LLC vs. 1099
Submitted by Anonymous on Fri, 2006-12-08 22:43.
I'm a consultant who has just formed a sole propriotor LLC w/ the state
of California. But most my consulting engaements are in New Jersey. I have
the option of either filing 1099 or corp-to-corp w/ my clients. In layman's terms,
which (LLC or 1099) is to my advantage if I occur a lot of expenses out of state?
Thanks,
Mansour
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California LLC
As a single member LLC, there is no difference (from a tax perspective) between the LLC & 1099. You can elect to have your LLC treated as an S-Corp rather than a sole proprietor by filing Form 2553 with the IRS.
Where your expenses occur really doesn't make a difference. If you're a California resident you will have to pay California taxes on all income world-wide.
Personally, I think the corp-to-corp option is better but there's quite a bit more administrivia associated with being treated as an S-Corp. See my post Consultants: What about LLCs? for more information.
Hope this helps.
L:)