LLC Owner, Thinking About Corp to Corp vs. W2 (90k vs $60/hr)
Submitted by Anonymous on Wed, 2007-08-29 12:25.
Hi,
Currently I own a Minnesota LLC which has 2 owner/managers.
I've been offered a new position for 90k/yr W2, or $60/hr Corp to corp for technology consulting.
I'm trying to figure out which one I should do. Basically it comes down to $45/hr for W2 or $60/hr for corp to corp.
Since I already have an LLC, i'm not sure I want to also do paperwork for corp to corp or if it's a benefit to do so.
Is the additional $15/hr worth all the additional paperwork? The W2 position comes with benefits and vacation time also.
I would have to handle all of that myself if I do corp to corp.
can you offer me any suggestions or give me some idea of how I should evaluate the benefit of either choice.
Thanks!
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Valuing FT Employment benefits.
The question to me in more the value of the benefits you're getting.
Is sounds like you get some pretty good benefits with the 90K salary. If you get some health insurance, that could be in the $10,000/yr range. The vacation is worth $3-5,000. You don't mention if there's a 401(k) plan or any matching. That could be worth a bit. You can contribute more in a individual 401(k), but you'd need to have the cash flow to make a better contribution than you can as a employee.
On top of that, you'll end up paying 7.625% additional in employment/self-employment taxes. (It kind of depends on how your LLC is taxed).
Does the corp-to-corp allow you to contract under the LLC or do you need to form a corporate entity? If the latter, you should be able to have your LLC taxed as a S-corporation and meet their requirements.
On the other hand, you may want to opt for the corp-to-corp option if the the other part of the LLC is losing money. You could use the other expenses to offset the income you make consulting. That could make a big difference if the LLC is taxed as a partnership because it could reduce your SE taxes.
It really depends on your specific circumstances.
L:)