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1099 gigs and LLC tax preparation question

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  • 1099 gigs and LLC tax preparation question

    Hey everyone,

    I just graduated from PM+R residency this past July. I took a 1099 job doing consults in SNFs and on the advice of other docs in the same field I made an LLC with S-selection in Illinois (where I was living). I also got a locus job in CA covering weekends/PTO and I passed both of these 1099 income streams through my LLC in Illinois. After a few months, the CA locums job offered me a full time spot and now I am converting to W-2 only and moving to CA. Since my taxes were much more complicated this year (been doing them on my own via HR-Block), I signed up for a CPA. Since I may end up doing some 1099 income later on in 2021 in California, they are advising me to close my LLC in Illinois and open one in California. Obviously there are fees associated with doing this. In talking with my father in law, he said that the LLC in Illinois is a national entity and there is no reason for me to not use it in California. All of this is very confusing to me, anyone able to shed some light? Is my CPA correct or just trying to make a quick buck my having me close the Illinois LLC and opening one in California? Thanks for any advice!

  • #2
    Originally posted by Sikhest_Soldier View Post
    Hey everyone,

    I just graduated from PM+R residency this past July. I took a 1099 job doing consults in SNFs and on the advice of other docs in the same field I made an LLC with S-selection in Illinois (where I was living). I also got a locus job in CA covering weekends/PTO and I passed both of these 1099 income streams through my LLC in Illinois. After a few months, the CA locums job offered me a full time spot and now I am converting to W-2 only and moving to CA. Since my taxes were much more complicated this year (been doing them on my own via HR-Block), I signed up for a CPA. Since I may end up doing some 1099 income later on in 2021 in California, they are advising me to close my LLC in Illinois and open one in California. Obviously there are fees associated with doing this. In talking with my father in law, he said that the LLC in Illinois is a national entity and there is no reason for me to not use it in California. All of this is very confusing to me, anyone able to shed some light? Is my CPA correct or just trying to make a quick buck my having me close the Illinois LLC and opening one in California? Thanks for any advice!
    It’s really not going to make much difference, although I fail to see how your CPA will benefit much, if at all, from making this change. My bigger concern is why you have an LLC taxed as an s-corp at all. How much are you making from this side hustle? CA is quite an expensive location for a physician to file as an s-corp. fyi, LLCs are mot allowed for doc’s in CA, fwiw, but I w/n/h recommended one in any state unless you’re making ~$400k. Laura (my ptr in CPA firm) has recently told me that, in CA, she has set the bar closer to $600k.
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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