What are the consequences of NOT setting up a business structure?

Sole proprietorship is probably the WORST type of business ORGANIZATION (not structure) one can do. While there is no up front costs to run your business as such, as many already stated, you are PERSONALLY liable for anything and everything. What does this mean? Her home isn't protected, personal accounts aren't protected...she is literally throwing herself under a bus. It doesn't sound like she is technically doing anything wrong. As long as she does file her income, that's fine. If she wants to hunt down 1099's from everyone she performs business with, that really is her business and yes, it really is enough. 1099's miscellaneous income and is a viable tax reporting method. Many small vendors and business work this way.

Will she be fined for not having a business organization? No. I think we've established she is a sole proprietor. Will she be fined? Only if she is caught breaking the law. It appears she is paying taxes on income. She may require a business permit if she does not operate from a paid office space. It really depends on state/city regulations. Sole proprietorships often do not have to register with the state unless they want to register a doing business as. Again, she doesn't have to have a company name either. Again, she is operating as a sole proprietorship. They are both one in the same. Her name is enough to be her "company" name.

If this really bothers you, you might want to suggest the hiring of an attorney to form an LLC. It would give her limited protection and is the basic corporate veil. Our firm charges about $1200 to file with the state, apply for an EIN and produce a record book. It really is an investment and if she makes enough money, it is worth it. All accounts are run in the LLC's name and should would run it just as she is now, but with more peace of mind.

She has a structure - sole proprietor. It's legal to just do business under your own name, not have a separate name for the company. Whether she needs some kind of business license, or needs to register with the state, depends on where she is.

To be on her side it may be cheaper not to have a structured business but the liability hanging over her head. Drive a nail into a gas line hanging a picture KA-BOOM have some one get hurt, hire an attorney they will attach all her assets. Small Business people don't have the time to defend them self's in court. Buying Wholesale in bulk limited liability to Business assets. Pay your self a wadge deduct taxes company truck or car? Keeping a business ledger a profit loss statement go public.

why would she get sued? - there are millions of sole proprietorship businesses out there

sole proprietor IS her business structure - she should probably get a business license and state sales tax license so she doesn't have to pay tax on things she will be reselling or using to make things she will sell

1. With no corporation she clearly is risking all of her personal property if she were ever sued.

2. She probably needs to have at least a local business permit.

3. If services that she provides are subject to sales tax in her state she should be charging sales tax. Services like interior design aren't subject in all states.