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In the state of Washington, it is easy and cheap to start an LLC with basic liability insurance. I have a small software consulting operation that I use for hobby money, but I'm not sure at which point it makes sense to incorporate.

I understand that I can write off my home office, have a more "official" appearance, etc. but at which point is this "worth doing"?

Assume for the purposes of this question that it costs $200 per year to maintain an LLC and insurance. All of my work is done electronically so there are no material expenses. Leaving aside the aforementioned "official appearance" and any protection offered by insurance, how much annual gross revenue justifies incorporating into an LLC?

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    Keep in mind the acronym: "limited liability company" also has legal protections from, um, liability. So it's more than just a revenue thing. If you have significant personal assets, an LLC can help shield those assets from the actions of the company. Lots of rules and caveats apply. – Rocky Apr 12 '18 at 21:27
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Sorry, wrong number.

With your own business, you can file a schedule C and take off expenses against that income. With the new tax code, there may be some advantages to incorporating, but an LLC will not provide those benefits. For tax purposes, an LLC is a pass-through entity.

An LLC can help provide a layer of protection against lawsuits. Let’s say you write a piece of software that somehow goes off and causes a car accident. The LLC can protect your assets that are non-business related from such a lawsuit. This is unrelated to income, but very related to other assets you’re trying to protect.

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    LLC defaults to passthrough for tax, but can elect to be treated as corporation by filing 8832 -- plus the more complicated corporate returns (1120/-S, 94X, W-2/W-3). – dave_thompson_085 Apr 13 '18 at 18:12

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