LLC and private contractor?
If i form an LLC would i be able to file 2 seperate tax forms instead of reporting all the income from the LLC on my personal taxes.
Examples: could I pay myself from the llc as a private contractor, instead of using the w2 forms.
Say the llc brought in 60k, if i distributed half that profit to myself thru a private contracting agreement, would that be legal considering it would reduce my tax bracket?
Thanks for your help
- 1 decade agoFavorite Answer
The IRS has specific guidelines about who does and who does not qualify as a contractor. I doubt you can qualify as a contractor for your own business. The issue is moot anyway. As Managing Member of an LLC you are double taxing yourself if you get paid by w2 or 1099 as a contractor. You should definitely speak to your accountant about strategies. He/She can make your income/distribution at the highest level without stepping up to the next tax bracket.
- 1 decade ago
No. You won't save anything.
Assuming the IRS permits you to pay yourself as a contractor you will pay taxes on the money you receive via a 1099 and you will have to pay taxes on a Schedule C on the profits of the business.
If the IRS won't permit you to pay yourself as a contractor you will have to pay taxes on a Schedule C on the profits of the business.
So, in either case you will still be paying taxes on all of the earnings of both yourself and the business and in either case your taxable income will be the same.
Hope this helps