Hi,
I write this note on behalf of my spouse...
"I am a medical professional and earn income 100% as 1099-MISC/NEC with my solo business setup as a PLLC. My recent Sch C bottomline: ~$80-100k. I have a solo-roth-401-k and my business matches in solo-401-k per the limits. The demand for my work in my area is increasing, so a couple of months ago, I got someone good (percentage basis), which is pretty common in my profession i.e. I keep X% of the income after seeing a patient while the person keeps (100-X)%. I provide 1099-NEC.
The demand increased further so I am considering offering a post-doc / full-time / part-time position (flexible). I prefer to pay 1099-NEC.
Questions:
1) However, if I must hire as a W2 position, what are the consequences and procedures to follow to do it the right way?
2) What are the effects for my 401-k and matching? I don't mind paying a match to the W2 if I must, but obviously being a small business, prefer no match.
3) Will I lose the 401-k's status which is setup as "solo" 401-k or "solo" roth-401-k, since now I will have an employee other than me (my spouse and kids are not employees and won't be at this point)?
4) Are there some good references I could use to follow if I must hire an employee as a W2?
Mainly to avoid the learning curve / hassle and also because it helped me more to start as a 1099-MISC a few years ago after being on W2 for a little while, I prefer hiring as a 1099-NEC but if the employee prefers a W2, then I want to be ready...
"
[OT comments removed by admin LadyGeek]
Solo PLLC looking to hire
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Re: Solo PLLC looking to hire
Please comment and help. Thanks!
Re: Solo PLLC looking to hire
I would hire a local professional (attorney/CPA) to assist you with this. The answer to several of your questions is “it depends” and the answer to question #1 is state law specific (so general responses will not be sufficient you would need an Arizona specific response).
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Re: Solo PLLC looking to hire
As far as your Solo 401k plan goes, check your plan adoption agreement to see what you elected as to plan eligibility. If you hire a W2 employee for any significant hours, likely you will not be able to keep the plan active. There are other self-employed retirement plans that you can use but you will need to make employer contributions to everyone eligible to participate in the plan.
Re: Solo PLLC looking to hire
There is a good discussion of the impact of hiring a non-spouse employee in this thread: viewtopic.php?t=325372
Good you are thinking about before anyone has been hired.
Good you are thinking about before anyone has been hired.
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- Posts: 187
- Joined: Tue Feb 22, 2011 6:33 pm
Re: Solo PLLC looking to hire
Thanks for the replies! So far what I read appears that hiring on w2 might not be straight forward