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LawTalk
LawTalk, Lawyer
Category: Criminal Law
Satisfied Customers: 36350
Experience:  30 years legal experience
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I have a client (husband & wife) that have a construction welding

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I have a client (husband & wife) that have a construction welding business. The wife also works outside the home for a local hospital and gets paid by W-4 wages. They are getting slammed every year on taxes. I am suggesting they form some type of a Partnership where the taxes/income etc. are in a "pass thru" situation.
Would you recommend a Limited Liability Partnership; if not what would you recommend that will give them the best tax break.
Thank you!
Submitted: 6 years ago.
Category: Criminal Law
Expert:  LawTalk replied 6 years ago.
Good afternoon,

An LLC or a Limited Liability partnership would allow for flow through of income. The LLC generally provides a better system of liability protection though and may be a superior vehicle in this case. A general partner is not necessary to an LLC as it is to a LLP.

I wish you the best in 2010.

Please don’t forget that I only receive credit for having helped you when you click on the Accept Button located at my Answer.

Best regards,

Doug

Customer: replied 6 years ago.
But isn't a LLC treated the same by the IRS as an S-Corp or C-Corp as far as tax liabilities?
Expert:  LawTalk replied 6 years ago.
Good afternoon,

An LLC uses flow through income the same as an S-Corp. A C-Corp is taxed twice, and that is what needs to be avoided.

Please don’t forget that I only receive credit for having helped you when you click on the Accept Button located at my Answer.

Best regards,

Doug

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Customer: replied 6 years ago.

Doug,

I have one more question regarding the above situation. What would be the best way to pay the owner of the welding business? As an employee with all the usual taxes taken out; or just a set monthly draw that will give him a 1099 at the end of the year? He has no other people working for him; it's all his business and has no sub-contractors. Remember we are looking for the best tax advantage when him and his wife file their tax return for this year.

Please let me know!

Thanks

Expert:  LawTalk replied 6 years ago.
If he is paid as an employee he will be entitled to workers compensation---which is a significant benefit, but a potentially expensive one as well.

As far as the specific tax consequences of becoming an employee of your business---I'm not sure and would refer you to a tax specialist/CPA.

Doug
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