AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
For tax, a single-member LLC is treated like a sole proprietorship by default: profit goes on your Schedule C and you pay 15.3% self-employment tax on net earnings of $400 or more either way. The difference is liability and cost: an LLC generally protects personal assets from business debts and lawsuits, SBA says, but it costs state fees each year, such as Georgia's $50 annual registration.
Many Nigerians in the US start something on the side: catering for owambe parties, selling ankara or hair, bookkeeping, tutoring, shipping boxes home. The first structural question is whether to simply trade in your own name or form an LLC. The answer depends less on tax than most people think, and more on risk and paperwork. Your immigration status matters first: some visas restrict self-employment, so read owning an LLC on an H-1B or starting a business on an F-1 before you start.
The two options side by side
| Sole proprietorship | Single-member LLC | |
|---|---|---|
| Set-up | None beyond local licences and any trade name filing | State filing (e.g. Georgia articles $100) |
| Liability | You are personally liable for business debts | Generally protects personal assets, "in most instances" (SBA) |
| Federal income tax | Schedule C on your return | Same by default: disregarded entity, Schedule C |
| Self-employment tax | 15.3% on net earnings of $400+ | Same |
| Yearly state upkeep | Little | Annual report or tax report, e.g. Georgia $50, Texas PIR |
| Registered agent | Not needed | Required |
| Raising money | Hard | Easier, can add members |
Liability: the main reason to form an LLC
SBA says a sole proprietor can be held personally liable for the debts and obligations of the business, while an LLC in most instances protects members' personal assets from business bankruptcy or lawsuits. For a catering business where a guest could fall ill, or a business with a lease and suppliers, that protection matters. For tutoring or online design work with little risk, insurance may do most of the job. The protection weakens if you mix money, so keep a separate business account either way.
Tax: less different than people assume
The IRS says a single-member LLC is disregarded for income tax by default: an individual owner reports on Schedule C, and pays self-employment tax as a sole proprietor would. The LLC is treated as separate only for employment taxes and certain excise taxes, and needs its own EIN if it has employees. It can elect corporate treatment on Form 8832.
The IRS sets self-employment tax at 15.3% (12.4% Social Security plus 2.9% Medicare) if net self-employment earnings are $400 or more, reported on Schedule SE, and you can deduct the employer-equivalent half when working out adjusted gross income.
A worked example
As an example: a side catering business makes $20,000 net profit in a year. Roughly, 15.3% x $20,000 = $3,060 of self-employment tax before the Schedule SE adjustments, which bring it somewhat lower. That figure is the same whether you trade as a sole proprietor or through a single-member LLC; income tax is added on top at your normal rate.
Costs and paperwork of an LLC
- Formation fee: Georgia charges $100 for articles of organisation under O.C.G.A. 14-11-1101; Texas uses Form 205 (check the fee schedule).
- Annual filings: Georgia's $50 annual registration between 1 January and 1 April; Texas's franchise tax report by 15 May, usually a no-tax Public Information Report for a small LLC.
- A registered agent, which you can be yourself if you live in the state.
- A trade name filing if you trade under a different name; Texas law requires LLCs to file assumed name certificates with the Secretary of State.
See annual report deadlines and registered agents.
Records to keep from day one
- Every sale, with date, customer and amount, including cash and Zelle payments.
- Every expense, with receipts: ingredients, fabric, shipping, mileage, equipment.
- Payments to or from Nigeria, with the exchange rate used, if you buy stock there.
- Any licence or permit, with renewal dates.
- A note of hours and days if you also have a job, in case questions arise about your visa or employer.
Starting as a sole proprietor and forming an LLC later is common. When you switch, open a new business account in the LLC's name, move contracts and supplier accounts across, and keep the old records for tax.
A simple way to decide
- Could a customer, guest or supplier realistically sue the business? If yes, lean to an LLC plus insurance.
- Will you sign a lease, take on staff or borrow? Lean to an LLC.
- Is it a low-risk test of an idea with small takings? A sole proprietorship with good records can be enough to start, and you can form an LLC later.
- Will a partner join? Form the LLC now, with a written agreement.
- Will you move back to Nigeria within a year or two? Factor in that an LLC keeps needing annual filings and an agent in the state after you leave.
Where Pryme fits
Side businesses with Nigerian suppliers or customers need clean, separate records whatever the structure. A Pryme Business Account keeps business USD and NGN apart from personal money, and the Finance agent prepares a monthly profit summary for your approval, useful when Schedule C time comes.
Questions people ask
Is an LLC taxed differently from a sole proprietorship?
Not by default. The IRS treats a single-member LLC as disregarded, so profit goes on Schedule C and self-employment tax applies the same way.
Does an LLC protect my house if the business is sued?
SBA says an LLC protects members' personal assets in most instances. Mixing personal and business money can weaken that.
How much does an LLC cost to keep each year?
It depends on the state. Georgia charges $50 for annual registration; Texas requires a franchise tax report, usually a no-tax information report for a small LLC.
Do I pay self-employment tax on a side business?
Yes, if net self-employment earnings are $400 or more, at 15.3% according to the IRS.
Sources
- SBA: Choose a business structure · accessed Oct 2026
- IRS: Single member limited liability companies · accessed Oct 2026
- IRS: Self-employment tax · accessed Oct 2026
- Justia: Georgia Code 14-11-1101 · accessed Oct 2026
- Texas Business and Commerce Code s.71.103 · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.