I’m a sole proprietor and my self employment taxes is sky high should I become an LLC
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I’m a sole proprietor and my self employment taxes is sky high should I become an LLC
I am wandering if becoming an
LLC will help ease some of the
self employment tax burden
Asked on January 18, 2018 under Business Law, Florida
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 6 years ago | Contributor
No, it won't help. At the end of the day, the full amount of tax has to be paid. When someone works for *another* person, they have the advantage of the employer paying half this tax--the employer portion--while the employee pays only the employee portion. Self-employed, you pay the full tax. If you form and work for your own LLC, however, it's all your money: even if the LLC "technically" pays the employer portion, at the end of the day, it's paying with your money, since you and your work at the source of the funds in the LLC. Having your own LLC doesn't let you get part of the tax covered by someone else--you end up covering it all, whether it's coming out of your bank account labeled LLC or the account with your own name on it.
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