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I am starting my own, 1099 independent consulting service.

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My question, should I LLC...
I am starting my own, 1099 independent consulting service. My question, should I LLC my company, it will be just myself? And do I need an EIN or just use my SSN. I have my state/county business license already set.
Submitted: 8 years ago.Category: Tax
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Answered in 11 minutes by:
6/27/2010
Tax Professional: Lev, Tax Advisor replied 8 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,359
Experience: Taxes, Immigration, Labor Relations
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There will not be any difference for tax purposes - single member LLC is disregarded entity - means - all income and expenses are reported on owner's individual tax return the same way as for solo proprietorship.

 

You may have a separate tax ID for business regardless if you have an LLC or not.

If you do have a separate tax ID - it is reported on the schedule C in the header - see box D - www.irs.gov/pub/irs-pdf/f1040sc.pdf

If you have a privacy concern and do not want to provide your SSN to third parties - you had better to have a separate tax ID for your business purposes.

 

The possible advantage of having the LLC - you may select it to be treated as a S-corporation. Your S-corporation will pay you wages (as an employee of the S-corporation) and the rest of income will be distributed to you as dividends (as an owner of the S-corporation). That might provide you some saving on FICA taxes.

 

Please let me know if you need any help or clarification.

 



Edited by LEV on 6/27/2010 at 3:29 PM EST
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