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.
NOTICE: My goal is to assist people who cannot afford traditional legal services. Without your contribution, I will be unable to continue to help others in this forum. I am always available to answering your follow-up questions after you click Accept – however, if you do not click Accept, the website gets paid, and I receive nothing. This is true, even if you are on a subscription plan. So please click Accept, so that I will be able to continue to provide this service for others in the future.