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1099 employee with one source of income should I start company in florida?

Asked by: tony  — 9 April, 2011

I am a 1099 employee. I work from home and one of my friends told me who is also working at the same company to create a business and hire myself as an employee. What is the advantage of forming a company in the state of Florida and then considering myself an employee? Is there any advantage of this? I will not be working for anyone else other then my primary employer (A well known job board). If I did hire myself would I have to pay unemployment and other fees or is it just a way to get a tax break etc.

Answered by: admin  — 9 April, 2011

Dear Tony,

Your question is more of a tax question than an incorporation question. Because we are not tax professionals, you would be better served in talking to an accountant.

That said, from our general knowledge it would seem that an LLC would only offer you the benefit of limited liability protection, which you may not necessarily need if you are working for another company. An LLC would not really offer you any tax advantages, however.

You may be able to save some money by opening an S-Corporation, as it could help reduce your self-employment taxes somewhat. This is something to discuss with your accountant.

Of course, the downside in both cases is the increased expenses and administrative burden of keeping a separate company. You will have to pay to both set the company up and maintain the company properly. That means paying set up fees, yearly fees, accounting and bookkeeping expenses, etc.

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