I agree with some of the things Kathryn said about the IRS testing if you are an employee or Independent Contractor according to different tests they do. However when approaching this in a legal way and also in the way of saving the most money on taxes I disagree with a 1099 being more effective.

First off, with a 1099 you pay Income Tax and Self Employment tax but the main thing you have to look at is that your LLC has the right election to avoid self employment taxes. If your LLC is a disregarded or Single member LLC you really need to look at that election one more time to see if it's convenient to change it and save more in taxes.

The second thing is following the law. If you LLC is not a disregarded LLC or taxed as a Single Member LLC it means it is being taxed as a partnership or you have sent the election to be taxed as a C-Corp or S_Corp. This means that the IRS wants to see the members (shareholders to the IRS if different election) who are active in the business being paid a reasonable salary through a w2 not a 1099. Having said that there are different strategies to reduce your payroll taxes, maximize your deductions with legal allowenses and have part of that as tax free money when you own your own LLC.

Give me a call so I can clear your questions about elections and I can give you some strategies you can use to reduce your overall tax liability with your current LLC.