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Setting up an LLC as a Consultant
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Setting up an LLC as a Consultant
Setting up an LLC as a Consultant
Setting up an LLC as a Consultant
Setting up an LLC as a Consultant
Setting up an LLC as a Consultant
Setting up an LLC as a Consultant
Setting up an LLC as a Consultant
Setting up an LLC as a Consultant
Setting up an LLC as a Consultant
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  Post Number #9  
Old 10th August 2017, 02:22 PM
Coury Ferguson's Avatar
Coury Ferguson

 
 
Total Posts: 4,520
Re: Setting up an LLC as a Consultant

Just a little comment on this:

My wife and I started and incorporated into a LLC just recently (about a year ago), but in California. Your income from the LLC, can be filed with your Personal Income Taxes. Any losses can be taken from the previous 3 years or 3 years after.

We had a small retail outfit and service so we had to charge taxes (City and State) and paid them every quarter (for taxes collected). But we also had a Resale Permit.

In CA when a service was performed there was no tax required. Only from the retail product.

You need to find out, if your service is taxable, since it may vary from state to state. Contact your local State Tax Official and ask.

We closed the LLC July this year.

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  Post Number #10  
Old 10th August 2017, 02:31 PM
Auditman64

 
 
Total Posts: 37
Re: Setting up an LLC as a Consultant

Excellent Information, and thank you very much..........
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  Post Number #11  
Old 10th August 2017, 03:05 PM
Golfman25

 
 
Total Posts: 825
Re: Setting up an LLC as a Consultant

Quote:
In Reply to Parent Post by Auditman64 View Post

Yes,

Everything you mentioned is everything I'm learning & discovering.

But if I understand it all correctly, there are many different avenues.

There is withholding taxes under schedule "C" under your own social security number, or withhold under an EIN tax ID number, or setting up your LLC as a "C" corporation or an "S" corporation, and each one involves reporting your taxable income slightly different from the next.

This is definitely something that should be left to the experts, so the hunt is on for a good tax accountant that's freakishly good at making money vanish......legally.

I appreciate the reply, thanks.......
Don't overthink it. And while I know people don't like FICA and whatever, it does credit you for future SS/medicare benefits. So watch for that. I have seen people think they where smart for avoiding FICA by not having a "salary" only to become a pauper because they never contributed to the FICA system.

My opinion (and what my better half did as a sub S corp) is to run a zero income entity. Basically, you bill your clients for revenue. Pay some expenses -- phones, internet, auto, office supplies, etc. And then pay yourself the balance out in salary plus a retirement plan. Your LLC shows zero taxable income and you have a salary to report on your income taxes.
Thanks to Golfman25 for your informative Post and/or Attachment!
  Post Number #12  
Old 10th August 2017, 03:18 PM
Statistical Steven's Avatar
Statistical Steven

 
 
Total Posts: 1,087
Re: Setting up an LLC as a Consultant

Unless you are employing others, the LLC is a Schedule C for tax purposes. The reason you start an LLC is for legal purposes to protect you from being sued. My accountant advise I avoid the LLC because the tax return is more complicated and my assets are not enough to worry about a law suit. Just my


Quote:
In Reply to Parent Post by Auditman64 View Post

Hi Gang,

I am finally at the point where I can interview with registrars for contractual employment, and I’d also like to do some consulting work on my own in the future from time to time as the opportunities present themselves.

I’ve obtained a: "Single Member LLC" including an EIN tax ID number, and I even have business cards printed.

I sat down with a tax accountant, and was told that best thing to do would be to just file my taxes under schedule “C” and call it a day rather than try to do the whole sub-clause schedule “S” stuff which gets complicated.

My question (for all of you that have done this for years) is simply this:

Do people in our profession that double as consultants charge companies sales tax?

I was always under the impression that consulting fee’s didn’t fall under the guideline of charging sales tax. (of course I could be wrong)
I had a very frustrating conversation with a woman at my local Department of Revenue office today.

Upon asking me to explain what type of work I would be doing so she could categorize the business correctly she seemed to be completely lost.

She didn't understand: AS9100, registrars, certification bodies, aerospace audits, or consulting for Aerospace companies, and she kept insisting that I would have to categorize myself under the “Business Management Consulting Services” code which requires charging clients sales tax.

I’m absolutely fine with this if this is correct, but I walked away having this nagging feeling that the woman didn’t quite understand what I was trying to explain to her regarding the nature of the work.

Probably because she kept cutting me off in mid-sentence every time I tried to answer any of her questions.

At present I haven’t committed to anything with the Department of Revenue, and I explained to her that I would be back after I did some more research on the matter.

So if any of you seasoned experts in this field could give me some guidance I would greatly appreciate it.

Thanks in advance…….
  Post Number #13  
Old 10th August 2017, 10:45 PM
Auditman64

 
 
Total Posts: 37
Re: Setting up an LLC as a Consultant

Thanks guys,

I'm definitely ok with paying my fair share of taxes, and yes I would like to keep contributing to FICA & SS but I just feel that 30% is quite absorbent....

All of you have offered up some really good advice, and I've learned a lot.

The LLC is more for having the ability to open up a business account with a bank as you can't open up a business account without it. (here in CT anyway)

Also the LLC would come into play whenever I'm doing my own consulting separate & apart from a CB.

I 'll definitely have all of this figured out with the help of a professional before I start or turn any paperwork into the department of revenue.

If it's better to forgo the LLC altogether then so be it, but I have to exhaust all options so that I don't get all jammed up with uncle Sam later or pay through the nose in taxes unecessarily.

Thanks Gang, you're all a very helpful bunch, and it's much appreciated.
  Post Number #14  
Old 11th August 2017, 08:40 AM
Ninja's Avatar
Ninja

 
 
Total Posts: 790
Re: Setting up an LLC as a Consultant

Quote:
In Reply to Parent Post by Golfman25 View Post

... while I know people don't like FICA and whatever, it does credit you for future SS/medicare benefits. So watch for that. I have seen people think they where smart for avoiding FICA by not having a "salary" only to become a pauper because they never contributed to the FICA system.
Very good point, thanks for adding it.
I've always assumed that SS would be gone by the time I retired, so I've never considered it as part of the equation...thus I forgot entirely about it.

I figure that if I'm wrong, and it is still there...It will be "found money".
All the same, consider that SS/medicare only traps the past X years...and time it if you want to play that game.
  Post Number #15  
Old 11th August 2017, 09:42 AM
Golfman25

 
 
Total Posts: 825
Re: Setting up an LLC as a Consultant

Quote:
In Reply to Parent Post by Ninja View Post

Very good point, thanks for adding it.
I've always assumed that SS would be gone by the time I retired, so I've never considered it as part of the equation...thus I forgot entirely about it.

I figure that if I'm wrong, and it is still there...It will be "found money".
All the same, consider that SS/medicare only traps the past X years...and time it if you want to play that game.
Certainly, if you have the discipline to save on your own that's the best. But life does get in the way and too many people fail to do so. With that said, there are some nice retirement options out there for consultants. For example, set up a SEP IRA and you can contribute something like 25% of your income.
  Post Number #16  
Old 11th August 2017, 06:30 PM
Wes Bucey's Avatar
Wes Bucey

 
 
Total Posts: 11,075
Re: Setting up an LLC as a Consultant

I'm running late for a meeting, but I want to get this out:
Being a consultant is not just about the gross income less any applicable taxes. It is about all the ancillary expenses of running a business (and the concomitant deductions.) The Small Business Association gives a good template for a business plan which will help you get a handle on this. I echo the idea that you need two good professionals with experience: attorney and tax accountant, each familiar with small business.
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