Jim, I formed an LLC when I was thinking of starting a business unrelated to Remedy.
For Remedy work, companies seemed to be ok with a 1099 contract with me, so I never bothered. I heard of some tax advantages of corp-to-corp arrangement, but I seemed to get plenty of deductions without that setup. Once formed, I did use the LLC for Remedy contracts as well. Good way to build a history for the company, in case I want to have a real business of any kind in future. Another factor was the need to get my own health insurance. In NY state, every insurer is required to guarantee an insurance to all residents. Insurance companies oblige, but the price is not regulated and is very high in the open market for individuals/families, as you can imagine. By having a company with two employees (being married makes it easy to recruit another employee), I easily got a group plan at one third the cost (can't beat ehealthinsurance.com). Technically, I could do this without having a registered company, instead by using my own name (DBA, doing business as "my own name"), but having a LLC and writing a check with its name made me and my employee's employment more believable in the eyes of the insurance company. About social security tax...a typical LLC is a pass-through entity, meaning that it doesn't pay any taxes at all on its earnings. Rather, all the earnings come down directly on your personal tax return. So, there's no tax advantage, especially when it comes to FICA(social security, Medicare taxes). I don't think there's much you can do to avoid the FICA taxes. Unless perhaps you make a big load of money, more than a typical contractor, and use a corporation instead of a LLC to play with the figure. Got some golden talents they will pay for in gold? :) Still, FICA is effectively capped at around 100k, so FICA is perhaps not the biggest drain on your earnings. LLC did come handy when a recent Remedy contract required corp-to-corp (and a ridiculous amount of ridiculous commercial insurance, that's a different story), but I am personally not worried about liability much, as long as I am the only person in the LLC. (Oops, forgot the other employee, but her job performance has been utterly lacking all along...so customers are not likely to hold me liable of anything). If I had other people I funneled through the LLC, who would come in contact with the customers, I would worry about them and want to have some protection for my peace of mind. So "liability" was not a factor in getting a LLC. In general, if you plan on contracting for a while, you want to get a LLC, or a corp. Did I mention that I am impersonating, but am not an accountant or an attorney? And that this info is US centric? I just did. --- Jim Fox <[EMAIL PROTECTED]> wrote: > Did you form an LLC for liability reasons or so you > would be ineligible for > Social Security Payroll Taxes or some other reason? > > Fluxman > > -----Original Message----- > From: Action Request System discussion list(ARSList) > [mailto:[EMAIL PROTECTED] On Behalf Of Rabi > Tripathi > Sent: 06/18/2008 11:27 PM > To: [email protected] > Subject: Re: Self-Employed Remedy Professionals > > Been doing it for 2 1/2 years. It's a mixed bag. > Overall, I'm happy. For the longest time, I had no > company, just did 1099. > Just last year got a LLC. > > If you don't understand the last two sentences, > you've got a lot to learn to > operate as an independent. It took me quite some > time to learn the terms, > the math, the tricks, the caveats and so forth. The > paperwork and the > regulations and the taxes etc. And negotiations, > contracts. Most > importantly, avoiding the bad ones who won't pay. > Still learning. > > It's a different life/different "job". If you crave > stability, certainty, > you probably won't like it because it's really like > an adventure with its > ups and downs and you are on your own in many ways. > Call it > freedom/opportunity or call it chaos/risk. It is > more demanding than, in my > opinion, a permanent job especially a non-consulting > one. Just my personal > opinion, so please don't shoot me. Say, I don't want > to be doing this till > retirement. > > > > --- "Gary Opela (Corporate)" > <[EMAIL PROTECTED]> > wrote: > > > I'm just curious, how many of you do your own > independent thing with > > remedy? > > > > > > Thanks, > > > > Gary Opela, Jr., RSP > > Remedy Engineer > > Leader Communications, Inc. > > http://www.5pointleader.com > > http://www.lcibest.com > > Best Product, Best People, Best PriceTM An ISO > 9001:2000 Certified, > > CMMI(r) Level 3 Rated Company _______________________________________________________________________________ UNSUBSCRIBE or access ARSlist Archives at www.arslist.org Platinum Sponsor: www.rmsportal.com ARSlist: "Where the Answers Are"
