On my current job I'm on as a W-2 employee even though it is a contract job.  I chose this route because I've never done full-time contracting before and I wanted to make sure I kept up with my taxes and the added benefit of getting insurance at a lower rate.  My wife and I had discussed going out on our own and forming a LLC but again, it's a little scary after being a full-time worker my whole professional life.

We may be revisiting our initial thought of going W-2.  We received our second pay check and I'm having to pay Kansas state income tax even though I live in Texas and a resident of Texas (Texas doesn't have state income tax).  I've not asked a lawyer or accountant on why that is but it seems off to me.  About six years ago, when we first moved to Texas from Kansas, my employer was still in Kansas and I didn't pay Kansas state income tax and I assumed the same would still be true this time - tax is based on where you live and not where you work.

I need to find out the real answer because if I'm going to be paying Kansas income tax I'm going to switch from W-2 to 1099 and start my own LLC.  With the amount of income tax I pay Kansas I could cover my own health insurance plus get the extra tax advantages of having my own company.

Because I'm so freaked out about the tax and legal side I've looked into companies like IProfessionals and MyBizoffice where you technically become their W-2 employee but still maintain all the flexibility of being independent.  They handle all of the back office work like taxes and expenses all for a  percentage of your gross billing.

Anyone have any advice or opinions?