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Setting up a LLC for Consulting Work?
Posted on 4/28/13 at 12:44 pm
Posted on 4/28/13 at 12:44 pm
An attorney buddy asked me to do some consulting work for him (financial statement analysis, etc.) on the side. Do you think it would be a good idea for me to set up a LLC for liability and/or tax reasons and bill for my services through that entity?
3
Posted on 4/28/13 at 1:24 pm to FlowMaster
For liability reasons yes, for tax purposes it depends on how much you'll bring in from this business, may not be worth it.
Posted on 4/28/13 at 1:40 pm to FlowMaster
Yes. A single member LLC is treated as a disregarded entity unless the member elects to be taxed as a corporation. So the default is to report the activity on Schedule C just like a sole proprietorship. There will be no tax savings associated with creating the LLC, but it gives you the flexibility to change your mind in the future should you take on another member or decide to elect S-Corporation status. And it will give you the asset protection you need to segregate your personal and business assets.
It is possible to achieve some savings on self-employment taxes by electing S-Corporation status. You will need to sit down with a CPA, or other tax professional, and determine if this would be beneficial for you.
It is possible to achieve some savings on self-employment taxes by electing S-Corporation status. You will need to sit down with a CPA, or other tax professional, and determine if this would be beneficial for you.
Posted on 4/28/13 at 1:50 pm to Poodlebrain
Thank you.
Posted on 4/28/13 at 6:17 pm to Poodlebrain
Wow, that was an excellent answer. I was just going to say go ahead and do it if the cost is reasonable because this is often how great people and great new enterprises get their start.
Posted on 4/28/13 at 6:54 pm to Poodlebrain
quote:
You will need to sit down with a CPA, or other tax professional, and determine if this would be beneficial for you.
This. And you should hire Poodle, IMHO.
Posted on 4/28/13 at 8:24 pm to FlowMaster
My dad is retired, does regulatory consulting for community banks.
He did something similar but went with an s-corp over an llc, Ill ask him why tomorrow.
He did something similar but went with an s-corp over an llc, Ill ask him why tomorrow.
Posted on 4/29/13 at 1:59 pm to jso0003
The S Corp is more red tape if you will only do very little consulting activity and the tax advantages are miniscule if the business income is relatively small. The S Corp would also be subject to LA franchise tax if organized first as an S Corp.
Stick with the LLC to start. You can always elect S Corporation treatment later if you increase your volume.
Stick with the LLC to start. You can always elect S Corporation treatment later if you increase your volume.
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