If you keep the paperwork clean, the major advantage of having an LLC as a solo operator is the ability to protect your personal assets (home, savings, etc.) from any potential liabilities of your business. If the business is sued and is an LLC, the recovery is limited to the assets of the LLC. If you remain a sole proprietor, a lawsuit can wipe out all of your personal assets as well.With a single member LLC, you are treated the same as a sole proprietor for federal income tax purposes, so nothing changes on this front.To receieve the liability limitation benefits of an LLC, however, you need to keep your paperwork current with the Secretary of State, keep a separate bank account, and keep your business and personal spending separate. (If you spend on a personal credit card, use an expense report to have the business reimburse you.)
annual filing fees of several hundred $, tax returns to fill out, other legal requirements like meetings and minutes, extra form on your 1040 - is it really necessary to have an LLC?
For tax purposes an LLC is disregarded. Your payers would *still* be required to issue you a 1099-Misc to your Name and SSN. You would report the income on your 1040 schedule C just like you always did.Your friend is NOT a tax preparer. In order to pay to another entity, you d have to go one step further, become a S corp, pay yourself a salary and file an 1120S. Then when you file, you use the W-2 *and* the 1120S schedule K-1 to do your taxes. The extra tax return is due March 15; the W-2, it s forms and your tax withholding have their own schedules, etc. You generally lose more money doing this than you save--one headache is you have to determine a reasonable salary and the IRS tends to think that s your net income until you get to $100K.And, oh gee, this is for fun, pro bono and you want an LLC for ONE paying gig? NO!Let s see $115 fee to the state to file the LLC.$90 to $500 to get sample legal paperwork to file the LLC.
