Single-member LLC or Sole Proprietorship?

Which do you recommend for a design freelancer?

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LLC is only for liability protection, doesn’t change anything tax-wise. So if you setup a single member LLC you are by default taxed the same as a sole prop. Once you reach a certain income threshold it may make sense to setup as an S-Corp, which is where you would start seeing tax advantages (you’d setup an LLC as the biz entity and then elect to have that taxed as an SCorp). Would recommend talking to your accountant, mine recommended an S-Corp if you’re over about 75k in income.

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👆🏻 you will get serious tax savings by letting a pro get you set up with an S-Corp if you’re making six figures or more. And if you’re ACD level you’re probably gonna make that in six months or less.

My financial advisor set up an S-corp. get someone who will put you on payroll for your company and set up 401k contributions to maximize tax efficiency

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I’m in the same situation right now. My accountant recommended LLC for freelance, even though my salary income is six figures (over starting threshold for what makes sense for s corp).

Doing sole while I finish figuring out LLC (business address, bank account, etc).

My lawyers perspective is that you need the LLC over sole, to split business and personal. She mentioned where most of the marketing and ad industry freelancers get in trouble is over “negligence” with clients. Should something go south, your personal assets are protected.

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Be careful. LLCs actually don’t protect as much as people think they do.

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If you’re serious about your business… you’ll treat it like a business

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S-Corp 4 life!

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