Legal advice on Self-employed workers

Amending the operating agreement, is practically a prerequisite. Since, LLCs are designed to have flexible management with few corporate formalities, while S Corps impose strict ownership requirements, along with many formalities; a carefully drafted amendment of the LLC's operating agreement, would need to be made, in order to bridge the gap, of these two regulatory frameworks. A single member LLC can transition to S Corp tax election. Single member LLCs are a disregarded entity, for federal tax purposes. They are not considered partnerships, like multi member LLCs, in terms of federal taxation. This is important, because partnerships do NOT qualify for S Corp tax treatment. This mean single member LLCs can elect corporate tax treatment, and then make the leap to S Corp tax election. Statutory conversion. Depending on the jurisdiction, it may be possible for an LLC to convert into a Corporation. Doing this conversion, opens the possibility for multi member LLCs to seek S Corp tax election. Statutory merger. If a statutory merger is not available in your jurisdiction, or just too costly for state and local tax purposes, then there may be another alternative. This involves creating a separate entity, a Corporation, and then have the LLC merge into the Corporation. Similar to a conversion, this may make multi member LLCs eligible for S Corp tax treatment. An additional option, which is too complex to discuss on this part, but is worth mentioning, is a non-statutory conversion

It is important to make quarterly estimated tax payments if you are self employed. The IRS believes that the tax system is a pay as you go system, meaning when you file your tax return in April, you should not owe any taxes. They should have previously been paid, whether through estimated tax payments or through withholding if you’re a wage earner. If you don’t make your quarterly estimated tax payments you could end up owing when you file your tax return in April, and then you would have to set up either a payment agreement with the IRS or pay the taxes in full to be in compliance.