Since I began freelancing nearly 10 years ago, I've never separated my writing earnings from other income. I paid the self-employment taxes on those earnings. Honestly, I did not see the need to separate income from a few writing sales each year from my earnings from my full-time job.
Then, I started freelancing full time. For the last five years, as my writing business has grown - along with the income - I've contemplated forming a Limited Liability Corporation (LLC), but I haven't determined if it's worth it. Yes, I make a living from my writing abilities, but I don't view myself as a "big-name brand" so I'm not sure if I will be ahead by forming my own writing conglomeration where I can rule the publishing world...at least in my mind....and keep personal and business finances separate.
According to the Internal Revenue Service, an LLC is a type of business structure, allowed by state statute, where owners have limited personal liability for the company's debt and actions of the LLC. The LLC can include several members or it can be a sole proprietorship.
Will it add more paperwork or will it make bookkeeping and tax time easier? What costs are associated forming this type of arrangement? Do other writers use an LLC or is it an unnecessary expense?
I'm still weighing my options about the value of an LLC for a freelancer, and I've scheduled an appointment with the accountant so we can discuss the benefits and drawbacks. Then I will be able to make a sound decision...and continue my quest for publishing domination!
What do you think, writers? Should a freelance writer form an LLC?
by LuAnn Schindler. To read more of LuAnn's work, visit her website.