Does a Self-Employed Person Need to Register with the IRS?
No. You can conduct business activities under your personal name without additional business registration.
Is This a Good Thing?
Both yes and no. On one hand, there is no additional paperwork or hassle with registration documents. On the other hand, you deprive yourself of the legal protection that an LLC (Limited Liability Company) provides. Let’s not forget that we are in America, where everyone loves to sue each other. By operating under your own name, you expose your personal assets to risk in the event of legal proceedings.
What About Taxes?
Self-employed individuals pay:
- Federal Tax (based on a progressive scale)
- Self-Employment Tax (Social Security + Medicare) – 15.3%
- State Tax (if applicable)
Income from self-employment is calculated in an attachment to your personal/family tax return called Schedule C.
“So this is the same as a Single-Member LLC,” you might say. Yes, but with one caveat: an LLC can change its method of taxation at any time (even retroactively when filing a return) and recalculate its tax liabilities under more favorable terms. This option is simply unavailable to a plain self-employed individual.
