[gubamyster]

Why not just keep it simple with a sole proprietorship & file a Schedule C? There would be no set-up cost for a sole proprietorship.

You can get a FEIN (tax ID) for a sole proprietorship if you don’t want to have your SS# on documents or invoices. You can get this online at the IRS website, no cost.

You can file for a DBA to use a more professional business name other than your personal name. The DBA would be minimal cost.

[9YearLurker]

I agree. For one client, 5-10 hours a week, S-Corp is definitely overkill, but LLC is likely more than needed as well.

[Sacajaweau]

I agree 100%. I filed a DBA so I wasn't named directly..only on the recording document in the Clerk's Office.

Schedule C...office in home...no problems.

[glennaro]

Home office; sole proprietorship; independent contractor ... being in California you should obtain a business license from your city or county to make your “independence” official. Many firms will ask for confirmation.

[Gideon7]

Why not just keep it simple with a sole proprietorship & file a Schedule C? There would be no set-up cost for a sole proprietorship.

The importance of an LLC is in the name: LIMITED LIABILITY. If you get sued they can only go after the assets of your LLC, not your home or your life savings. A sole proprietorship exposes you to unlimited personal liability.

The single-owner LLC acts exactly the same as a sole proprietorship for tax purposes. It gets "disregarded as a separate entity" by the IRS: You file the same Schedule C, make the same business expense deductions, etc. The only difference is you add the name of the LLC to the form.

For the liability protection to work you have to carefully keep all your business transactions separate from your personal spending. Otherwise in a lawsuit they could try to "pierce the veil" to go after you personally. Open a separate bank account under the name of the LLC and use it exclusively. Get a Visa debit card for the bank account. (Never use a personal credit card.)

As an extra benefit if your business gets audited by the IRS you can easily show all your business transactions by just giving them the business bank statement, keeping your personal transactions private.

[Vigilanteman]

$50 fee for filing a DBA in Pennsylvania. We organized it as a partnership so I could add relatives or friends as needed. This protects the name from use by someone else and gives you access to perks like bonus premiums for business checking accounts. I can still file on a Schedule C as long as the only partner is a spouse with whom I am filing jointly.

I write only a handful of checks monthly and the $300 bonus from the bank paid for the DBA filing, business cards and a nice business size set of checks and book with about $180 to spare.

[ealgeone]

The LLC is the way to go as it offers protection against personal assets.