Work 1099 without company

Question

My wife has the possibility to do some regular freelancing work (writing and editing) with a local company which would be paid as a 1099 on an hourly basis. Several years ago when she did something similar she had her own LLC company, however she shut that down a long time ago.

I am guessing that there might be potential tax benefits to restarting her LLC and doing the work through it. So can anyone make an argument for or against restarting her LLC?

Note that where we are the LLC registration cost and local business license cost with run to no more than $US150 - which is well less than a days work at her billing rate.

Answer 1

I am not an accountant or attorney. NOTHING I post should be see as direct tax or legal advice. This answer is solely based upon my personal experience.

I own/operate a single member LLC in the US.

The key word in LLC is Liability, As a US based, single-member, LLC there's not a great deal of tax benefits. You can still file individually and it doesn't change the tax rates. Now, I'm not married so there may be further considerations due to that which I'm unaware of. Only an accountant could answer that effectively.

The only reason to use an LLC if it's a single-member LLC is to protect personal assets against business claims. Even with that in mind how you manage the personal and LLC finances plays a large role -- the need for separate bank accounts, tracking how you spend any money from the LLC account, tracking how and when you take dividends from the LLC. If you fail to manage money correctly, it's my understanding that a single member LLC can easily be dissolved by a judge should an issue arise.

In my personal opinion, if there's no worry about legal claims against the business, there's no need for a single-member LLC. A sole-proprietorship will offer pretty much the same tax status and merely removes any liability protection.

Again, I am not an accountant or attorney. Nothing in this answer should be seen as legal advice.