Need some help from the accounting experts or whichever of you has experience in this... I've got a potential opportunity with a company that is based in Georgia (the state just in case that's confusing for anyone). They're not established in Texas at all. I would be their first employee here. The president of that company said it might be to my benefit if I were to set up my own company and technically be a contractor to them. He said this would prevent me from having to charge sales tax on what I sell through them, potentially putting me at a disadvantage when quoting jobs. The transaction would be going through them and not my company. Plus, I'd be able to deduct all of my expenses for the company from what I understand. Is this the best route and how difficult is it to set up/manage?
Can you give us an example of how one of these transactions would work? Not sure I understand the sales tax issue. I assume you would structure this as a single member LLC (it's just you). Single member LLC is a disregarded entity for tax purposes. You'd pick up the income on schedule "C," so you would be an independent contractor and also subject to SE tax. You'd be required to report all payments received and could deduct your related business expenses. Also, LLC is subject to franchise tax in Texas. There is no tax due on gross receipts less than 1 million, or if computed tax due is less than $1,000. However you will be required to file an annual report each year to maintain good standing with the Secretary of State.
Well I'd imagine someone here can suggest a lawyer or accountant to help get you setup and running. I'm not too familiar with setting up an LLC, other than speaking with a couple of peers who have done the same and mentioned it is a bit of a process, but manageable. I'm uncertain of the details of your potential contract work, but it may just be easier to operate as a sole proprietor.
Yes. Currently, they're a re-seller of synthetic turf from Georgia. Since they do not have a business in Texas, they're not subjected to collecting and paying sales tax. If I were a direct employee of the company, then they'd officially be established in Texas and would be subjected to collecting and paying sales taxes and whatever else the state charges businesses. I'd essentially be at an 8.25% disadvantage from the get-go against competitors.
This. There are reasons to incorporate and an attorney who handles the formation of business organizations can walk you through your choices. However, I'm not aware of anything that would require incorporation in order to work as a contractor.
