Hello again designer,
Thank you for the additional information.
Since for at least right now this is going to be a temporary position, and you do not expect earnings of more than $35,000 for that period, I would strongly suggest that you simply operate this business as a sole proprietor, rather than setting up any type of formal business entity.
Many people are under the impression that having a formal business set up will allow you more deductions, but that is really not the case. And setting up a formal business involves much more paper work and registration fees than it may be worth in your case, at least at this point.
Operating as a sole proprietor you will simply report your income and related expenses from this job on Schedule C of your personal tax return. You will then pay taxes only on your net income after deducting your expenses. If you will be working from your home and will be using a dedicated area in your home for this business work, then you can claim a deduction for some of your home expenses for the area being used for your work.
The only reason at this point that you would really want to consider creating a formal business would be if you feel that you need a layer of legal protection. In other words, if you feel there are any possibilities your company might be sued for a faulty product or something of that nature, then it would be beneficial to have a separate legal entity set up so that your personal assets were protected. But from a tax standpoint, you will be just as well to operate as a sole proprietor.
If at some point this becomes a full time venture for you and your income increases significantly from this business, then it might be worth looking in to establishing an S Corporation, as that would offer you a few tax advantages. But the tax advantages of an S Corp would not really even kick in until you were running this as a full time business and had income of at least $50,000 or more each year.
Thank you designer