Getting paid for a service as an individual vs as a company

I am interested in offering services like computer repair or programming. However it's not a business I will be running. It's more like getting paid for helping. This "help" is an extra source of income and I might put some ads in Craigslist.

Let's say I develop an app for another person or a company, is it OK for them to pay me through a check to my name? I am asking this because I don't want to go through opening a business, paying for a business license and all the paper work. My "work" is basically informal. I am not looking for legal advice to take with me. Just for a ballpark informal advice.

This is exactly the kind of work that falls within the context of a sole proprietor. You can typically register them online and for relatively cheap.

That said, I wouldn't be too concerned about accepting some payments in your own name if you're just getting started. Just be sure to include this income on your tax return. The reason you register as a proprietor is primarily to reduce your tax hit on this kind of extra income; and plus you can claim business related expenses against your personal income - but if you only are doing this every once in a while the tax savings will be negligible anyway.

If you plan to do a couple transactions a year and the work is low risk then you can accept the checks and you just need to declare it as income for tax purposes.

If this money starts to become a couple thousand or more and the risk goes up you may want to consider looking into setting up an LLC or something like that.

That could potentially help protect you personally from any lawsuits related to the business. However, being a one man business it's a lot harder to separate the two.

Anyway you cut it, it's a business.

• When I refer to risk, I primarily mean someone suing you for messing up their computer, or losing their files, or deleting something they didn't want deleted etc.

However it's not a business I will be
running. It's more like getting paid
for helping.

If you ask anyone from the finance office they will call this argument bullshit. Like that - and send you a fine.

If you do something to make money it is per definition a business. Point. It may not be a company, but it is a business. Saying "hey, it is more like helping people" - well, seriously, Honda is also not a business. They basically help people to get cars etc.

Let's say I develop an app for another
person or a company, is it OK for them
to pay me through a check to my name?

Depends on legislation. Which country you said you are in? Oh, you did not say. See, "taxes" is not something that is globally the same. Depending on legislation it may be legal (you have to declare as income), legal (they have to pay taxes on top what they pay you) or illegal.

My "work" is basically informal.

Ah - no. It is work for hire. Or it is selling software. Whatever it is, if you do it regularly and a lot (not a single check) you will get into arguments with the tax office about that not being a business. Arguments that will cost you a LOT.

And dont forget to put that income on your tax declaration. Informal or not - it is income.