Is an LLC Worth it? Freelance Work

You don't need a llc to deduct expenses on a schedule C for your 1099 income.

If you've had 1099 income for the last few years, theoretically you have been eligible for any work related deductions, have you been using an accountant the last several years?

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A hybrid S/c corp was suggested.

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No idea what this means

There's no single business structure officially designated as a "hybrid S and C corporation" by the IRS. However, some situations might involve aspects of both, like S corps electing C corp status in specific contexts or strategies involving both structures.
Understanding the Structures:
C Corporations (C Corps): C corps are entities taxed separately from their owners. Corporate profits are taxed, and then dividends distributed to shareholders are taxed again at the individual level (known as double taxation). C corps offer strong liability protection and more flexibility regarding ownership and stock options.
S Corporations (S Corps): S corps avoid double taxation by passing profits and losses through directly to the shareholders' individual income tax returns. This is known as pass-through taxation. To qualify, S corps must meet specific requirements, such as a limit on the number and type of shareholders and only having one class of stock

You can be a c corp and elect to be treated as an S corp, or you can be a pass through entity and elect to be treated as an S corp.

What aspects of a c corp and s corp are you doing that make it a hybrid?

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So is the main benefit of an LLC just for asset protection in case of a suit? If that’s the case than that’s not something we need.

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And even the liability protection isn’t what a lot of people think it is. For voluntary creditors (contracts, loans, etc., yes it offers protection). For tort claims based on your own personal acts or conduct, you can still be held personally liable.

This is probably not advisable by some of the MT accountants, but have your llc lease your personal home for two weeks. Have a legal lease, invoices, and keep records of what your business did - like you had a business retreat and used the time to plan for the next year and all the good stuff. Counts as an expense for your business and tax-free income (up to a certain point) on your personal side. Augusta Rule.

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So is the main benefit of an LLC just for asset protection in case of a suit?

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Basically, and as already mentioned, its not always some kind of bullet proof protection.

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I could see it making the finances easier - just to have both separated, easier to track.

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Yup. While you certainly can keep it as a sole prop with a DBA(do business as) moniker, sometimes having a llc and an associated business ein does make it easier to keep everything in order and separate from personal affairs. Personally thats why I have one, just for organization.

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I keep seeing differing opinions on writing off the work space in a personal home. The office we use will be solely used for side work - this shouldn’t be a concern for writing off should it

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Maybe one of the cpas here can chime. But home office deduction I've always been told is one of more frequent audit triggers. With that said, there's no reason not to consider claiming the deduction, along with a proportion of internet/phone etc used for business purposes. As long as you meet the criteria for the deduction and can justify in the event of audit.

Stop using the word hybrid. It doesn’t mean what you think it means here.

Sounds like you are a c corp with an s corp election. Pass through entities with the s corp follow the same rules that you do. There is no hybrid here.

Sounds like you qualify for the home office deduction. Be sure to ask the cpa about this.

Would you rather I said the following?


“a c corp with an s corp election. Pass through entities with the s corp follow the same rules that you do”