I've seen a lot of self-employment posts, so I apologize if this is redundant, but nothing seems to address my exact question.
My partner and I work entirely as freelancers. We get paid cash for a few odd jobs we do together (pet care, etc) but mainly get 1099s for individual work. We have a limited number of expenses right now. We are filing jointly for the first time this year and wondering if there is a better way to file than schedule c, sole proprietorship. We don't have an LLC; we've discussed starting one but aren't sure that would have any tax benefits, and we've talked to 2 accountants, one who pushed an LLC and one who said it was pointless. Hoping reddit can solve this problem!
What's the best way to file as 1099-NEC freelancers?
byu/Rainbow_Tit_45 intax
Posted by Rainbow_Tit_45
7 Comments
The llc is pretty pointless for taxes. It sounds like 2 schedule C’s are the best option here. One for each of you for the work you each did.
There are zero tax benefits for an LLC without an S Corp election. Depending on your income, that may be an appropriate path. Otherwise Sched C is the way you will file.
LLC is for legal liability (**L**imited **L**iability **C**ompany) and/or making stuff like partnerships easier. It will not reduce your tax burden (but it will increase your workload burden).
If you don’t have any significant liability exposure in your work, just do Schedule Cs.
>My partner and I
Just double checking, are you married?
There aren’t any tax benefits to setting up an LLC by itself. It’s possible that you could save some money if you had LLC’s and then elected S corporation taxation for the LLCs, but watch out for accountants who push that heavily. It’s more administrative work than sole proprietorship and will be a lot more expensive with the payroll requirements and 1120-S returns.
There are some basic guides for self income here:
https://myfreetaxes.com/taxguides
If you want to do your taxes yourself, look at the IRS Free File program, My Free Taxes, or FreeTaxUSA. None of those options will charge more for self-employment income. You also might qualify for free tax preparation:
https://www.irs.gov/individuals/free-tax-return-preparation-for-qualifying-taxpayers
Who is the 1099 made out to? The TPIN number on the 1099 is who has to file for the 1099s.
I am not familiar with common law marriage states, and I know the rules differ in that situation.
LLC is for liability protection so unless people are going to sue you for walking their dog and losing it or something, you don’t need an LLC. Also you can get business errors and omissions or professional liability insurance and skip additional tax compliance.
so yes LLC is pointless.