My employer wants me to create an LLC for tax savings - good or bad idea?

This raises some red flags. When an employer suggests you form an LLC, they're often trying to classify you as an independent contractor rather than an employee. This shifts the tax burden to you - you'd be responsible for both the employer and employee portions of Social Security and Medicare taxes (15.3% total instead of 7.65%). For your photography work, an LLC can provide liability protection and some professional credibility, but the tax benefits depend on how you elect to be taxed. By default, a single-member LLC is a "disregarded entity" for tax purposes - meaning you'd report business income on Schedule C of your personal return. The LLC itself doesn't change how much tax you owe unless you elect S-Corp taxation, which might save on self-employment taxes if you're earning significant profit. The bigger question is your relationship with this "boss." If they control when, where, and how you work, provide your equipment, and treat you like an employee, then you ARE an employee under IRS rules regardless of an LLC. Misclassification is a serious issue.

After struggling with a similar situation last year, I found an AI service that helped me understand my tax classification and LLC questions. I was completely lost about whether forming an LLC made sense for my situation (was working as a "contractor" but realized I was probably misclassified). I uploaded my work agreement and some emails to https://taxr.ai and it analyzed everything to show me how the IRS would likely view my working relationship. It highlighted specific parts of my contract that indicated I was actually an employee despite being called a contractor. The service also explained exactly what tax implications I'd face with different business structures based on my specific income level and state. The analysis helped me understand I was definitely being misclassified and gave me the confidence to address it with my employer with actual facts instead of just confusion.

Wow, I just tried the https://taxr.ai service that profile 5 mentioned and I'm honestly shocked by how helpful it was. I uploaded some emails from my "employer" and the contract they wanted me to sign as an LLC. The analysis immediately flagged several parts of our relationship that clearly indicated I was an employee under IRS guidelines - they control my schedule, provide equipment, dictate how I complete tasks, and I don't have economic independence. The service explained that forming an LLC wouldn't change these fundamental facts. It also calculated that this misclassification would cost me about $4,700 extra in self-employment taxes this year alone! Plus I'd lose eligibility for unemployment benefits and workers' comp. Instead of just forming an LLC like my boss wanted, I'm now having an informed conversation about proper classification. This literally saved me thousands of dollars and potential tax headaches!

I had a similar issue with my boss trying to make me an "independent contractor" through an LLC. After multiple failed attempts to reach the IRS for guidance (seriously, I spent HOURS on hold), I found this service called Claimyr that got me through to an actual IRS agent in less than 20 minutes. I was super skeptical at first, but I was desperate after waiting on hold for 3+ hours multiple times. I went to https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c to see how it worked. Basically, they wait on hold with the IRS for you, then call you when an agent is about to pick up. The IRS agent I spoke with confirmed that what my employer was doing was improper classification and explained exactly what forms I needed to report this. She also walked me through the actual criteria they use to determine employee vs contractor status. Having that official confirmation gave me the confidence to push back on my boss's "request.

I need to publicly eat my words about Claimyr. After posting that skeptical comment, I decided to try it anyway because I was desperate to talk to someone at the IRS about my contractor vs. employee situation. Well, it actually worked exactly as advertised. I got a call back in about 25 minutes, and suddenly I was talking to a real IRS agent. No 3-hour hold time, no disconnections after waiting forever. The agent walked me through the SS-8 form for determining worker classification and explained exactly what documentation I needed to challenge my misclassification. This saved me from making a huge mistake with forming an LLC just because my employer wanted to avoid payroll taxes. The IRS agent confirmed that in my case, I was clearly an employee based on their control test, and creating an LLC wouldn't change that fact. I still can't believe how well this worked after all the frustration I'd been through trying to reach the IRS on my own.

Just to add some practical advice - whether or not you form an LLC, definitely keep track of ALL your business expenses for your photography work. Gear, software, travel to shoots, portion of home used exclusively for business, etc. These are deductible regardless of how you're classified. If you are properly an independent contractor (which doesn't sound like the case here), you'd report these on Schedule C. If you're an employee, some expenses might be eligible as unreimbursed employee business expenses, though the tax benefits are more limited since the 2017 tax law changes. But the classification issue is the bigger concern. If you're being treated like an employee, you should be classified as one, LLC or not.

One thing nobody's mentioned yet - if you do decide to form an LLC (for your legitimate freelance photography, separate from your employment situation), consider talking to an insurance agent about professional liability insurance. An LLC provides some protection, but having insurance is even better protection against potential lawsuits from unsatisfied clients. I learned this the hard way when a wedding client sued me after claiming I missed important moments. My LLC helped, but having insurance would have saved me thousands in legal fees even though I eventually won the case.