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Question
I'm torn, trying to figure out if I should actually create a company or just keep doing IC work informally. Could you help me figure out which would be better as far as my taxes go?
- Anonymous
Answer
You can always continue to provide your contracting work through your sole proprietorship. And as the only owner of your contracting business, there is little tax difference if you choose to become an LLC. However, becoming an S-Corp, can allow you to avoid paying some self-employment tax. And depending on how much your contracting business is making, this could be a sizable tax savings.

Melissa Pedigo

Melissa Pedigo has been a CPA for over 20 years and she is one of the only CPA copywriters in the world. With a vast knowledge of U.S. tax and accounting, she’s able to write about tax and finance topics from a unique perspective...as an industry expert. When she’s not writing or being an accounting nerd, you’ll find her watching and playing tennis, reading, tending to her half-grown garden, and studying foreign languages

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