Do you need to be Inc or LLC for tax purposes? - Virtual Assistant Forums

#1 (**permalink**) 4 Weeks Ago

Hi, quick question. This is something I cant seem to answer myself. Even as I dig through all of my accounting book work I have done over the year, I can't seem to come across one thing...
I have several contractors whom work as a part of my team, so should I be an Inc or LLC for tax purposes for my subcontractors? Does anyone have any advice for me before "tax time" rears its ugly head lol. I am still researching, but I figured I would ask those whom are in the know-how.

#2 (**permalink**) 2 Weeks Ago

Hi Dakota,
I am no expert on this topic by any means, but I do believe that in order to take proper business deductions you need to be at least one or the other.

Another member, Lily, of Virtual Office Goddess, hosted a live chat on the topic of LLCs here at the forums [quite a while back] and the text from that chat is archived here - it might be a good place to start looking for answers.

Personally, I finally hired an accountant to help me navigate all of the business tax laws, and deductions.

#3 (**permalink**) 2 Weeks Ago

You can take business deductions as a solo-preneur, as well. You will need to track your business expenses the same as for a solo as you do a LLC or Inc.

#4 (**permalink**) 2 Weeks Ago

Thanks for jumping in with the correct answer Lily!

[I didn't realize deductions could be taken even without an LLC, etc. - good to know]

#5 (**permalink**) 2 Weeks Ago

Which ever way you decide to go you want to make sure to keep track of all your deductions in an organized manner. QuickBooks Simple Start is a great tool to start with.

Cindy

#6 (**permalink**) 2 Weeks Ago

Quote:

Originally Posted by Tess

Thanks for jumping in with the correct answer Lily!

[I didn't realize deductions could be taken even without an LLC, etc. - good to know]

Yup. For a Sole Proprietor(ship) you use Schedule C, Partnerships 1065 (with Schedule K-1 from the 1065 given to each partner and amounts used on their respective tax returns [1040], Corporations Form 1120, S Corp Form 1120S, and LLC which must file a tax return as a corporation, partnership or sole proprietorship (more info on LLCs at the link below).

For further reading, if anyone is interested, here is a link on the IRS's website regarding business structures: http://www.irs.gov/businesses/small/...=98359,00.html.

#7 (**permalink**) 1 Week Ago

I really love all the questions I have thought of so far, the answers can be found on these forums. I am happy to have this confirmed. I didn't think you had to incorporate or become an LLC to have your own business.

Thanks for the info!

Holly