Business Entity Type Explainer

Option 1 — Sole Proprietor: Zero setup cost. No liability protection — your personal assets at risk. All income taxed as self-employment (15.3% SE tax). Option 2 — Single-Member LLC: $300 TX filing fee. Personal assets protected from business debts. Same SE tax treatment unless you elect S-Corp. Option 3 — LLC + S-Corp Election: Most tax-efficient at $85K. Pay yourself reasonable salary (~$45K), remainder as distribution — saves ~$6,000/yr in SE taxes. RECOMMENDATION: LLC with S-Corp election — liability protection + meaningful tax savings outweigh the added complexity at your revenue level. Consult a business attorney and CPA before forming.