Originally Posted by
capt_morgan
Any pointers on what it would mean financially and legally to incorporate, create an LLC or other business practice while working as a CFI for a local flight school as an independent contractor? Tax benefits, legal and liability benefits, etc. are what I'm looking for. Any experience with this?
Thanks!
It all depends on the state you are in. In my state it is somewhat expensive, and they charge you a large, recurring annual fee. It is sufficiently complicated that you will need a lawyer ($1-2K) to draw up the paperwork. You can find it all on the internet, but if it is done incorrectly then the liaibility protection will not hold up. You also probably need to do some annual paperwork and keep records, and maintain a bank account.
An LLC usually allows you pass income directly through to yourself, so you don't have to file taxes for the LLC, just yourself. This wouldn't be a tax benefit in and of itself, but you can write off business expenses related to the LLC.
As for liaibility, an LLC should afford some degree of protection, basically it seperates your business assets from your personal assets. In this case you would not have many business assets (unless you own the plane). Some people create an LLC on paper, put it in a file cabinet, but never actually keep up with the routine operating and record-keeping requirements...apparently this will not hold up in court for liaibility purposes.
Like I said, you should talk to a lawyer.