The Profitable Tutor Framework
Module 7 – Finances and Taxes
Sole-Proprietor, LLC?? Which one?
**Disclaimer** These are just my opinions. Please consult with your local government and a CPA. This information is meant as educational and not provided by a certified public accountant. I am in no way liable for the outcome of your decision to become an LLC or C-Corp.
This is a video recording of an interview I did with my father-in-law who owned his own business for many years and also was an H&R Block tax preparer. Enjoy!
Cliff Notes for this Video
Sole-Proprietor = Just you as the owner, making less than $20,000 per year gross
Limited Liability Company (LLC) = Just you as the owner + contractors, employees. Making more than $20,000 per year gross. Gives you some protection from lawsuits. Must file quarterly sales of digital or hard goods.
S-Corp = Just you as the owner or with a partner, employees. Making more than $100,000 per year gross. Must issue yourself a paycheck and pay taxes/payroll. More hassle.
C-Corp = Owners, a board of directors, making over a $1,000,000 per year. Think big corporations. Most tutors do not need to move to this level.
For starting tutors, just be a sole-proprietor until you hit the threshold of $20,000 gross per year. Then file an LLC. Most people will stay in an LLC for a long time. No need to do an S-Corp until prompted by your CPA. At that point, it's about tax savings and protection of assets and you.