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Old 11-05-2015, 01:23 PM
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Is 100% of what I pay out, as a 1099, deductible?

Hello, I am a SMLLC doing consulting work. I am pursuing a contract with a client that is asking for two consultants. Each consultant will be billable to the client at 100/hr. I am one of the consultants and will bring my brother on as the other.

So the client will have and agreement with my LLC for two people and pay the LLC through a 1099 for the combined hours billed by both people. Both of us will be working independently and have different hours billed.

I want to turn around and pay my brother as a 1099 contractor at 100/hr for the hours he billed and not take any cut off of it.

Would 100% of what I "pay" him go as a business expense? I ask because I don't want to take a cut of my brother's billables but I don't want to pay additional taxes because we went through a single LLC.

Alternatively, we could setup two individual agreements with the clients but and be paid on 2 separate 1099's but we prefer to funnel everything through the LLC and take care of our end on our own.



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Old 11-05-2015, 06:13 PM
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Quote:
Originally Posted by villybhakta View Post

#1;Would 100% of what I "pay" him go as a business expense? I ask because I don't want to take a cut of my brother's billables but I don't want to pay additional taxes because we went through a single LLC.

#2;Alternatively, we could setup two individual agreements with the clients but and be paid on 2 separate 1099's but we prefer to funnel everything through the LLC and take care of our end on our own.
#1;As you are a sole owner of the SMLLC, your brother is not your partner/member but is either a W2 EE or a contractor; asyou pay him a contractor , nOT your W2 EE, you may claim the payments made to your brother /what you pay him on your Sch C of 1040 line 11.

#2;then the client 'd send copies of the two 1099s and 1096 to the IRS and each of you 'd also receive a copy of 1099 so I guess your brother does not need to issue you a 1099; but he needs to report the income on his 1099 on his SCh C while you also need to report the income reported on yur 1099 on SCh C of 1040 and claim the amt for your brother on line 11 of SCh C as said above.



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Old 11-05-2015, 06:19 PM
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Sorry my bad; NOT your borhter but YOU do not NEED to issue your brother a 1099 . please nake a note of this~~~~~~~



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Old 11-05-2015, 06:33 PM
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Why would the client send two 1099s? The client has a contract with the LLC and would send a single 1099(showing like $450k) to the LLC. The LLC would then send a different 1099 to my brother(showing $225k)

Then to do taxes, the LLC would use the 1099($450k) supplied by the client
and
My brother would use the 1099($225k) he was given from the LLC.

Structurally we, want the client to do business with the LLC as opposed to doing business with two separate individuals. Establishing a business to business relationship is what we are trying to accomplish.



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Old 11-05-2015, 08:24 PM
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Quote:
Originally Posted by villybhakta View Post


#1;Why would the client send two 1099s? The client has a contract with the LLC and would send a single 1099(showing like $450k) to the LLC. The LLC would then send a different 1099 to my brother(showing $225k)

32;Then to do taxes, the LLC would use the 1099($450k) supplied by the client
and
My brother would use the 1099($225k) he was given from the LLC.

.
#1;OK I see sorry for my mistake/misunderstanding; I thought that as you said,” I am pursuing a contract with a client that is asking for two consultants. Each consultant will be billable to the client at 100/hr. I am one of the consultants and will bring my brother on as the other.

So the client will have and agreement with my LLC for two people and pay the LLC through a 1099 for the combined hours billed by both people. Both of us will be working independently and have different hours billed.” So,I thought that The client ‘d issue 2 1099s for you and your brother.

#2;Correct; then you need to issue a 1099 to your brother for $225K and claim the amt on your Sch C line 11.Your brother needs to report it on his Sch C.So the client sends a copy of the 1099/1096 to the IRS and you also need to send a copy of 1099 for $225K paidfor your brother and 1096 to the irs.



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