Setting up LLC, need tax, benefits advice
Hello!
My husband’s new-ish job is hiring him as a partner/consultant, so he’s in the process of setting up an LLC. We will need to purchase our own health insurance for family, and we’d like to set up a retirement account under the LLC as well. Seeking advice on setting that up, tax advice, benefits advice. Do we need a CPA? A Tax advisor? Both? Crossover consultant? And, of course, do you all have any recommended names? Thank you much!
Sep 18, 2024
Parent Replies
This is a little crazy to me - you both are incurring tons of costs under this arrangement, by having to do all of this other stuff yourself. He could just start off consulting as a sole proprietor, for one thing, and kick the LLC can down the road because that's a hefty slice of work. You're doing all the unpaid admin work of being a consultant without the consultant freelancing benefits, sounds to me. You (he) have to make your own decisions about the LLC & health insurance stuff. The retirement is not a big deal and in fact you don't even need to do it until sometime prior to April 15, 2025 for tax year 2024. (Because there is a limit to what you can contribute as a business owner and you won't know that exact amount until you know your net for the year.) If his "new-ish job" is not witholding taxes, definitely go ahead and line up a CPA to do your quarterly filings, or what the heck, do it yourself and have him hire you as an employee (so your time is at least tax deductible). Please check out the Nolo Press small business owner books.
If he'll make more than $60K/year, you can file as an S-Corp as a single-member LLC and get a ton of benefits and minimize a lot of the headache taxes as there are services (Collective + Lettuce) that do it for you. If you make less than this, you'll spend more than you save. I started an LLC in August and just used Northwest Registered Agent to set up, and Hiscox to purchase LLC E&O insurance (most won't write in California - the saga continues...; other option is Hartford but it was more expensive). I had my bankers at JP Morgan (I was formerly with First Republic) set up a self-employed IRA for me to contribute to for retirement. If I continue to consult as my main work in 2025, I plan to go the S-Corp route with Collective or Lettuce as they take care of all the bookkeeping, bank accounts, filings, owners draw paperwork, etc. etc. so it seems worth the $300/mo to not sweat it. They also do have options to do self-employed retirement and health plans. Life is money and time, and sounds like you have plenty on your plates, so the $300/mo for these services is probably well-worth-it to avoid the headaches of going it alone. Lettuce and Collective both have a lot of free resources and webinars you can check out if helpful.