Ask HN: How do you handle the business structure and taxes of side projects?
Lawyer and entrpreneur here. There are 2 main reasons to incorporate: liability protection and ease of administration.You don't say what your side project is, but you have to ask your self whether you need liability protection, that is what are the chances someone is going to sue you for damages. If you feel you need liability protection, then you should form an entity. I recommend an LLC in most cases. It is a pass-through entity for taxes which means you pay taxes on your individual return (though it still must file a business tax return). Also buy insurance.The other reason is ease of administration. A legal entity will have some form of controlling document. In an LLC, it is the Operating Agreement. This spells out the rights and duties of the principals in the business. It also allows for common ownership of the business assets. As principals come and go, the LLC continues on. Finally, if you get big and you bring on investors, they will want to see a legal entity for their protection.The drawbacks of forming an LLC are the time and effort of drafting and filing all the proper incorporating documents, paying the filing fees (in California $800 per year), and the extra tax forms.This is a complicated topic and I have given a high level view. There are lots of resources on the internet and in bookstores on this topic. Nolo.com would be a good place to start.