[croggle]

Elaboration time... I did this in the UK, similar likely applies in the states.

I used to be an 'independent contractor'. I work for companies doing ecommerce / Java / Consulting work. I work a fixed term contract and leave when the project is complete.

I set up a limited liability company with me as the director and the only employee. When I get a contract (work), the client hires my company rather than hiring me directly. Depending on your specific tax laws, you pay a lot less tax using this kind of setup i.e. you pay yourself a low salary and the rest in (low tax) dividends.

This is the standard way most IT contractors operate.

[gk1]

I'm not even remotely close to being a lawyer, but I thought in the US a single-member LLC is taxed the same as a sole proprietor.

[wslh]

There is another trick not mentioned here. If you live outside US and have an LLC with only one person you don't pay taxes in US. This works assuming your work is done outside US.

So, say you live in a very relaxed tax environment, you can incorporate your LLC, sell software services to US companies and pay small taxes in your country.

[JamesSwift]

By default, yes, but you have the option to elect as a corporation.