Could anyone help me get a LLC started? My boss suggested it to make things easier, etc. (insurance, real estate)

[BryceE]

My boss suggested I start a LLC up so that he could pay the company and then the company pay me so that I didn't lose my benefits. I've been trying to get this setup for a couple months now and it's way to confusing and all. I'm almost tempted to just give up the benefits and go from there. The only problem with that is I hardly make enough to live on, so if I ever decide to move out, I'm screwed. Any help please?

[user_id]

Why would you form a LLC if you are working for someone else?

[StoneOne]

Creating an LLC is one of the easiest processes I can think of. It usually involves filling out three pages with basic information about yourself and faxing/mailing it into the Secretary of State's Corporations Office. Getting an operating agreement if you want more than one manager might require a lawyer, but it it's just you, there's no need for that.

Your reason for starting one sounds a bit suspicious, though. It sounds as if your boss is trying to pass total tax liability for your employment onto you. If he pays your LLC, he'll no longer be paying employee payroll taxes, unemployment insurance, etc. As for benefits, I seriously doubt he would pay them either, unless for some reason he's negotiated to keep you in his company's group health plan or intends to give you cash to pay for your own benefits.

If you do go this route, make absolutely sure the nature of your relationship becomes a client/contractor relationship rather than a boss/employee relationship. You should have significantly more freedom to do the job as you see fit, on your own time (but with your own resources as well), work for others at the same time, etc.

And be prepared to pay all your own taxes on a quarterly basis.

[LeftCoastee]

Originally Posted by BryceE

My boss suggested I start a LLC up so that he could pay the company and then the company pay me so that I didn't lose my benefits.

How does starting an LLC allow you to keep your benefits? If you don't know the answer, ask your boss specifically. Other than him paying you a higher rate to cover your benefit costs I don't see how this would happen.

You also have to understand the implications of an LLC. Are you prepared to handle taxes and quarterly payments (either yours or the LLC depending on how you have it set up)?

It adds a lot of overhead and risk for what you want out of it. You are also giving him a much easier way to terminate your relationship.

[Randomdude]

Originally Posted by BryceE

My boss suggested I start a LLC up so that he could pay the company and then the company pay me so that I didn't lose my benefits. I've been trying to get this setup for a couple months now and it's way to confusing and all. I'm almost tempted to just give up the benefits and go from there. The only problem with that is I hardly make enough to live on, so if I ever decide to move out, I'm screwed. Any help please?

Your boss likely wants you to do this so that he can avoid paying payroll taxes for you by paying you as a vendor/independent contractor. My guess is that he is suggesting you set up an LLC, so that you can use the benefits of that set up to pay yourself largely as a distribution instead of salary, and defract some of the payroll tax you would otherwise be forced to pay, if he was simply paying you as an individual.

He is also blackmailing you in to doing this by holding your benefits over your head. Completely underhanded.

[emilybh]

Originally Posted by Randomdude

Your boss likely wants you to do this so that he can avoid paying payroll taxes for you by paying you as a vendor/independent contractor. My guess is that he is suggesting you set up an LLC, so that you can use the benefits of that set up to pay yourself largely as a distribution instead of salary, and defract some of the payroll tax you would otherwise be forced to pay, if he was simply paying you as an individual.

He is also blackmailing you in to doing this by holding your benefits over your head. Completely underhanded.

As an independent agent who does mostly health insurance includng group insurance I know in every state I've been licensed in, you don't have to form an LLC to stay on your employers group plan. If you work on a straight commission basis or on a contract basis, all you need to do is get a form from the insurer to sign that says that you are a 1099 employee that works exclusively for your employer and give it to the insurer. I have groups such as real estate agencies that do this or other companies who have hired consultants to work for a long time for them that do this.

[Randomdude]

Originally Posted by emilybh

As an independent agent who does mostly health insurance includng group insurance I know in every state I've been licensed in, you don't have to form an LLC to stay on your employers group plan. If you work on a straight commission basis or on a contract basis, all you need to do is get a form from the insurer to sign that says that you are a 1099 employee that works exclusively for your employer and give it to the insurer. I have groups such as real estate agencies that do this or other companies who have hired consultants to work for a long time for them that do this.

Actually, if he set up an LLC, hed be an employee of his LLC. If he was simply a 1099 vendor, he would not get the distribution tax benefits of the LLC, namely shielding the distribution income from payroll taxes.

Now, Im not sure if they could include him in a group policy if he was not a 1099 employee, however, from what his boss is saying, that may be possible where he is at.

[subsound]

Forming an LLC to get paid in this fashion is a bad solution, and an attempt at an illegal run around for employment laws. It's a pretty common tactic so the employer can get around employment law enforcement, since the laws that cover independent contractors is looser...but you can write it off on your own taxes if you pay yourself benefits. I have seen this type of case in B-Law courses, and it's touted as a bad example of evasion. I would give them up honestly, and run to find a new employer...you can get really burned in this situation.

[mach]

I used bizfilings, I think it was $400. Just call them up and ask them how. Most likely you will need insurance as well. Error and omissions insurance is lots of $$$$$$$$$$.

[Randomdude]

Originally Posted by subsound

Forming an LLC to get paid in this fashion is a bad solution, and an attempt at an illegal run around for employment laws. It's a pretty common tactic so the employer can get around employment law enforcement, since the laws that cover independent contractors is looser...but you can write it off on your own taxes if you pay yourself benefits. I have seen this type of case in B-Law courses, and it's touted as a bad example of evasion. I would give them up honestly, and run to find a new employer...you can get really burned in this situation.

Its not illegal at all. Its actually fully legal, and its a huge lightning rod of debate in this country.