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What are the estimated tax and tax return filing requirements for taxpayers earning income as an independent contractor and should I incorporate or establish a Limited Liability Company for that independent contractor activity?

Estimated Taxes Limited Liability Corporation (LLC) Independent Contractor
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Robert Ferguson
As an independent contractor without an LLC or S corp that your earnings are being paid to, you are most likely to pay a higher amount of tax as a result. The LLC not only offers greater liability protection but offers greater tax savings in the long run. particularly if you establish it a Sub S Corp for tax purposes. Most of the tax breaks come from billing as a company with its hourly or flat rates vs the hourly rate earnings of a professional. If $20 or $25 per hour is reasonable rate of pay for you as an employee, but your firm charges $55 or $60 an hour, without being an LLC or S Corp only your deductions keep you from paying payroll taxes on all of the income. If on one hand you have a $30 an hour employee working as an EA and a CPA at $40 the rate of pay you as the employer would pay yourself would be no more than one of your employees. Any additional amounts would be profit and carried over to your personal income as passive income on the LLC tax filing 1120S and your K1. You then would be reporting the income as a dividend from the LLC and only pay income tax on it filing a Schedule E.
Unfortunately not all states and countries provide for the LLC form of company, and therefore the sub S Corp is the next best.
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