LLC 15% pass through vs Sole Proprietorship 20% passthrough

Feb 24, 2019

  1. bluediamond
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    bluediamond Guru

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    Thanks for your insight. I am 71 and drawing social and the past couple years plus this one will raise it substantially. Since of my age and much thought I am remaining a sole proprietor, yep I know many people set up LLC or S Corps my age and older but nothing is guaranteed in this business as far as I'm concerned.
     
  2. XpressInsurance
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    XpressInsurance Super Genius

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    If you set up as LLC or S Corp, I believe you will also have to have your carrier appointments set up that way. I don't know how many of you do business in a lot of states but that can get costly for company licenses vs. individual state licenses.
     
  3. Todd King
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    Todd King IMO/FMO Owner

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    Actually, you can set up an LLC and still have all of your contracts in your individual name. Of course, that means, for many companies, you will still have to have a personal account for them to pay to, not a business account. That's okay because you can set up your own business account and just transfer the money there. That way you can keep all things business separate from your personal.
     
  4. sshafran
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    sshafran Guru

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    But then they 1099 your ssn, not your tin.... doesn't seem like this would be the best way to do things.

    I could be wrong...
     
  5. Todd King
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    Todd King IMO/FMO Owner

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    Yes, but it is an LLC, so it's cash in, cash out.
     
  6. fun2drum
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    fun2drum Expert

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    I'm trying my best to wrap my mind around this. Is there really any advantage to LLC/S corp vs sole proprietorship all things considered? Passthrough is 20% and it looks like with any business it generates the self employment tax still applies. Maybe it makes more sense if you're an agency with a downline? That way the agency is paid to the LLC so if a downline agent gets into trouble the LLC gives a layer of protection? Am I reading this right?
     
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