Contracting a person through LLC vs as Independent Contractor?

[Tanya I]

Hi,


Please let me know if a company would be affected (for tax purposes) if they contract a single person through an LLC owned by them as opposed to contracting them as an Independent Contractor. I appreciate your opinion, but most of all I need a an online resource which I can show to the company, preferably from the IRS website. Can you help? Thanks in advance!

 

[Drmdcpa]

I do not understand what you are asking. Who owns the LLC? It possibly does not matter. But again I do not know what your query is about.

 

[Tanya I]

Hi thanks for replying. Let me put it in another, hopefully clearer way. I am looking for an online resource, preferably IRS website, which clearly shows that the current company I work for as an independent contractor will not lose anything by replacing my current contract with another contract in which I will be represented by an LLC in my own name (on my end, respectively, the LLC will be hiring me as a contractor, but that should not matter). I am Bulgarian and live in Bulgaria, and here freelancers' taxes and social security are heavy, and it makes much more sense for me to operate as an LLC instead. Is that clearer?

 

[Drmdcpa]

You will not find that on an IRS website, nor any taxing authority, because they are not interested in lowering your taxes.

It is somewhat of a standard practice for subcontractor s to operate as an LLC or other entity. They do this for other business reasons like liability protection. If your sole motivation is to reduce taxes, it is against the internal revenue code.

Also an LLC is not going to help you save taxes unless you elect to be treated as a corporation.

With all that said, there should be little or no difference between the company hiring you as a sole prop vs an entity.