>nor can afford to incorporate a business
You don't need to incorporate to be self-employed. The costs are essentially zero.
You don't need to incorporate to be self-employed. The costs are essentially zero.
I'm giving you here an example of Austria (EU): If you want to earn more than around 5000 dollars a year, you HAVE to incorporate. The cheapest setup will still cost you a few hundred dollars per year, but from start to incorporation it will take you at least 2-3 weeks.
Many will need the services of a tax consultant to deal with the taxes, which also involves some costs. (If you are employed the company has to deal with the taxes for you)
Then there are also liability issues depending on how you incorporated. Something similar to a LLC costs more to incorporate, but with the cheaper ones you are liable with your private property. (if you get sued by a customer they could take your house)
Another issue is that you don't receive social services like unemployment benefits if it didn't work out for you. And then you also pay more for health services than normal employees.
These are a lot of issues for someone just trying to make a few bucks because he/she has for some reason or another financial problems.
It's not some insurmountable problem for entrepreneurs that have a reasonable plan and some money saved up, but we are talking about people that are trying to get through a tough year. In such a situation the additional risks when you are already at the bottom are for many not acceptable.
In my country to be self-employed you have to register and pay "freelancer" insurance cost to the state that add up to something equivalent to $800 per month (nominally $300-$400 in our economy).
People incorporate for a reason, though. If you don't your personal assets aren't protected if the business gets sued or becomes insolvent.
There's a reason Donald Trump still has lots of money after having his businesses go bankrupt four times.
Trump is/was doing multimillion dollar real estate development with outside investor's money, and observing lots of corporate formalities. That's why his businesses could go bankrupt without wiping him out.
If I represent a creditor, I'm not going to care if your chickenshit small business is incorporated or not, particularly if it's just a professional services business like a consultant. I'll just sue you AND your corporation. Besides, most creditors that loan to small businesses demand personal guarantees from the owners.
Just having a corporation won't make you Donald Trump. But it might earn your tax preparer some fees.
You can sue anybody you want. The question is always whether or not you can prevail. If you're just a creditor you would almost certainly be unable to get a judgement against the individual unless he did something stupid like spend corporate money on personal items.