LLC as a contract psychologist

[PsynofTimes]

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Hello. I am about to join a practice as an extra moonlighting gig working 3-10 hours per week. I recently heard that one should set up an LLC to do this in order to protect one's assets from a lawsuit. Can anyone shed light on whether that is actually a good idea or necessary? Thank you.

 

[AcronymAllergy]

An LLC offers very limited (hah, pun) asset protection. However, there are various tax advantages to setting up an LLC, even if all you ever do is run it as a pass-through entity rather than an S corp or something more complex. For example, you can write off a whole bunch of stuff as business expenses, assuming it's justified. The taxes are more complex, so you'd probably want to hire someone for that, but usually you'll save more than what it costs to pay them (and pass-through LLC taxes aren't terribly complex anyway).

I pretty much always recommend it. Just check with your state to see if you need an LLC or PLLC (the difference is basically just in name only).

 

[PsynofTimes]

thank you!

 

[bluecolourskies]

An LLC offers very limited (hah, pun) asset protection. However, there are various tax advantages to setting up an LLC, even if all you ever do is run it as a pass-through entity rather than an S corp or something more complex. For example, you can write off a whole bunch of stuff as business expenses, assuming it's justified. The taxes are more complex, so you'd probably want to hire someone for that, but usually you'll save more than what it costs to pay them (and pass-through LLC taxes aren't terribly complex anyway).

I pretty much always recommend it. Just check with your state to see if you need an LLC or PLLC (the difference is basically just in name only).

Wait wait so you can’t write stuff off a sole prop? (Yes I know I should consult with a tax person but i filed as a sole prop and did deduct a bunch of stuff 😭)

 

[WisNeuro]

Wait wait so you can’t write stuff off a sole prop? (Yes I know I should consult with a tax person but i filed as a sole prop and did deduct a bunch of stuff 😭)

You can, there are just different things available to different tax structures.