Depending on where you are living of course. I'm giving you here an example of Austria (EU): If you want to earn more than around 5000 dollars a year, you HAVE

Depending on where you are living of course. I'm giving you here an example of Austria (EU): If you want to earn more than around 5000 dollars a year, you HAVE to incorporate. The cheapest setup will still cost you a few hundred dollars per year, but from start to incorporation it will take you at least 2-3 weeks. Many will need the services of a tax consultant to deal with the taxes, which also involves some costs. (If you are employed the company has to deal with the taxes for you) Then there are also liability issues depending on how you incorporated. Something similar to a LLC costs more to incorporate, but with the cheaper ones you are liable with your private property. (if you get sued by a customer they could take your house) Another issue is that you don't receive social services like unemployment benefits if it didn't work out for you. And then you also pay more for health services than normal employees. These are a lot of issues for someone just trying to make a few bucks because he/she has for some reason or another financial problems. It's not some insurmountable problem for entrepreneurs that have a reasonable plan and some money saved up, but we are talking about people that are trying to get through a tough year. In such a situation the additional risks when you are already at the bottom are for many not acceptable.