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I have freelanced as a sole proprietor for 15 years. I advise focusing on getting customers and establishing long-term relationships, and not worrying about the

I have freelanced as a sole proprietor for 15 years. I advise focusing on getting customers and establishing long-term relationships, and not worrying about the trappings of a business. One person contracting, with no employees or significant assets at risk, doesn’t gain much from an LLC or S corp. The income passes through to you as business income on your taxes regardless, so the less paperwork, bureaucracy, and fees the better. You can easily find lots of companies selling questionable or outright useless services to new small business owners. Ignore all of that, you probably don’t need it. Do good work, don’t accept jobs from shady or pushy clients, keep records (a spreadsheet works fine). You want to optimize for billable hours, not for looking like a “real” business. I have some free no-ads articles on my site typicalprogrammer.com.

teaearlgraycold 3y ago
Wouldn’t an LLC allow me to make purchases into business expenses and skip income tax?
- gregjor 3y ago
  You can deduct business expenses as a sole proprietor. You just have to keep track of them and keep receipts. I use a spreadsheet and a folder with scans of receipts. The IRS got wise to tricks people used to restructure income with LLCs and S corps a long time ago. Complex business and tax structures for a solo or small business will just attract attention from tax authorities. Every situation is different, especially with employees or valuable/depreciable inventory. Consult a professional if those apply, they usually don’t for solo freelancers. Sometimes you run into clients who think they can only pay to a corporation, they usually mean they want an EIN, which you can get for free online from IRS. Sometimes clients want E&O or liability insurance, I have either talked them out of that or passed on them — not worth the expense.

teaearlgraycold 3y ago

Wouldn’t an LLC allow me to make purchases into business expenses and skip income tax?

gregjor 3y ago
You can deduct business expenses as a sole proprietor. You just have to keep track of them and keep receipts. I use a spreadsheet and a folder with scans of receipts. The IRS got wise to tricks people used to restructure income with LLCs and S corps a long time ago. Complex business and tax structures for a solo or small business will just attract attention from tax authorities. Every situation is different, especially with employees or valuable/depreciable inventory. Consult a professional if those apply, they usually don’t for solo freelancers. Sometimes you run into clients who think they can only pay to a corporation, they usually mean they want an EIN, which you can get for free online from IRS. Sometimes clients want E&O or liability insurance, I have either talked them out of that or passed on them — not worth the expense.