Before starting any potential side hustle, do you always need to legally set up an LLC? Can I launch my website and see if I can obtain customers first?

It really depends on your type of business, your projected income for the first few years etc.

As a sole proprietor, your personal assets can be used to pay business debts. Also, if there are any law suits, you may be held personally liable. Therefore, many prefer opening LLCs or corporation.

In addition, the costs of setting up an LLC is not very high. Many CPAs also offer this service along with tax consultation.

A major advantage from a tax perspective, depending on your projected annual income etc is that you can choose S tax election for your business. This option can save you taxes if you are an LLC with S tax election

 

** our response to a question asked on quora


Posted In: Company Formation

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