Hello all,

Your help is much appreciated.

I am the owner and sole W-2 employee of my S-corp. My S-corp has contracted with a client to provide my services. For the last couple of years, the client has paid the S-corp via 1099-MISC and my S-corp has paid me W-2 wages.

But now, the client wants to hire me directly as a W-2 employee and cut out the S-corp completely. The client wants to do this for the same amount of money that they were paying to the S-corp before (ie., my new W-2 salary = old S-corp 1099-MISC).

Now my questions:
1. Is this legal?
2. I think this will be a disadvantage to me because I can no longer deduct my expenses (via the S-corp)? Should the client pay more (or provide more benefits such as health insurance, 401K matching, etc..) to make up for my loss?
3. My S-corp will have to be dissolved because it will no longer be needed?
4. Are there any advantages at all in going the employee route with the same payment as before? Seems like all the advantages are going to the client and none to me?

I would like to turn down this change and keep running the same way I have been. What are your recommendations?

Thanks.