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Comment by adamb_ | Hacker News Reader

I'm considering making the transition from sole proprietor to LLC for my on-the-side consulting... Advice from friends range from "it's a no-brainer!" to "it's more trouble than it's worth". I don't make a lot doing my side-work (under $10k), but the amount has grown year-over-year. Any advice on incorporating?

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Advice: consult with an attorney.

More generally, if you are considering the LLC for legal protection, I would not advise the LLC if you will be the sole owner (aka single member LLC), despite the name you will generally not receive limited liability protection. As an attorney I always take a very conservative approach when it comes to legal protection.

LLC makes sense if you're worried about potential downside from your consulting arrangements -- e.g. how much are you on the hook for if you fail to deliver? LegalZoom or RocketLawyer is probably fine for getting set up initially -- talk to an actual lawyer if you end up hiring someone or subcontracting work out to people.

Talk to accountant about tax hassles with LLCs.

Sadly though, for us Canadians there is no LegalZoom or RocketLawyer (although I might be totally wrong on this one!)

So its either like a few thousand to setup an INC (LLC's don't exist here) or go the cheap but high liability route with a sole proprietorship.

Most advice would be jurisdiction specific. General advice: get a good accountant, whose job it is to know stuff like that, and keep apprised of when it changes.

for one guy, don't bother unless you want extra paperwork.

I did some research into incorporating an LLC and I came to the same conclusion. For a sole owner, a sole proprietorship is simpler and the LLC doesn't provide any benefits but does add a lot of extra tax and other paperwork.

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