<prompt> Human: I have a full-time salaried position where I make 160k per year, but Ive started doing some consulting on the side. I also am receiving passive income from online referrals, which pays me through paypal each month. Between the consulting and referrals, I should make an additional 25k this year. Do I just report this on my taxes as is? Is there a better way of doing it so I can reduce my taxable income? Would I be better off with an LLC and funneling my side work through that?  <response>: Yes, you have to report all income on your taxes. You can put it through an LLC, but it will still be treated as personal income for tax purposes. Talk to a CPA. Theyll give you a good sense about what business expenses if any you can reasonably deduct. 