NYC Unincorporated Business Tax ?

[John Bradley]

I have a question for any consultants in New York City receiving a
1099 as I expect to be doing the same in the near future.

How do you avoid paying the unincorporated business tax ? I believe
that this tax was created to prevent partners in large partnerships,
such as law firms or Goldman Sachs, from evading the corporate
income tax.

Am I correct in assuming that the tax must be paid ?

Is it possible to incorporate to avoid this tax ? It looks like LLC's
have to pay the unincorporated tax. There seem to be limitations on
one person corporations in New York anyway.

I plead ignorance on this issue. Any help would be appreciated.

John Bradley
j...@panix.com

[RMP Consulting Partners LLC]

Goodness, sounds like a pain. Here in Texas, all incorporated entities
(corp's and LLC's both, but not LP's or LLP's) pay the state income tax
hidden in the "franchise" tax. There's no tax on unincorporated entities
but we came close to getting one. I'm not sure how it works in NY. If you
find out, please let me know in case we get some business up that way.

Robert M. Pritchett, President - RMP Consulting Partners LLC
http://pobox.com/~rmpcp - rm...@pobox.com - Dallas, TX
"Quality means doing it right the first time!"
Contractors: tired of hearing "W-2 only"? Join us and let us help you get
that same contract on a 1099 as a self-employed independent contractor!

John Bradley wrote in message ...

[John J. Strasser]

On 08 Jun 1998 18:57:03 -0400, John Bradley <j...@panix.com> wrote:

>
>I have a question for any consultants in New York City receiving a
>1099 as I expect to be doing the same in the near future.
>
>How do you avoid paying the unincorporated business tax ? I believe
>that this tax was created to prevent partners in large partnerships,
>such as law firms or Goldman Sachs, from evading the corporate
>income tax.
>
>Am I correct in assuming that the tax must be paid ?
>
>Is it possible to incorporate to avoid this tax ? It looks like LLC's
>have to pay the unincorporated tax. There seem to be limitations on
>one person corporations in New York anyway.
>
>I plead ignorance on this issue. Any help would be appreciated.
>
>John Bradley
>j...@panix.com

A better person to ask would be your accountant. Don't have one?
You're in business for yourself. Get one! Same thing with a lawyer.
You won't need them often (if you stay small enough) but you do
occasionally need them.

John

John J. Strasser
General Manager
Saguaro Canyon, LLC
http://www.saguarocanyon.com
Email: sca...@saguarocanyon.com

[Elocutu...@hotmail.com]

In article <357fe968...@news.idt.net>,

scadmin@$$NoSpam$$$saguarocanyon.com wrote:
>
> On 08 Jun 1998 18:57:03 -0400, John Bradley <j...@panix.com> wrote:
>
> >
> >How do you avoid paying the unincorporated business tax ? I believe
> >that this tax was created to prevent partners in large partnerships,
> >such as law firms or Goldman Sachs, from evading the corporate
> >income tax.
> >
> >Am I correct in assuming that the tax must be paid ?
> >
> >Is it possible to incorporate to avoid this tax ? It looks like LLC's
> >have to pay the unincorporated tax. There seem to be limitations on
> >one person corporations in New York anyway.
> >
> >I plead ignorance on this issue. Any help would be appreciated.
> >
> >John Bradley
> >j...@panix.com
>
> A better person to ask would be your accountant. Don't have one?
> You're in business for yourself. Get one! Same thing with a lawyer.
> You won't need them often (if you stay small enough) but you do
> occasionally need them.

Agreed, but here's my layman's perspective after speaking to a lawyer and an
accountant.

If you are a corporation, you will pay 6 1/2% in corporate tax
If you are an unincorporated business, you will pay 6 1/2% in unincorporated
business tax
If you are an individual, billing 1099 under a DBA name, you will pay a 6 1/2%
self-employment tax

If you're going 1099, it's worth asking for a 6 1/2% premium over the quoted
W2 rate, since the firm is saving that in taxes anyway.

--Elocutus

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