I need some advice. Here is my situation: I would like to get an adjunct teaching position and create an LLC so I can off set the additional income with the expense that I would incur such as: cost of internet service for online classes, travel expenses (gas and portion of car payment), laptop, continuing education needed to gain additional adjunct positions, donations to scholarships, etc. My wife and I file a 1040A income tax return now and the only reason we do not fill out a 1040EZ is because we make to much money for that form. We make a good living and do not own a home (we rent), do not have any children, do not have any medical expenses so we do not itemize. Here are the questions: When I create an LLC, will I get a tax ID number that I would use in place of my SSN for job applications or business agreements? If yes, will schools accept the tax ID number as opposed to a SSN? Is this common practice? Would it be worth the trouble for the tax benefit if I plan to invest about $5Kper year in the LLC if I plan to generate an additional $10K-$15K per year? Since I have never done anything like this before, any advice would be greatly appreciated and any questions are welcome.
IMHO, it’s probably more trouble than it’s worth. An LLC (or any corporation) will receive it’s own taxpayer ID number which is used rather than the shareholder’s social security number. I would be surprised if many institutions would recognize the LLC, rather than you as an individual. If the school treats its adjunct faculty as independent contractors it might be possible. But if you’re an independent contractor the expenses you list would be deductible on a Form 1040, Schedule C anyway. (Other than donations to scholarships which would be limited or not allowed at all in a corporation.) If you teach in a classroom settling, you will be an employee - not an independent contractor. If you teach online, it could go either way depending on the specific facts and circumstances. A separate tax return would be required for the LLC or corporation and it may be treated as a personal service corporation. If you’re dealing with a lot of money, avoiding being classified as an employee through forming a corporation can be a good strategy. But not for $15,000 a year. The normal disclaimer: Tax laws are very complex so you should check with your attorney or CPA.
I taught at a local community college and had the money paid directly to an LLC. It was not a course for college credit however. I also taught the same course at a Vo-tech. I did other things through it as well. I kept it for a consultant thing I did on the side for a while. You can expense your lap-top, Palm Pilot, etc. although the IRS has some strings attached to how they are used. You can reduce milage, phone expense and other things. About the main thing I discovered is that you will end up paying taxes anyway. Keep in mind self-employment taxes. Check with your accountant. I found it was worth it as a consultant because of the hourly fee. Schools (at least public ones) want to pay you the same rate no matter what. Make sure you are not paying your own self-employment taxes on a teacher's base py rate. Good luck.
