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GREENHEAD22
LSU Fan
Member since Nov 2009
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Doing a LLC. for a 1099 employee
So the wife has started a new job and is now a 1099 contractor. Is there any unforeseen reason for not doing a LLC for her?

She uses her personal vehicle and has to purchase office supply and work supplies. (Medical equipment, computer, Ipad etc.)

TIA


thelawnwranglers
LSU Fan
Oakland, NJ
Member since Sep 2007
29026 posts

re: Doing a LLC. for a 1099 employee
Can she argue that she works at home before abd after work to deduct commuting miles


GREENHEAD22
LSU Fan
Member since Nov 2009
14300 posts
 Online 

re: Doing a LLC. for a 1099 employee
Yes


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BACONisMEATcandy
LSU Fan
Member since Dec 2007
46494 posts

re: Doing a LLC. for a 1099 employee
We just did the LLC at the end of last year and it’s been awesome. Our CPA told us this was the way to go.

SEP-IRA is the biggest win factor


GREENHEAD22
LSU Fan
Member since Nov 2009
14300 posts
 Online 

re: Doing a LLC. for a 1099 employee
Did you just do it online? Any need to get a lawyer involved?


Fat Bastard
Atlanta Braves Fan
Member since Mar 2009
49050 posts

re: Doing a LLC. for a 1099 employee
Nope. Solo 401k is better. Posted here ad nauseum. Look it up in a search.


donRANDOMnumbers
New Orleans Pelicans Fan
Hub City
Member since Nov 2006
15666 posts

re: Doing a LLC. for a 1099 employee
*an


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BACONisMEATcandy
LSU Fan
Member since Dec 2007
46494 posts

re: Doing a LLC. for a 1099 employee
We did everything online. However it is not a Louisiana LLC


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Rust Cohle
Baton rouge
Member since Mar 2014
1339 posts

re: Doing a LLC. for a 1099 employee
You seem most interested in tax savings? What are the tax benefits are available for a LLC , that are not available for an individual? I thought the benefit of a LLC was mostly that it limits your liability.
This post was edited on 8/22 at 7:22 pm


Puffoluffagus
LSU Fan
Savannah, GA
Member since Feb 2009
4720 posts
 Online 

re: Doing a LLC. for a 1099 employee
That any understanding as well. LLC is a legal designation that can help separate personal assets from business assets for liability purposes. There's also controversy on how much it can protect you if it's only a single member LLC, but that's for another discussion.

For tax purposes, regardless whether you establish a LLC or just operating under a DBA, you can still take advantage of the same deductions for business expenses/mileage etc, establishing a solo401k or doing a sep-ira etc.



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BACONisMEATcandy
LSU Fan
Member since Dec 2007
46494 posts

re: Doing a LLC. for a 1099 employee
Literally see zero difference between the two for us other than allowing of a loan. Roth is of no use as the whole reason we want this is to defer taxes on that $57k


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LSUFanHouston
LSU Fan
NOLA
Member since Jul 2009
22332 posts

re: Doing a LLC. for a 1099 employee
quote:

You seem most interested in tax savings? What are the tax benefits are available for a LLC , that are not available for an individual? I thought the benefit of a LLC was mostly that it limits your liability.


If you form an LLC, then elect to be taxed as an S, there can be tax advantages relative to self-employment tax savings, offset some higher compliance costs.

You don't need an LLC to take advantage of SEP retirement plans.


LSUFanHouston
LSU Fan
NOLA
Member since Jul 2009
22332 posts

re: Doing a LLC. for a 1099 employee
quote:

Can she argue that she works at home before abd after work to deduct commuting miles


If the OP's wife only has one client, and she spends the majority of her day working at that one client, and she deducts commuting miles, and she is audited, the IRS auditor is going to have some fun at her expense.

There is SO MUCH ABUSE in this area... most of the time, the taxpayer gets away with it though, so that's why the abuse continues to occur.


GREENHEAD22
LSU Fan
Member since Nov 2009
14300 posts
 Online 

re: Doing a LLC. for a 1099 employee
She will doing in home therapy.

She had to buy a new computer and iPad, drives to each patients house and works in the home office before and after patients visits.

She should be able to write off travel and vehicle expenses, the office space at the house, supplies etc.
This post was edited on 8/24 at 11:56 am


BilJ
Kansas State Fan
DANGA ZONE
Member since Sep 2003
148563 posts

re: Doing a LLC. for a 1099 employee
quote:

f you form an LLC, then elect to be taxed as an S, there can be tax advantages relative to self-employment tax savings, offset some higher compliance costs.



this

just being an LLC and filing as a sch c disregarded entity doesn't really offer any tax savings vs a sch c filer without an LLC


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LSUFanHouston
LSU Fan
NOLA
Member since Jul 2009
22332 posts

re: Doing a LLC. for a 1099 employee
quote:

She had to buy a new computer and iPad, drives to each patients house and works in the home office before and after patients visits.

She should be able to write off travel and vehicle expenses, the office space at the house, supplies etc.



Assuming she doesn't have an office to use out of the home, she can absolutely take an office in home deduction, supplies, travel out of town, etc.

As far as vehicle expense, she can absolutely write off the expenses between patients. The IRS looks more closely at the mileage from the home to the first patient, and from the last patient to home.

So, if she wakes up, then leaves home, goes to Patient A, then Patient B, then grabs lunch somewhere, then Patient C, then Patient D, then home...

Auto expenses from A-B, B-Lunch, Lunch-C, and C-D are all fine.

It's a little more aggressive to claim Home-A and D-Home. She would need to prove she is putting in significant work while in the home office, before she heads out to first client, and after her last client of the day.

It can be done, she just needs to have good documentation.


GREENHEAD22
LSU Fan
Member since Nov 2009
14300 posts
 Online 

re: Doing a LLC. for a 1099 employee
How does the IRS like this documented? There is different forms and notes that have to be done daily/weekly. We would he talking a ton of paperwork if we would have to present it for the whole yr.

Also in regards to mileage how picky are they on that? She sees 6-7 patients a day from Slidell to Hammond.
This post was edited on 8/24 at 2:12 pm


YungFO
LSU Fan
Dallas
Member since Mar 2018
896 posts

re: Doing a LLC. for a 1099 employee
She should 100% start an LLC. 1099 contractors can deduct basically everything when they're incorporated.


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LSUFanHouston
LSU Fan
NOLA
Member since Jul 2009
22332 posts

re: Doing a LLC. for a 1099 employee
quote:

How does the IRS like this documented? There is different forms and notes that have to be done daily/weekly. We would he talking a ton of paperwork if we would have to present it for the whole yr.


Scheduling helps. So if she has on her calendar, 730 - 830 am, prepare bills, prepare files, then 400 - 500 pm, update Johnson client file and Smith client file, etc, that helps.

Having a true home office helps. File cabinet if not 100 percent digital, etc.

quote:

Also in regards to mileage how picky are they on that? She sees 6-7 patients a day from Slidell to Hammond.


The first thing they will ask for is a mileage log.

Best thing to do is to get a smartphone mileage app. If she is going to use Microsoft Office 365 Business Standard, they offer MileIQ as part of their suite, and it's a great program. Or you can buy it stand alone for like $6/month



Jag_Warrior
Virginia Fan
Virginia
Member since May 2015
1753 posts

re: Doing a LLC. for a 1099 employee
You give excellent, detailed advice to many questions on here. This one doesn’t affect me, but thanks.


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