Should I incorporate/LLC as a freelancer who files jointly with spouse?

Forum|Forum|3 years ago
November 16, 2022
3 replies
55 views

As an independent contractor, should I incorporate in any way (LLC, Sole Proprietorship) if filling jointly with a spouse? Or can/should I just pay taxes as an individual/DBA?

Best answer by pmurphy3

You will still have to report your income either on the Schedule C, using your Social Security number as the tax ID. Strongly recommend that you at least get an EIN number from the IRS. It is free and takes about 2/3 minutes.

No penalties for not incorporating. However, an LLC gives you protection from lawsuits. They can only sue the company, not you if you are an LLC.

pmurphy3

Level 4

Yes, you can seek the protection of a Limited Liability Company (single member) and file a joint return. You would get an EIN and run the business that way. You can file your taxes for a single member LLC on the Schedule C of your form 1040 that you file with your spouse. If you decide to incorporate, you will have to do a separate tax return for the business.

Just a word of caution, please check with your state to see if there are specific rules regulations and fees for your LLC.

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k_coleyAuthor

Level 2

What if my business is more of a consulting-type structure? My income will be extremely variable, and I am not selling goods or services; therefore there are't really any 'assets' to protect. If I simply want to ensure I pay my own taxes correctly alongside my husbands W-2 earnings, is it really necessary to generate a separate business ID to work as a consultant?

Are there penalties if I don't incorporate in any way? I live in MD.