What Type Of Business Entity Should Your Fiverr Gigs Have?

[taxhelp]

Not a week goes by where I receive a Fiverr order that goes like this:

“I created an LLC for this new business I created. I lost a ton of money since the business didn’t make any money. The state now wants me to pay penalties because I didn’t file a tax return for the LLC. Can you help?”



So what type of legal entity should you get for your business? The truth is, most small businesses fail so before you set up and spend all this money on lawyers and tax accountants, first figure out if your business idea will make money. Countless of business owners think they have a great idea that ends up bombing only after they spent thousands of dollars on websites, logos, legal paperwork, business cars, etc.



Instead figure out a way to get your product or service to market. Based on the types of clients I have helped, the majority of small business owners can start a business without setting up any type of legal entity. When you file your tax return, use Schedule C to figure out your taxable liability.



Look at it this way, if your business is successful, you will have no problem paying someone to help you figure what’s the best business entity for your business. Why spend money on setting up taxable entities when you don’t even know if you’re going to make money?



This is general advise and guidelines that do not take into account your specific tax situation. You should consult with a trusted tax professional prior to making any decisions that may impact your taxable situation. Contact me for any clarification.

[Guest binaryphoenix]

Fantastic advise! Thanks for posting. 🙂

[taxhelp]

Reply to @binaryphoenix: Thank you! I’m glad you enjoyed it.

[davidweekes]

THis is a 50/50 toss-up issue. While what you say relative to outlay makes sense from a financial point of view, the other side of the coin is that in order to market my services or even get your foot into a door sometimes the buyer needs to “see” something which while your point about the business cars and other expenses is sound, as a potential buyer/client, I would want to know that the party does have some type of business structure which I can verify. And yes while a business card, website, brochures and even a D-U-N-N number can be “falsified” it gives some of us customers a better feel when these things are there.