[Hidden-tech] LLC advice related to consulting

[Aaron Taylor-Waldman]

Shel might be on to something—keep it simple and clean. Parsing income,
expenses, and pay among multiple entities within one LLC sounds
unappealing. Granted, it is cheaper in terms of costs associated w/ biz
formation, annual report/franchise taxes, tax prep, etc…but possibly
significantly more expensive to have an accountant parse both entities
under one schedule-K.

And I would add that there are multiple tax structure options available to
an LLC—and there might be one that is more appropriate to your
particular business vs. what is appropriate for your wife's business.

For tax purposes, a single person LLC can elect to be a sole
proprietorship OR s-corp/c-corp tax designation. They have
different approaches to payroll tax etc, and a qualified accountant or biz
advisor would work with you to determine which structure is best for you,
depending on things like how much income your business is projected to earn.

Corporate designations allow for pass-through income—ie bank draws—in
addition to paying yourself a salary. It can be strategic and cost-saving,
for example, to pay yourself a smaller salary (w2 income) and then
supplement it with bank draws, which are not subject to payroll tax.

Lastly—you may consider an S-corp/C corp biz formation, vs LLC.

Basic rundown on formation types for single person companies:
https://www.legalzoom.com/articles/s-corp-vs-llc

Hope this helps!
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