<prompt> Human: Doing graphic designmarketingarchitectural design work for a friend on the side of my full time job. I am logging my hours and invoices as I go for record. How much money should I set aside to pay taxes? I live in California, but his company is in ATL, GA. 20? 25? Are there things I can write off? He might have me order the holiday cards I set up a template for, and those could run me 200. Can I write those off? Or if I pay for them, and he pays me back in expenses, would I be taxed on that money? If so, Ill insist he pays for them himself. Any other necessary things I need to know? Any help would be much appreciated :Assistant: My guess is youll be doing more work like this in the future. I was in the same boat and word spreads so:1 Set up an LLC. Easy to do. Just fill out a form, pay the fee and your company is set up. Youll probably just want to go with a sole proprietor setup for now which is easiest.2 Set up a business bank account - All checks should be made to your business name and deposited here. You can then withdraw from here to pay yourself.3 Set aside 35 - Probably wont be paying in that much, but its good to have a little padding.Human: Actually, just did some googling and found this? For California income tax purposes, an LLC will be classified as a partnership if it has more than one owner and will be treated as a disregarded entity if it has only one member. from  <response>: Thats because an LLC is for legal protection - they arent a separate entity for tax purposes. Disregarded entity means you will be taxed the same as a sole proprietorship. 