Employer asking me to become incorporated... LLC

[blueberry01]

Hello Everyone,

I am a new grad that is looking for a job. One dental office is hiring me as a individual contractor, however, they said I have to incorporate myself (LLC).... I am not sure entirely what that means! Can someone please tell me if this is good or bad??

Please and thank you!

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[Saddleshoes]

Unless you are being paid a LOT more then I think you are...
Tell them to stuff it.

 

[sgv]

Unless you are being paid a LOT more then I think you are...
Tell them to stuff it.

What's so bad about LLC? You could pay yourself whatever salary you like or keep capital within the LLC to avoid certain taxation (couldn't you choose to be taxed as a corporation for a possibly lower rate). Right? Plus if you get sued, people can't come after your money directly, correct?

 

[jda02624]

The first thing you have to determine is if you are an employee or an independent contractor in the eyes of the IRS. Some employers will want you to be an independent contractor to avoid paying your payroll taxes. (http://www.nolo.com/legal-encyclopedia/working-independent-contractor-faq-29070-5.html)
The comment earlier about them paying you more is true. As an independent contractor, you will be responsible for your own payroll taxes so you would have to be making more to cover those (in order to be making similar take-home money as a true employee). Remember too that you will have to file taxes quarterly.
As far as forming an LLC, I'm not sure what is best for your situation. I am an independent contractor and I am doing a sole proprietorship. An LLC does not protect you from liability. Check out the information from White Coat Investor for more on that (http://whitecoatinvestor.com/incorporating-to-reduce-liability-and-to-save-taxes/).
Even though you will be paying more payroll taxes, having an LLC or Sole Proprietorship opens up some investment opportunties and tax advantages that you don't have as an employee (i.e. Solo 401k, more tax "write offs", etc.). All of that will require more research on your end or speaking with an accountant. I just know that at my previous job (associate doc), I was only able to do a traditional IRA and my employer did not have a 401k plan. Now that I am an independent contractor and sole proprietor, I'm doing a solo 401k (up to $52k pre-tax contributions), health savings account (pre-tax contributions), and I'm able to deduct a lot more of my work-related expenses now, including my health insurance. This is significant in reducing my taxable income and bolstering my retirement options.
Sorry for the long post, but I hope some of this helps. Definitely look at WhiteCoatInvestors site and get his book. His info is invaluable for your financial future.
As far as your case, I think your employer is simply interested in not paying your payroll taxes. You should be compensated more if that's the case.