I have a confusing situation. A & B are individuals. B has a type of consulting firm, where she finds facilitators (TP A) that provides services to others. Clients pay B, and B then forwards 75% of the payments to A, holding back the other 25% to cover items effectively for the IP to facilitate these groups. A receives a 1099 from B. B only has a couple of other clients besides A.
Now A & B want to go into business together. They will together find other facilitators for their groups – covering several states. The facilitators will pay the new entity a lump sum recruitment fee to get access to the IP, training, security checks, etc.
However, A & B also plan to keep their original relationship the same – with A being a facilitator for B. A will get 100% vs. the 75%. A will kick in $100k for the new entity, while B will contribute the IP. SO we now have three businesses: A who will continue as a facilitator and keep receiving a 1099 from B; B – who will get money from her other clients who are facilitators, and A-B, who will become an entity and find separate facilitators all over the country.
A couple of questions:
1. Can A can still continue on as the 1099 employee and utilize her solo 401(k), or if this structure blows that up.
2. They are working with an attorney to decide the type of entity. So far the attorney is thinking that an LLP may be better than an LLC, but I thought LLC’s are easier to set up in other states?
3. They will be paying these facilitators all over the country via 1099’s. I should probably have the attorney determine if the facilitators should be W-2’s or 1099’s? If W-2 – then we have a lot of states to set up, but can get around that with 1099’s? I think I am missing something big in this area.