I am a freelancer who works with multiple clients on digital production both design and photographic, most of my income is 1099s. At this moment I pay self employed taxes and quarterly taxes. When is it a good idea to become an LLC? What are the benefits? I've also had some clients request EINs instead of SSN for 1099 forms. What is the benefit of an EIN and is it complicated to apply for it?
Hi @keck here is some information related to the advantages of becoming an LLC and the only way to determine when you should do this is to speak with an advisor regarding your situation.
You should check with your state on the guidelines they may have on what to do to set up an LLC, possibly check with the Secretary of State.
Unlike informal business structures such as sole proprietorships or partnerships, forming as an LLC grants your business certain tax benefits as well as personal liability protection — meaning you won't be personally liable for your business's debts or in the event that your business is sued.
Alternatively, startups that expect rapid growth and plan to take on investors, such as venture capitalists and angel investors, may not benefit from forming an LLC and may choose instead to start a corporation.
Here is a link to set up an EIN, they are not complicated to set up, but you may check with your state to see what extra steps you need to take.
Hope this information helps!