I have been doing some side consulting, and was thinking of setting a LLC to help with taxes and stuff. I am going to be getting a 1099-MISC soon, if I setup a LLC now, can I tell that company my tax Id for the LLC and the previous year income be part of the LLC? Or does the income from work now start once the LLC is created?
      Answer1:Only after the LLC is formed, registered and its EIN issued can you start its recordkeeping as income of the biz rather than you personally. So you are too late for last year.Before you spend the money forming an LLC and paying the initial registration & annual fees to the Secretary of the State for whatever state you are forming the organization in, youd better make sure that you are saving enough in annual income and other taxes and generating sufficient income to cover all of the costs involved in an LLC. It aint free!Also note that some states (notoriously, Connecticut) charge property tax on all physical property of the biz each year, and none of that property is ever amortized to the extent that property tax no longer applies to it. Some states (e.g. NY) require any vehicle titled in the name of a sole proprietorship, LLC, etc, carry commercial vehicle insurance (expensive & hard to get), so putting your car in the company name could cost you alot. Each state has its pitfalls, and especially its tax traps.Dont do diddly if you do not know what you are doing! Find out the potential pitfalls & consequences, not just the benes, first. Stupidity costs -- and its very expensive!
      Answer2:To some extent, ibu guru is right. However, not doing anything to protect yourself from liability from a lawsuit would be ignorant. Yes, you need to research the pitfalls of forming an LLC in your state, but I cant imagine that avoiding the "pitfalls" is more advantageous than shielding yourself from liability.By the way, forming an LLC wont necessarily "help you with taxes", since LLC income is treated as pass through income for tax purposes. It wont affect your tax rate regardless.