An LLC is not required unless desired  however she should probably get an EIN as a sole proprietor so she doesn't have to give out her SS# to anyone. 

How do I report income from self-employment?

If you received a 1099-MISC for your self-employed income

Type 1099-misc in the Search box and then select the Jump to link. This will take you directly to the section where you can enter your 1099-MISC. You’ll also be able to enter any cash, personal checks, credit card payments, or cryptocurrency (Form 1099-K) related to your self-employment.

If your self-employment income was only from cash, personal checks, credit card payments, or cryptocurrency 

Type Schedule C in the Search box and then select the Jump to link. This will take you to where you can enter any cash, personal checks, credit card payments, or cryptocurrency (Form 1099-K) related to your self-employment. You may first be asked some general questions about your business. After you answer them, you’ll be taken to the Let's get income for (your line of work) screen where you can enter this income as Additional Income.

Related Information:

• What's the difference between self-employment income and other income?
• Where do I enter a 1099-MISC?
• Why am I paying self-employment tax?
• How is cryptocurrency like Bitcoin taxed?

If you are new to being self employed and  acting as your own bookkeeper and tax preparer you need to get educated ....  

If you have net self employment income of $400 or more you have to file a schedule C in your personal 1040 return for self employment business income. You may get a 1099-Misc for some of your income but you need to report all your income.  So you need to keep your own good records. Here is some reading material……

IRS information on Self Employment….
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center 

Publication 334, Tax Guide for Small Business
http://www.irs.gov/pub/irs-pdf/p334.pdf 

Publication 535 Business Expenses
http://www.irs.gov/pub/irs-pdf/p535.pdf 

Home Office Expenses … Business Use of the Home

https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction

https://www.irs.gov/pub/irs-pdf/p587.pdf

          

There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Self Employed return and will help you keep up in your bookkeeping all year along with calculating the estimated payments needed ....
http://quickbooks.intuit.com/self-employed

Self Employment tax (Scheduled SE) is generated if a person has $400 or more of net profit from self-employment on Schedule C.  You pay 15.3% for 2017 SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  You do get to take off the 50% ER portion of the SE tax as an adjustment on line 27 of the 1040.  The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 line 57.  The SE tax is in addition to your regular income tax on the net profit.
 


PAYING ESTIMATES
For SE self employment tax - if you have a net profit (after expenses) of $400 or more you will pay 15.3% for 2017  SE Tax on 92.35% of your net profit in addition to your regular income tax on it. So if you have other income like W2 income your extra business income might put you into a higher tax bracket.

You must make quarterly estimated tax payments for the current tax year (or next year) if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits. 
 
- 2. You expect your withholding and credits to be less than the smaller of: 
    90% of the tax to be shown on your current year’s tax return, or 
  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

To prepare estimates for next year, You can just type W4 in the search box at the top of your return , click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. Say no to changing your W-4 and the next screen will start the estimated taxes section.

OR Go to….
Federal Taxes or Personal (H&B version)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button

My wife is a massage therapist, she works for herself.... does she have to set up an LLC?

No. But since a massage therapist has to be registered at the state level in order to practice their trade, it would probably be a good idea to set the business up as an LLC so that the business is registered with the state too.

Also how much does she have to set aside for taxes?

The IRS has instructions, forms and worksheets for that at https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=2ahUKEwjS6Ya6kYTmAhWq1VkKHdvfDdAQFjAAegQIBRAC&url=https%3A%2F%2Fwww.irs.gov%2Fpub%2Firs-pdf%2Ff1040es.pdf&usg=AOvVaw0tCCAzeotAkIIIdMJ3D8_I

However, in my opinion they're a vast waste of your time and effort. If you just send the IRS 20% of your *GROSS* business earnings each quarter, then come tax filing time you'll be fine. If you want to do the worksheets then by all means, knock yourself out. But I'm sure you'll find it will work out to between 18% and 22% of your gross business income each quarter.

Does she have to pay quarterly?

Generally, yes. In a nutshell, if at tax filing time if what you owe the IRS is more than $1000 or more than 10% of your taxable business income (whichever is *HIGHER*) then you will be assessed an underpayment penalty for not paying quarterly taxes, or not paying enough quarterly taxes.

Keep in mind also that if your state taxes personal income, you will also need to pay your state quarterly taxes too.