Solo LLC Tax Advice
Discussions center on whether solo entrepreneurs, freelancers, or independent contractors should form an LLC, S-corp, or similar entity to optimize taxes, reduce self-employment taxes via salary structures, limit personal liability, and avoid IRS scrutiny, with repeated calls to consult accountants or lawyers.
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the tax implications are a bit scary. I guess it would be best to register an LLC and enter that way.
Have you asked yourselves: for what liability/tax/funding reason is incorporation necessary? Check out this thread http://news.ycombinator.com/item?id=244009 (there may be others). Maybe then speak with an accountant or attorney to explore options.
Contact a tax advisor/accountant, ask them if you should elect s corp treatment, also ask what a reasonable salary draw is to avoid IRS tax evasion scrutiny. Defer to their advice over HN’s; they’re the tax/finance professional on the hook for given guidance.
Maybe make $1000 in revenue to prove you’ve got something worth the time/cost of filing LLC paperwork and then talk to a lawyer. I believe for the most part taxes are the same here in the US since it’s pass thru, but same thing, consult a professional.
Wouldn't you actually be paying more taxes as a one person company? Why does it matter if the company has only one client and one employee if everything is paid properly?
Could these people just form an LLC to get around this? So you'd be acting as a business not an individual.
most of the countries now have something like that but for sole proprietship. if you have an llc, you can do basically whatever you want because it is taxed different, and somebody has to be employed there, so the country gets the taxes. its just that you can pay yourself some salary and the rest you can pay out at the end of the year as profit that is taxes different.
no you pay 15.3% more taxes on your salary. This is you a portion of your taxes that your employee and now you will be responsible for. As well, never do business under your own personal liability, while software is low risk, if you get into a litigious contract dispute you could loose everything. You want to limit your liability and you want to form a S-Corp. Go to an accountant or attorney, not doing this correctly could be a costly mistake, if you truly can't afford one then educate yourself
Don't incorporate. Make an LLC.
Could ICs just sidestep this with an LLC or S-corp where they're the sole employee?