You don’t need to make El Chapo money to benefit from an LLC.

Most people think LLCs are only for six-figure earners, big-time entrepreneurs, or criminal masterminds with private jets and federal escorts. But the truth is, forming a Limited Liability Company (LLC) can be a smart move for everyday freelancers, side hustlers, and small business owners—long before you’re making cartel cash.

So how much income do you really need before an LLC is worth it? Let’s break it down.

What Is an LLC, and Why Do People Form One?

An LLC is a legal business structure that separates your personal assets from your business liabilities. That means if your business gets sued or goes into debt, your personal finances (like your home or car) are generally protected.

People choose LLCs for:

• Liability protection

• Credibility with customers and partners

• Pass-through taxation (profits are taxed once via your personal return)

• Flexibility in management and ownership

But these perks come with costs.

The Cost of Running an LLC

Before considering income thresholds, understand the costs involved:

• State filing fee: Ranges from $50 to $500+

• Annual fees or franchise taxes: Some states (like California) charge $800+ annually, while others are as low as $0 (e.g., Wyoming)

• Registered agent fees: $100–$300/year if you use a service

• Compliance expenses: Annual reports, bookkeeping, and possible CPA fees

So even if your LLC doesn’t make money, it can still cost several hundred dollars a year to maintain.

When Does an LLC Become “Worth It”?

A common rule of thumb is that once your business earns around $30,000–$50,000/year, it’s worth considering forming an LLC. Here’s why:

✅ Tax Flexibility at $50K+

At this level, you can start to elect S Corporation status for your LLC. This allows you to pay yourself a “reasonable salary” and take the rest of your profits as distributions—potentially reducing self-employment taxes.

✅ Risk Increases with Revenue

The more you earn, the more you’re exposed to liability—whether it’s legal risk, contract disputes, or customer issues. Having an LLC protects your personal assets from these risks.

✅ You Want to Separate Finances

Even if you’re under $50K, forming an LLC may make sense if:

• You want a dedicated business bank account

• You want to build business credit

• You plan to grow quickly and want a solid foundation

What If You Make Less Than $30K?

If your business earns less than $30K per year:

• An LLC might still make sense if you have liability concerns (e.g., offering services, working with clients, selling physical products)

• You might be better off as a sole proprietor if you’re just testing the waters and want to avoid the admin

That said, the cost difference isn’t always drastic. In many states, setting up and maintaining an LLC costs less than $300 annually.

What Else Should You Consider?

Your Industry

Some industries carry higher liability risks—construction, health, coaching, food, and legal services to name a few. If that’s you, form an LLC early, regardless of income.

Your Growth Plans

If you plan to raise funding, get a business loan, or scale operations, you’ll need the credibility and structure that an LLC provides.

Your Need for Branding

“Jonas Smith, LLC” on an invoice or contract can look more professional than just your name.

Final Thoughts: It’s About More Than Just Income

There’s no magic income number that says, “Now you need an LLC.” But once your revenue hits $30K to $50K/year oryou’re taking on any legal or financial risk, an LLC is likely worth the cost.

If you’re still early in your business and don’t want the paperwork or cost yet, start as a sole proprietor—just be sure to track your income and keep receipts.

But if you’re serious about building something sustainable (and protecting yourself in the process), forming an LLC isn’t just worth it—it’s smart.