Q: I get paid as a web developer with 1099. If I form a LLC, does that help me to pay less tax ?
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A: Forming an LLC in California as a web developer may provide some tax advantages, such as potential deductions and business expense write-offs. However, it won't necessarily reduce your overall tax liability. California LLCs are subject to an annual franchise tax, and as the owner, you would still be responsible for self-employment taxes on your income. An LLC can choose to be taxed as an S corporation, which might result in tax savings if you can justify paying yourself a reasonable salary while taking the remainder of your income as a distribution, which is not subject to self-employment tax. It's important to conduct a careful analysis or consult with a tax professional or attorney who can advise you based on your specific situation, considering all the potential benefits and obligations that come with an LLC.
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