Businessguys - need advice about incorporating (or not) (1 Viewer)

[SpurrierisisGod]

I am about to start helping a friend with some structural design work.  He owns a business that creates fabrication models and drawings for stairs and steel structures.  He's asked me to help him with creating the drawings and will pay well.  He really wants to get to the point where he just does the modeling and passes off the detail drawing to me and another guy he's worked with (also his own s-corp).

He is set up as the sole member of an s-corp and he would rather pay me as a business and not an employee.  I've done some side work before but just little odd jobs so I never bothered to incorporate.

I would expect to make anywhere from $10k to 20k in 2018.  I shouldn't have any early initial expenses but will need to upgrade my computer, buy software, and normal home office stuff especially if I get closer to the 20k figure.

I know a little about LLC and s-corp but not enough.  Can anyone give any advise on which way to go even if it's just staying sole proprietor? Somebody walk me through this like Trump just passed massive tax cuts.

 

[kutta]

An LLC is “easier” than a S Corp mainly because there are no corporate taxes and there are no required formalities like bylaws and annual meetings for an LLC. But, there could be a tax advantage to setting up an S Corp, which is why I did it that way. As long as you pay yourself a “reasonable” salary in an S Corp, you can take the rest in distributions and not pay self-employment taxes on that part (SS, etc.). In an LLC, everything you pay yourself is treated just like regular income.

You are probably best off talking to an accountant or lawyer to make sure you do what is best for your situation.