Independent Contractors LLC

[DrFamily7]

I am about to be an IC and I have read with whitecoatinvestor that there is absolutely no benefit to setting up an LLC.

However, the majority of the EPs who I will work with are LLC.

Is there really any reason for a simple IC to be a single owner LLC?
I would not set up any S-Corp. Just a simple LLC
There seems to be no financial incentive.
Maybe slight liability protection?

Thanks for your help!

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[GeneralVeers]

I've looked at it and determined there is no real benefit. Taxes are the same, and you can still deduct most of the same things as IC. While in theory it offers additional legal protections, most lawyers would be able to get around it.

 

[gutonc]

While in theory it offers additional legal protections, most lawyers would be able to get around it.

This may be the truest statement ever made on the internet. And it's applicability is virtually universal.

 

[The White Coat Investor]

I am a member of two LLCs. Obviously I don't think there is zero benefit to the LLC structure.

However, if your goal is to be an independent contractor at your job as an EP (whether your main job or moonlighting), and you do not plan to be taxed as an S Corp (additional hassle and expense in exchange for lower payroll taxes on part of your income) there is little benefit to actually forming a single member LLC. The purpose of a Limited Liability Company is to decrease your liability. Since forming an LLC doesn't decrease the main source of your liability, professional malpractice, it's probably not worth the rather minimal hassle to form one.

Remember that an independent contractor can structure his business in several different ways:

Sole proprietor- reasonable, least hassle
LLC taxed as a sole proprietor- Not much benefit
LLC taxed as an S corp- reasonable, slightly lower taxes in exchange for more hassle
S Corp- reasonable, slightly lower taxes in exchange for more hassle
C Corp- Not much benefit

 

[Groove]

LLC taxed as S corp