You Don’t Need an LLC
One of the biggest myths I hear is:
“I need to set up an LLC so I can write off my expenses.”
Not quite how it works.
The IRS doesn’t care if you’re an LLC or just a sole proprietor. If you have a legitimate business activity and a legitimate expense, it can be deductible. The business structure doesn’t magically unlock write-offs.
What an LLC Actually Does
Don’t get me wrong, LLCs serve a purpose. They:
Create a legal separation between you and your business (liability protection).
Can add credibility to your business name.
May make it easier to open a separate bank account.
But when it comes to taxes?
An LLC by itself doesn’t change how your expenses are treated. The IRS looks at whether the expense is ordinary and necessary for your business, not whether you have “LLC” after your name.
LLC ≠ Different Taxes
Here’s what most people don’t realize: an LLC is a legal structure, not a tax structure.
By default, a single-member LLC is taxed exactly the same as a sole proprietor. Your business income just flows onto your personal tax return (Schedule C). The expenses are deductible either way.
When an LLC Does Change Taxes
The only time forming an LLC really changes your tax situation is if you later elect S-Corp status.
That’s a whole different setup, it comes with payroll requirements and more paperwork. Sometimes it can save money on self-employment taxes, but for most side hustlers or early business owners, it’s unnecessary and overly complex at the beginning.
So What Actually Makes Something Deductible?
It comes down to two key words:
Ordinary → common and accepted in your line of work.
Necessary → helpful and appropriate for your business.
That’s it.
If you’re running a lawn care business and you buy a mower → deductible.
If you’re a photographer and you buy a camera → deductible.
If you’re a consultant working from home and you buy a desk → deductible.
No LLC required.
When an LLC Does Make Sense
Now, there are good reasons to form an LLC:
You want liability protection (ex: if you’re in a business where you could be sued).
You want your business to look more “official” to clients.
You’re planning to scale and bring in partners.
But if your only reason is “so I can write off expenses”… save yourself the filing fee.
Common Trap
Here’s what I see a lot:
Someone makes a few thousand dollars on a side hustle and rushes to form an LLC. They think it’s going to save them on taxes, but all it really adds is paperwork and cost.
If you’re just starting out, keep it simple: track your income, keep receipts, and separate your business finances from your personal ones. That will get you 90% of the way there.
Quick Checklist if You’re Just Starting Out
Not sure where to begin? Keep it simple:
Track all income and expenses.
Open a separate checking account (even without an LLC).
Save a portion of your income for taxes.
Focus on growing your business, worry about an LLC later if liability or growth calls for it.
Closing Thought
You don’t need an LLC to write off your expenses. You need:
A real business activity.
Good recordkeeping.
And the willingness to treat it like a business.
Liability protection is valuable. But tax write-offs? Those are about what you do, not the letters after your business name.
If you’re not sure whether forming an LLC makes sense for you, or what you can and can’t deduct, that’s exactly the kind of thing I help clients sort through.
