Thanks for your interest. I've added some answers, Carl. Why are you considering filing the entity reclassification to be classified as an S-Corp? I assume you already know that a corporation is taxed at a higher rate than a disregarded entity. I have a "bird in hand" opportunity from a staffing agency. Their Independent Contractor agreement excludes LLCs, sole proprietors, or "any disregarded entity". This seems to be a trend in the staffing industry. What does your business do? Write software and design platforms and user experiences. " As a freelancer, I'd like to support as many types of compensation as possible." Exactly what do you mean by "support" as many types of compensation as possible? "support" = "accept". When I have an opportunity or I'm marketing my services, I don't want barriers to landing a contract or accepting income. Does your business have employees? No. Single member LLC Overall, I get the impression that some tax professional (like a CPA) is trying to talk you into doing something that may not benefit you, but will put more money in their pocket. Exactly right, except it's "some staffing professional" or rather a talent agency's entrenched policy. When one elects to have a disregarded entity treated "like an S-Corp", that's for tax purposes *ONLY* and absolutely nothing else. It will afford you absolutely no protection what-so-ever of your personal assets, should a client have reason to sue you. Remember, the 8332 or 2553 is for tax purposes *ONLY* and nothing else. I agree. protection of my personal assets comes from being a "limited liability company" and carrying large and varied insurance policies. The latter (a COI - Certificate of Insurance) was required by a former client, and is a common requirement for software contract work.
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I may file Form 8832 to reclassify my LLC as an "association taxable as a corporation", or form 2553 to elect status as an S Corp. Staffing agencies frequently offer work called "W2 Hourly" and "Corp-to-Corp" (C2C). One has specifically stated "no 1099" and will accept an "LLC, *excluding single-member LLCs taxed as disregarded entities*". As a freelancer, I'd like to support as many types of compensation as possible. Form 8832 or 2553? What effect would this change bring? What's the broadest range of income types I could support? Able to accept 1099 work in the future? Would tax year 2019 be part "disregarded entity", part "taxable as corp"? Current setup: Single-member LLC taxed as "disregarded entity". Founded 2014 in Texas. Solo401k - five years of max contributions. All LLC income to date has been reported on 1099. US Citizen. Serving US clients thus far.
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