3 ms·

An LLC is normally not prohibited from having stock options. It is an entity just like you the person. However, most likely the company giving you the job will

by pmikal 17y ago

An LLC is normally not prohibited from having stock options. It is an entity just like you the person. However, most likely the company giving you the job will not be able to hire you through your LLC for a period more than a year. This is usually the time period the IRS would rule that you are an employee of the hiring company. This isn't a hard rule however, but a general interpretation. You would of course need cooperation from the company's owners as they may not like having you as an LLC. Even so, there are many people acting and working like employees that are being paid through their own companies. It will probably be easiest for you to join the new startup as an employee and keep your LLC group coverage. Be careful that you are not eligible on two group policies as in some cases they could cancel each other out. Also try to maintain some income to the LLC to show it is actually trying to make some money and is not a shelter for your hobbies. At least enough to cover expenses. Also, there is always hope you can again get insurance. Try posting your specifics on this agent forum and see what your options are: www.insurance-forums.net

sowbug 17y ago
I didn't know about the no-more-than-a-year guideline -- that's fascinating. Is the purpose of the rule to protect the worker from being perpetually denied benefits that he'd otherwise get as an employee? If so, that's too bad, because in this case the worker wants to remain a contractor! And thanks for the advice on not being covered twice. I'll be careful about that if it comes up. If I were offered health coverage as part of my employee compensation, I hope I'd be able to negotiate it into extra cash instead.
- pmikal 17y ago
  Your new employer can be held liable for employment taxes, plus interest and penalties, if a worker, you, is incorrectly classified as an independent contractor and paid via your LLC. The penalties can be reasonably high. The IRS definition is here: http://www.irs.gov/businesses/small/article/0,,id=99921,00.html http://www.irs.gov/businesses/small/article/0,,id=99921,00.h... There will also be a state definition to consider. The one year period isn't a rule but more of a generally accepted guideline. You can get around most of these in your contract with the hiring company and your LLC, but again will need their cooperation to properly structure the relationship to minimize their risk of losing an audit. It's really a bunch of hoops for them to jump through to get you on-board. If it were my company, it would be unlikely that I would go through the effort unless you were a key man.

by pmikal 17y ago

sowbug 17y ago

I didn't know about the no-more-than-a-year guideline -- that's fascinating. Is the purpose of the rule to protect the worker from being perpetually denied benefits that he'd otherwise get as an employee? If so, that's too bad, because in this case the worker wants to remain a contractor! And thanks for the advice on not being covered twice. I'll be careful about that if it comes up. If I were offered health coverage as part of my employee compensation, I hope I'd be able to negotiate it into extra cash instead.

pmikal 17y ago
Your new employer can be held liable for employment taxes, plus interest and penalties, if a worker, you, is incorrectly classified as an independent contractor and paid via your LLC. The penalties can be reasonably high. The IRS definition is here: http://www.irs.gov/businesses/small/article/0,,id=99921,00.html http://www.irs.gov/businesses/small/article/0,,id=99921,00.h... There will also be a state definition to consider. The one year period isn't a rule but more of a generally accepted guideline. You can get around most of these in your contract with the hiring company and your LLC, but again will need their cooperation to properly structure the relationship to minimize their risk of losing an audit. It's really a bunch of hoops for them to jump through to get you on-board. If it were my company, it would be unlikely that I would go through the effort unless you were a key man.