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Ask HN: As a freelancer, should I incorporate into an LLC, S-corp or C-corp?

8 points by hauget ↗ HN
Hi everyone. I am a foreign student currently residing in Germany. I happen to have a US bank account and wanted your advice/opinion on whether I should incorporate (in the US) into an LLC, S-corp or C-corp for freelance work. Much obliged for your feedback. Cheers!

8 comments

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brudgers
Are you going to incorporate in the US or Germany or somewhere else?
hauget
Incorporating in the US
brudgers
Given the the three possible locations for tax liability [US, Germany, Country of Citizenship], I would recommend speaking with an attorney. That said, a C-corp is almost certainly not the right vehicle for a free-lancer.
lsiunsuex
You really should get a lawyer; even if you pay for just an hour of they're time, to help you make this decision. Each of the options you listed have different rules and regulations, taxes to be paid, what you can write off and not, etc...

"generally", LLC should be fine for a freelancer, and technically, you can do it without that. Goto your bank and tell them you want to setup a DBA (doing business as) - then it'll be Hauget doing business as Hauget Development Co. (for example)

Personally, (for freelance), I became an employee (W2, no more 1099)of a friend's slightly related business and all my freelance business goes through him. He takes a cut, paying business taxes, medicaid, etc... taxes come out of my freelance paycheck as any normal employee would, and I don't have to worry about the accounting stuff at the end of the year.

hauget
The friend option is super smart. Will def. consider doing something like this and consulting a lawyer. Much obliged for the input!
shove
Definitely not a C. All of an S corp's income filters to the shareholders (you) at tax time. This is far, far simpler than the C-corp rules which your org won't be large enough to benefit from.

S-corps require an annual filing and a small annual fee: $65 here in NC.

That said, I'm not sure what your tax responsibilities would even be as a foreigner. @lsiunuex is correct, unless your income is above ~$50k, there's absolutely no advantage to undertaking this headache -- and certainly not merely for freelance income.

hauget
Was mostly asking because of the uniqueness of the tax situation. As a foreign student in Germany I'm not allowed to freelance within Germany so I might as well setup in the US as a foreigner. Will do more research on S-corp as I know a few artists who freelance with it. Thx!