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LLC and business structure guides

Most freelancers start as sole proprietors without filing anything. These guides cover when an LLC is worth forming, what it costs in each state and the paperwork that comes with it.

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ComparisonLLC vs sole proprietorshipAn LLC changes nothing about federal income or self-employment tax. The 2026 figures side by side, and what the structure buys you.By Nicolas StrautPublished 5 min read

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Taxing your LLC as an S corp

What the S corp election saves and costs, and the profit level where it starts to pay.

ComparisonS corp vs LLC: 5 key differencesThe 5 key differences between a default LLC and an S corp election, what the election saves at each 2026 profit level once the QBI deduction is counted, and the break-even.By Nicolas StrautPublished 11 min read

Frequently asked questions

Do I need an LLC to freelance?

No. Freelancing without an LLC is legal in every state. You are a sole proprietor from the first dollar you earn, with no paperwork and no fee. What your city may require is a local business license, which is a separate thing. Learn more: Do freelancers need an LLC?

Does an LLC lower my taxes?

Not on its own. A single-member LLC is a disregarded entity, so its profit lands on your personal return and you pay the same income tax and self-employment tax as a sole proprietor. Only an S corporation election changes that. Learn more: LLC vs sole proprietorship

Can I start as a sole proprietor and form an LLC later?

Yes, and most freelancers do it in that order, forming the LLC once their liability exposure justifies the cost. Your federal filing doesn't change unless you also elect S corporation treatment, and there is no tax penalty for waiting. Learn more: LLC vs sole proprietorship

How much does an LLC cost to keep open?

Every state charges a fee to form one, and most charge again every year or two to keep it open. No state charges a monthly fee. A dozen states add a minimum tax on top, which is where the bigger annual bills come from. Learn more: How much does an LLC cost?

How much does an EIN cost?

Nothing, when you apply directly with the IRS. Sites that charge for one are sending the same free application for you. If you are forming an LLC, form it with your state first, because the EIN is issued to that entity's name. Learn more: How to get an EIN

Key terms

Sole proprietorship
The default for anyone who works for themselves. It starts automatically, with no filing and no fee.Learn more: LLC vs sole proprietorship
Single-member LLC
An LLC with one owner. The IRS treats it as a disregarded entity, so its income goes on the owner's Schedule C.Learn more: Do freelancers need an LLC?
LLC filing fee
What a state charges to form an LLC. Most states also charge a recurring fee to keep it open.Learn more: How much does an LLC cost?
EIN
A federal ID number for a business, free from the IRS, that most banks ask for.Learn more: How to get an EIN

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