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I’m in California/Los Angeles, - for me, an LLC is advantageous, but turning it into an S-Corp and drawing a paycheck saves a significant amount of money. The new tax laws were a net negative but if you have the right accountant, you can expense certain things differently and still have a comfortable amount of deductions
Are you in/near NYC? Go see one of their fantastic, yet shady, accountants. Otherwise, depends on how much you make. $10-$50k? not worth it. $150-$200k? Def worth it. But no one really knows this year with all the tax changes.
Talk to a CPA. LLC’s with only one person don’t actually get any liability protection because you’re an army of one and making all the decisions (therefore fully liable). Or so I’m told anyway
Yeah I’m in NYC, bringing in 70-90K
NY state is a bit of $$ to set up. (i think $1k+) spend the $100 to talk to a professional.
So is an S-Corp better?
In CA, and some other states, technically you have to be an SCORP, they’ve closed the llc loop hole which allowed you to be paid as a independent contractor but not pay into social security, disability etc. with an SCORP you pay yourself a minimal salary, (paying those taxes/social services) and then take the majority of your income as a withdrawal. Also running your “business expenses” through the SCORP.
All companies that higher you as a vendor are suppose to only supposed to higher SCORPS. Obviously some (mostly smaller shops that are less likely to be audited) agencies will let you be an LLC. But more and more wont.
SCORP is less tax advantageous than an LLC. But much better than a W2. And overall if you’re making more than 200k you’ll pay about 20 cents on the dollar on taxes.
Also depends who your clients are. Once the ACA came in agencies only want to pay on W2s. After years of having an S Corp and being very happy with that arrangement I could no longer fund it. So ensure your clients would pay a Corp before going to the effort
I have an S-Corp as well. If it is actually worth it remains to be seen. And ditto the above about it depending on who your clients are. From my experience larger holding company type agencies (McCann, etc) are less willing to hire you on as a contractor, in which case your S-Corp is rendered useless. My YTD income is at this point about 50/50 1099 vs. W-2 so not sure if it's worth it but guess I'll find out this coming tax season!
Yes and no. Yes LLC and no on salary —- it’s not required unless I go S-Corp.
Single member LLC here. I believe the LLC provides legal indemnity...I sure hope so! It’s also just more pro. I work for many big shops/brands that want to deal with a company and not just some guy. LLC lets me look bigger than I am. Also can make the book keeping easier. Costs $500/year for the filing fee.