How To Sell On Fiverr?

If someone chooses to become a freelance worker on a platform such as Fiverr, is there any benefit to filing as an individual or creating an LLC and filing under that?

• I want to work on Fiverr as a freelancer who will accept payment via Paypal for my services.  My understanding is that Paypal/Fiverr will send you a 1099 form if you earn over $20,000 and sell 200 services.  However, I understand that you also have to file self-employment papers, which essentially make you pay double income tax.  Therefore, is there any benefit of creating an LLC as a sole propritor?  Does this mean I am technically only taxed once?  I don't really understand taxes or company creation.

• Answer:

  While you definitely want to talk to a tax professional about your particular situation, you're probably not going to benefit dramatically from creating an LLC if you're freelancing through a platform like Fiverr. The costs associated with establishing and maintaining an LLC can be expensive, depending on the state you live in — and you're still going to owe taxes on all the income the LLC earns. Instead, you're probably going to be better off looking at what tax deductions you can qualify for. As a sole proprietor, your business expenses are deductible on your taxes. A good accountant will find you other ways to cut down your tax burden.