Independent contractor position! Is this legal?

[blackrock]

I am starting a new job in July and it will be an 1099 for taxes. I will be an independent contractor providing my services for a facility that will pay me.
I was reading online to see things I can write off for my business expenses, and came across a tax advising company.

one of their reps I spoke with told me to open up an LLC or S corp or something like that. That way I am employee of my business and "my pay" goes into my business account, and every month I get a pay roll but most of the money I get will be in dividends at end of the month

I have zero knowledge about finances, and am not trying to do anything "illegal" but if I can cut down on my tax liablity I am all for it. But it just sounded to good to be true so I wanted to run it by more finance savvy people.

 

[FutureFreak7]

Yes you can it is not illegal, what exactly do you do if you don't mind me asking


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[Giants83]

I suggest you do some research on the pros and cons if becoming an LLC. It might fit your situation or it might not. I use to install flooring years ago and was an independent contractor. After speaking with a few different people and doing some research I found that just doing a 1099 at the end of the year was my best option but may not be yours.

 

[bigguy35]

Yes , do a LLC . It protects your personal finances and property from liability if your business goes belly up. Def use it for tax purposes , you can write your car off for business , travel , work related meals , clothes for work , ect....

 

[blackrock]

Yes , do a LLC . It protects your personal finances and property from liability if your business goes belly up. Def use it for tax purposes , you can write your car off for business , travel , work related meals , clothes for work , ect....

Ok what would be the cons of it?


Can I write this off. Lets say I have two houses or apartments one in a town where I spend 14 days out a month and do 80% of my work, and other in a town where I spend rest of 14-16 days and do 20% of my work, can I make one of them a residency, and other a lodging expense for work?

 

[blackrock]

Yes you can it is not illegal, what exactly do you do if you don't mind me asking


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PM'ed you.

 

[Deleted member 121863]

the cons would be double taxation. The corp needs to pay taxes on profits, then you pay taxes on pay/dividends, how ever you wanna put it.

 

[Macrocupcake124]

The facility would prefer to pay you on a c2c basis anyway because they have no tax liability should you fail to pay your taxes. On 1099 they are still liable.

 

[ZOFO1973]

the cons would be double taxation. The corp needs to pay taxes on profits, then you pay taxes on pay/dividends, how ever you wanna put it.

While this is generally true, Scorp and LLC are considered a "pass through", so there will not be any double taxation. Your Scorp or LLC will technically not show any profit , instead income will be taken on a personal basis. You are also eligible to set up SEP IRA or 401K.