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Do I need to establish a legal identity for my business if I am self-employed?

I am an independent marketing consultant. What do I have to do to legitimize my income? llc… sole proprietorship… I am self employed with no employees.

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About Richard Butler

Richard Butler has been marketing online since 1993. As well as having generated "affiliate" income, he also provides "done for you" solutions for small business owners & entrepreneurs: and has his only Web Hosting solution: He has also used his online skills in his Real Estate Investing business, where he is well known as the "video marketing" expert.

7 Responses to “Do I need to establish a legal identity for my business if I am self-employed?”

  1. sweetestaboo37 November 20, 2013 at 3:37 pm #

    LLC is good because if your business goes under you are not held responsible.

  2. motherpeanutbutterbutinsky November 20, 2013 at 3:40 pm #

    This is up to you!

  3. Culinarian November 20, 2013 at 3:55 pm #

    LLC is probably your best bet. You will be working for the company, a legal entity, which will protect you from individual liability. You will also be taxed at the lower individual rate rather than a higher corporate rate, which would be the case if you formed a traditional corporation.

  4. AZ Boi in PDX November 20, 2013 at 4:54 pm #

    You will need to get you business licenses in the state and city which you operate. If not, you are asking for the IRS to fine you and audit you to make up whatever amount of money they feel you will owe the government. I dont think you would easily be able to open up a Limited Liablity Corportation because you are on your own and have no employees, so any mistakes that would be made and could have you sued would be a direct result of your actions. You also have less freedom to do what you want with the company, you have to have a set salary, and you have to have quarterly meetings. Corportions have to have stock in it, meaning certain percentages are owned by others. If you have a sigificant other, you can join up with them to start an LLC. more easily. Most states and cities have websites and free advice on how to start your company and status of it. Do it as legally as possible. Example, if you try to represent yourself as a funeral home in Oregon, and you are not registered, you can loose your establishment, and be fined tens of thousands of dollars.

  5. Chwalek November 20, 2013 at 5:50 pm #

    It depends. For many types of businesses, I would say yes, but as a consultant, I would say no. If you are just starting out, a sole-proprietorship is often the way to go. If you are using a company name such as “Smith Consulting,” you should go to the town or city hall and regsiter the business name as a DBA (doing business as). There may be a small fee.

    As far as the income goes, there is nothing you need to do to “legitimize” the income except for reporting it on your tax return- on a Schedule C.

    Consider an LLC or S corp. if there are potential liability issues or if you have substantial personal assets (investments, real estate ,etc.).

  6. IMATEK November 20, 2013 at 6:38 pm #

    As a sole proprietor you have two choices, use your name or a “dba” which is a fictitious name. Either way for business porposes and to protect yourself get a TIN which is gotten from the IRS for free online and is a Taxpayer ID protecting you SS number. All income is reported on you personal tax return using a Schedule C.
    If you have a liability issue (you think you might get sued) you have two options:
    An LLC or a Corporation. both limit your liability to the amount you have invested but both require regular forms to be filed both with the state and the federal government, Contrary to what was posted here an individual can form an LLC in all 50 states. I would recommend an accountant to look at your income, the expense of filing and your exposure to give you a recommendation and to assist with the filings.
    Just using your name and social security number is asking for identity theft in todays day and age.

  7. emmasnw November 20, 2013 at 7:23 pm #

    Use this basic checklist to make sure all the important steps are taken before you launch your new venture. This business checklist will make sure that you cross all your t’s and dot all your i’s before your business launch.

    Steps to Starting a Business –

    Other sites you might find helpful are:
    SBA –
    SCORE –
    Small Business Resource –
    Business Link –


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