We gathered a reading list so you don’t have to.
We’re thrilled to partner with so many great companies and organizations working to bring tools and resources to independents. In addition to the perks and benefits that we’ve lined up across healthcare, legal, and financial services, we’re sharing helpful blog content in collaboration with our partners to help you run your studio as smoothly as possible.
In this installment, we’re diving into business formation tips to spotlight our partner, Collective, an online concierge financial platform supporting independents with paperwork, taxes, and more. Wethos users get 20% off monthly membership with Collective — sign in or sign up to redeem!
LLC or S Corp? An age-old question.
So many independents eventually have to ask themselves this question. It’s often the first step to taking your freelance gigging to the next level. The leap to start an LLC or an S Corp protects you legally and financially in the long term, especially if you expect to be working independently full-time and growing your business over the next few years. If you’re working as a sole proprietor (basically anyone who’s not an LLC or S Corp), you’re not legally protected and you might be losing money if you make more than a few thousand dollars annually.
What’s the difference between an LLC and an S Corp?
Simply put, an LLC (limited liability company) is a business designation that can shield owners from litigation, but you’ll still file taxes as part of your personal return.
An S (subchapter) corporation is a tax classification. If you make over $100,000, it’s likely you could save about $5,000 with an S Corp classification. It also provides owners with protection from litigation in addition to tax passes through the company to the owner — meaning they can avoid self-employment tax.
An LLC may apply for S Corp classification, but it’s best to do that earlier on in your business journey, which is why the “LLC or S Corp” conundrum often bubbles up.
Looking to dive in deeper? We rounded up the best explainer articles so you can take a deep dive before you decide.
- “Should you start an LLC or S Corp? Here’s How to Decide,” from our partners at Collective
- “S Corp vs. LLC,” from LegalZoom
- “What Is an S Corporation and Should You Form One,” from our partners at Bench
- “Sole proprietorship? LLC? S Corp? How to pick what’s best for your business & taxes,” from Freelancers Union
- “LLC Vs. S Corp: What Are They And How Are They Different?” from Forbes
Happy reading! Ready to take a leap towards business creation? Let our partners at Collective help you out. Redeem 20% off membership with Collective through your Wethos account!