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Consulting fee through business?

StreetwiseCreativeStreetwiseCreative subscriber Posts: 1
I`m a single member LLC who does a lot of production-type work. I was recently hired by a client for x hours of time-based consultant work (I also do production work for them as well).
Is there any tax advantages/disadvantages to billing for the consultant work as an individual as opposed to billing it through my business? Both sources of income are being tracked through my business, so I`m thinking that it all comes out in the wash at the end of the year, correct? The only difference is that I`ll get two 1099-Income forms from this client instead of one. Am I right?


  • ConsultnowConsultnow subscriber Posts: 1
    Considering that you are an LLC all of the income is passed through to your personal return so in that instance it is pretty much a wash.  However the danger you may want to consider is that by dealing with the same customer both as a sole prop. and and LLC is that if something goes wrong he can argue that you were serving him as a sole prop. therebye effectively diminishing your "LIMITED LIABILITY".
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  • VideographyVideography subscriber Posts: 401 Silver Level Member
    I always thought that the purpose of an LLC was to protect the partners in a professional relationship from each other.  A law firm, an accounting firm, etc, could be an LLC so that the actions of one member can`t expose the other members to personal liability that an ordinary partnership would.
    So, a single person LLC is an oxymoron?  No different than a sole-proprietorship?
    Am I wrong?
  • KevDevKevDev subscriber Posts: 5 Member
    It`s my understanding that, considered as taxable entities, there is no difference between single-member LLCs and sole proprietorships.
    But, in other legal matters, there is a difference. Structuring your business as an LLC provides personal liability protection from business debt that a sole proprietorship cannot.
    The usual caveats apply (I`m not an attorney, there are exceptions, etc.).
  • arstringfellowarstringfellow subscriber Posts: 0
    I agree with Consultnow, while your tax liability will essentially come out in the wash; you`ll be paying self-employment taxes either way, I would play it safe and use the safety of your limited liability umbrella.  If you`re looking for a decreased tax liability, I would suggest looking into something like MBO Partners.  I run my consulting business through them and have found that I make out a little better - both time wise and financially.  I know they work with small businesses as well, it might be worth checking into.
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