Legal Question in Business Law in New Jersey

I formed a single member LLC in NJ. The IRS does not recognize LLC's, Ican file as a sole proprietor or as an S corp. If I choose S corp will I have to carry workmans comp and pay unemployment tax on my salary to NJ.

Asked on 9/26/13, 3:02 pm

2 Answers from Attorneys

Ronald Cappuccio Ronald J. Cappuccio, J.D., LL.M.(Tax)

You should be very cautious before choosing S corp status. There is an argument that the LLC has to withhold UI, Disability, and you will never be able to collect.Further, you would typically need to have Worker's Compensation insurance that would cover you. It is possible to ask the insurance company to exclude your salary, but this is an area of contention.

Forming a business requires the guidance of a good tax and business attorney.

Good luck!

Ron Cappuccio

www.LLCLawyer.com

856-665-2121

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Answered on 9/26/13, 4:45 pm
Barry Gartenberg Barry F. Gartenberg LLC

It's not that IRS doesn't recognize SMLLCs... Rather, for tax purposes, by default, the IRS "disregards" the entity and taxes the member as a SP. As to non-tax issues, I concur with Ron. It's likely you'll be required to provide WC, UI, etc. This does NOT constitute legal advice, but if you wish to contact me, I'd happy to speak with you. 973-921-0600.

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Answered on 9/28/13, 10:26 am


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