Freelancers: Sole proprietorship vs LLC vs S Corp?

almost 4 years ago from Oz Chen, UX Designer. Writer & Publisher @ UXBeginner.com

  • Max Foundry, almost 4 years ago (edited almost 4 years ago )

    Hey Oz.

    So sole proprietorships are the easiest to do if it's just going to be you owning it. If you have partners you'll have to pay them like vendors plus it's more difficult to work your partners in if you sell it.

    But the primary reason to do an LLC or an S Corp is for the protection from personal liability. And that is a pretty good reason. But you'll need to set up some basic legal documents, keep separate books, and file taxes for the entity. So if you are thinking this is less is less than $10k in revenue might not be worth the $1k a year plus the work for taxes and bookkeeping and state filing fees.

    5 points
    • Oz ChenOz Chen, almost 4 years ago

      Thanks for the info - good point on the balance between setup costs vs liability protection

      0 points
      • Breena Fain, almost 4 years ago

        However you get things set up (I'm under LLC but also a full-time freelancer), I highly recommend Quickbooks Self-Employed. It's great for tracking quarterly taxes, deductions, etc. It's pretty cheap, too.

        2 points
        • Oz Chen, almost 4 years ago

          Sweet, adding this to my list of software to check out. I've also heard great things about FreshBooks.

          0 points