Legitimizing Your Side Hustle: Is Incorporating Worth It

Fifty-nine million Americans freelanced in 2021, representing 36% of the workforce, reports Upwork, the popular freelancing platform. 

More than half of non-freelancers say they are likely to freelance in the future, suggesting that many opportunities explored during the pandemic will become permanent as the world returns to some semblance of normalcy. 

Upwork’s Freelance Forward 2021 research also indicates that 70% of freelancers say it took less than a year to earn more as a freelancer than at their past employer. 

According to Business Wire, freelancers have contributed 1.3 trillion dollars to the U.S. economy, 10 million more than in 2020. 

With freelancing on the rise, many wonder if they should incorporate their self-employment enterprises. 

Creating Space Between You and Your Business

The first step to forming a Single Member LLC (SMLLC) is to submit Articles of Organization. Once incorporated, the LLC can own property, be sued and sue others, manage bank accounts, borrow funds, and hire workers. 

It creates space between your personal finances and business finances, making filing your taxes less of a headache. And you will still be able to use popular tax filing services like Turbo Tax or H&R Block even if you have an entity. 

The benefits of incorporating yourself as an LLC are bountiful: you can attract more business opportunities, appear more credible to potential clients, protect your personal assets, get liability insurance, open a business bank account, and save money on your taxes. 

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