$115/hr Facebook Contract - LLC / S-Corp Question
I received an offer from K2 Partnering Solutions for a 6 month (Engineering) contract with intention to extend to 12 months at $115/hr at Facebook in Menlo Park, CA. A colleague suggested that I should look into incorporating an LLC and electing for S-Corp Taxation to be exempt from income taxes. K2 mentioned that I would be a W2 Employee, but can I (am I allowed to) request to be paid through my LLC instead to potentially save on taxes? If anyone has some experience with this kind of scenario I would greatly appreciate it. I have reached out to a few small business tax accountants for a consultation, but am waiting to hear back. Cheers!
I’m going through this interview process with K2 now. Can you tell me if you accepted their offer and how it went? Did it lead to an extension with FB?
You’d be a W2 employee through K2? Is there a difference in your wage through that as opposed to going as a 1099 contractor? Also, would K2 offer you benefits as part of being a W2 employee? As a 1099 contractor, you are responsible for the employer portion of payroll taxes (Social Security and Medicare) but can deduct those against your taxable income. You also can deduct all relevant work-related expenses (home office expenses, equipment needed to perform the role, supplies, etc.). As a W-2 employee, you can not deduct home office expenses anymore as a result of tax reform. However, K2 would pay the employer portion of payroll taxes. They’d also withhold all the required tax payments remitted to the IRS and state on your behalf. You likely won’t have that as a 1099 contractor and would need to make estimated quarterly income tax payments.
1) Yes, as of now K2 is considering me as a W2 employee. I am trying to determine if going with 1099 would result in material tax savings - from what I've been told I think it would save me thousands. 2) Yes, K2 is offering Health, Dental, and Vision benefits. (If I go the route of 1099, would I have to provide these myself?) 3) Got it. I think LLC, S - Corp would allow me to avoid double taxation here. Thanks for such a detailed quick response.
Regarding (2), you may have to provide these for yourself should you classify yourself as a 1099 contractor. That’s a major detriment unless you receive a higher wage as a contractor to provide those benefits for yourself.