not worth the expense vs general liability insurance unless you are in a business with significant liability exposure such as a medical practice.

Answer 3

hundreds of thousands of self-employed individuals document time table C as a sole proprietor, no LLC or enterprise mandatory. your business enterprise has the comparable SSN you do. If the business enterprise has earnings, you have earnings. If the business enterprise has different workers, you (in my view) produce different workers (and all that includes it). sure, you are able to ought to make quarterly money to sidestep owing a extensive pile in April. in the experience that your costs do no longer exceed your general deduction, you do no longer even document Sch. C. Having an distinctive form of entity, at the same time with an LLC or enterprise could make your existence/accounting greater complicated, yet would additionally preserve your own components from felony duty decrease than your business enterprise activities. LLC ability "constrained felony duty business enterprise", meaning the participants purely have felony duty to the decrease of their contribution to the business enterprise, no longer their own fortunes.