Consulting Company Registration

rahulk · Post by **rahulk** » Mon Jul 23, 2007 6:29 am

Guys,

I have started independent consulting and working with 2/3 companies. Someone suggested me to register a company so that i can show myself as a employee and use some of the expenses as business expenses? I tried to findout if someone have done it or not? I am sure many people must be doing it. I am trying to findout what kind of company I need to open and how to open?

Also what's the pro and cons? I tried a search here but couldn't find any thread discussing the same. if someone have a link, plz post here.
thanks guys.

sftrade · Post by **sftrade** » Mon Jul 23, 2007 9:16 am

I've incorporated mine using myincorporation.com. You can use legalzoom.com to incorporate too. From what i've learnt from my other friends who own similar companies, an S-corp works best

FreeSpirit · Post by **FreeSpirit** » Tue Jul 24, 2007 10:31 pm

You can incorporate as S-Corp in your state. You can also setup Solo 401K and contribute upto $44000 every year (tax-deferred)

MadMax · Post by **MadMax** » Tue Jul 24, 2007 10:58 pm

Wouldn't an LLC suffice? Do you have to have S-Corp or C-corp?

I registered an LLC just for the heck of it, coz I could do it online and it only cost me $105.

Chicago Desi · Post by **Chicago Desi** » Tue Jul 24, 2007 11:47 pm

FreeSpirit;35676You can incorporate as S-Corp in your state. You can also setup Solo 401K and contribute upto $44000 every year (tax-deferred)[/quote]

$44,000? Is that correct? Wow. What documentation does one need? Any references you can provide. Thanks.

sftrade · Post by **sftrade** » Wed Jul 25, 2007 12:04 am

check out fidelity.com and look for small business IRA/401k plans. Its 44k max or 25% of your yearly income. So if you make 100k/year you can contribute 25k. Also if you have employees they need to be given the same level of contribution so :) now think twice before starting the plan

sricitco · Post by **sricitco** » Wed Jul 25, 2007 2:11 am

#5

Yes, the company can contribute upto $44K but its capped at 25% of your W2 income. That would mean you have to show $220K on your W2.

Regards
Sri

sftrade · Post by **sftrade** » Wed Jul 25, 2007 2:17 am

which means you have to pay SS/medicare and payroll taxes

direstraits88 · Post by **direstraits88** » Sun Aug 05, 2007 2:08 am

Here is a related question...

Assume i worked on a W2 for another employer for 9 Months. And for the remaining 3 months, i go solo and open a S-Corp, how does this 25% limit work ?

Is it on the total income for the year or only 25% of the income after setting up the S-Corp?

I had no 401k plan with my old employer..

Also do i have time till next April to contribute to my 401k that i open after starting a S-Corp?

cyberabadi · Post by **cyberabadi** » Sun Aug 05, 2007 6:22 am

desipardesi;37731Is it on the total income for the year or only 25% of the income after setting up the S-Corp?

I had no 401k plan with my old employer..

Also do i have time till next April to contribute to my 401k that i open after starting a S-Corp?[/quote]

The 25% Cap is for each employer. So, if you work for Company B (Your Company) it would be 25% of your Gross Income for that period derived from that company and that your would show as income.

IMO! Company contributions are deducted at the end of each month or at a fixed date. And they would have to go by Dec 31 so, they would show on W2 or ..