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  • structure for consultancy


    "Etienne" <[email protected]> wrote
    Both my spouse and I are employed, but we are starting to provide some business services on the side for small businesses, such as creating websites, IT support, writing business plans, etc., as independent contractors. I would expect these services to provide an annual income of approximately $25k, on top of our $150k joint salary income. I was told that to maximize tax benefits, I should form a partnership with my spouse, so that we are able to deduct expenses we make to provide these services.
    You can legally deduct any and all legitimate business expenses incured
    against the business income received regardless of the type of entity you
    create. Granted, there are some benefits that are available under one
    entity and not another, but for all practicle purposes, a partnership or an
    "S" corporation may be what you need to consider.

    I was wondering which exact partnership structure would be best. General partnership, limited liabilty partnership, or limited liability corporation.
    All get treated the same for tax purposes. And since the two of you are
    generating all the income, and most likely have all the client contact, you
    wouldn't really limit any liability for your own actions (or lack of
    actions).

    The LLC seems atractive because of the liability protection,
    You should talk to a real attorney about what, if any, real protection it
    affords in your situation.


    --
    Paul A. Thomas, CPA
    Athens, Georgia



  • #2
    structure for consultancy


    "Etienne" <[email protected]> wrote
    Both my spouse and I are employed, but we are starting to provide some business services on the side for small businesses, such as creating websites, IT support, writing business plans, etc., as independent contractors. I would expect these services to provide an annual income of approximately $25k, on top of our $150k joint salary income. I was told that to maximize tax benefits, I should form a partnership with my spouse, so that we are able to deduct expenses we make to provide these services.
    You can legally deduct any and all legitimate business expenses incured
    against the business income received regardless of the type of entity you
    create. Granted, there are some benefits that are available under one
    entity and not another, but for all practicle purposes, a partnership or an
    "S" corporation may be what you need to consider.

    I was wondering which exact partnership structure would be best. General partnership, limited liabilty partnership, or limited liability corporation.
    All get treated the same for tax purposes. And since the two of you are
    generating all the income, and most likely have all the client contact, you
    wouldn't really limit any liability for your own actions (or lack of
    actions).

    The LLC seems atractive because of the liability protection,
    You should talk to a real attorney about what, if any, real protection it
    affords in your situation.


    --
    Paul A. Thomas, CPA
    Athens, Georgia


    Comment


    • #3
      structure for consultancy


      "Etienne" <[email protected]> wrote
      Both my spouse and I are employed, but we are starting to provide some business services on the side for small businesses, such as creating websites, IT support, writing business plans, etc., as independent contractors. I would expect these services to provide an annual income of approximately $25k, on top of our $150k joint salary income. I was told that to maximize tax benefits, I should form a partnership with my spouse, so that we are able to deduct expenses we make to provide these services.
      You can legally deduct any and all legitimate business expenses incured
      against the business income received regardless of the type of entity you
      create. Granted, there are some benefits that are available under one
      entity and not another, but for all practicle purposes, a partnership or an
      "S" corporation may be what you need to consider.

      I was wondering which exact partnership structure would be best. General partnership, limited liabilty partnership, or limited liability corporation.
      All get treated the same for tax purposes. And since the two of you are
      generating all the income, and most likely have all the client contact, you
      wouldn't really limit any liability for your own actions (or lack of
      actions).

      The LLC seems atractive because of the liability protection,
      You should talk to a real attorney about what, if any, real protection it
      affords in your situation.


      --
      Paul A. Thomas, CPA
      Athens, Georgia


      Comment


      • #4
        structure for consultancy

        Hello All,

        Both my spouse and I are employed, but we are starting to provide some
        business services on the side for small businesses, such as creating
        websites, IT support, writing business plans, etc., as independent
        contractors.
        I would expect these services to provide an annual income of approximately
        $25k, on top of our $150k joint salary income.

        I was told that to maximize tax benefits, I should form a partnership with
        my spouse, so that we are able to deduct expenses we make to provide these
        services.

        I was wondering which exact partnership structure would be best. General
        partnership, limited liabilty partnership, or limited liability corporation.

        The LLC seems atractive because of the liability protection, but we live in
        California, and according to state law, professional service companies
        cannot have the LLC structure.

        I was wondering if we would be considered a professional service company.

        About other options, (such s C-corp), I have read ugly things about the flat
        professional service corporation tax rate....

        Anybody any tips, input or guidelines, or can someone point me to an
        information source that can tell me exact guidelines for being considered a
        proffessional service provider or not?

        Much thanks,

        Etienne



        Comment

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