A business structure, often a corporation or limited liability company (LLC), established by an individual, typically in the entertainment or professional services industries, to contract out their services, is designed to separate the individual from their work engagements. It functions as an intermediary, receiving payment for the individual’s services and then compensating the individual as an employee or owner.
This arrangement offers several advantages, including potential tax benefits through deductions related to business expenses, liability protection, and the ability to manage income flow strategically. Historically, the use of such entities has grown in parallel with the increasing complexity of tax laws and the desire for enhanced financial control among high-earning individuals.