Should I set up an LLC for my consulting practice?
Posted in: Legal
Q: I've started working as a "consultant" for my sister's successful small business, from time to time. She is my only client right now. Should I form an LLC or Inc. and have her pay the "business" and then I pay myself? Is there any benefit for me in doing this? We're talking about $50-70K per year.
A: There wouldn't be any tax advantage to doing that, so the only thing left would the limited liability aspect. Some consulting is more apt for liability than others, though ideally this is your sister, and that would not be an issue.
If you want to form an LLC with the expectation of taking on more clients for protection of taking on more clients for protection of your personal assets, that is one consideration. Otherwise, there really is no reason to go to the trouble.
-- Answer from Nate S., an attorney on JustAnswer.
Daily Answer is excerpted from the JustAnswer archives and features information provided by a Expert on JustAnswer.