Can you get a tax advantage for hiring a freelancer without setting up a LLC? The issue is the following. Let's say I crowdfund 100k for a project, I have to declare this amount in my tax earnings, but if I spend all of the 100k, I get screwed up and will lose 100k + around 30k since I had to pay my taxes. So do you just spend 70k if you didn't set up a LLC?

1 Answer 1


LLCs are more about liability than taxes. You can deduct actual business expenses as a sole proprietor without having to set up an LLC.

But the crowdfunding itself may not be taxable income. It depends on the nature of the contribution. Meaning was the contribution made in return for some ownership? Or is there an agreement to repay it at some point? Or just a gift of benevolence with nothing in return?

In any case, though, legitimate business expenses (such as hiring a freelancer) can be deducted from your personal taxes without having to set up an LLC.

I would talk to a local CPA if you want to get more specific about what would count as income and what expenses could be deducted.

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