1) Where should my income tax liability be? Virginia or Florida? We are a Virginia company, but I live and work from my home office in Florida.
A: An LLC does not pay taxes. The owners pay taxes on the distributions
of profits received and reported through their K-1 Information Return
, and they are liable where they perform their services for the LLC. If you are in Florida, then your liability
is in Florida.
If you are receiving a 1099, while simultaneously being an owner of the LLC, then that 1099 is incorrect, because you cannot legally be an independent contractor
to an LLC in which you are an owner -- i.e., a partner cannot be independent while working for the partnership
. 2) If we were to hire an employee in Florida, where would their tax liability be, and which state's employment laws and taxes would we follow?
A: An employee is subject to the employment laws where the personal
services are performed -- as is the employer, because by employing the person in a different jurisdiction, the employer submits to that jurisdiction for the purposes of doing business. Here again, the answer is Florida.
Hope this helps and happy new year.
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