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Subject:  Re: S-Corp or Sole Proprietorship? Date:  12/21/1998  10:42 PM
Author:  dswartz Number:  7455 of 127753

S-Corp has a lot of non-wonderful aspects (at least here in Massachusetts). Among them: non-trivial recurring costs for operating a corporation (several hundred dollars to the state, plus a couple hundre more for the corporate tax return [to a tax pro, unless you are feeling brave to do it yourself...]), you get to pay unemployment taxes (a few hundred per year, depending on your salary), you also may need a workers comp insurance policy, which can run another few hundred per year. You also need an annual corporate meeting (an hour or so of your lawyer's time, to meet paperwork requirements). Much more onerous payroll requirements vis-a-vis IRS. The only reason I did it was my first client would not do business with a 1099 contractor (and it was a 2-year contract, so I wasn't about to argue). The legal shelter of a corporation is largely meaningless for most small S-corps, and as above, there are almost no advantages to electing this. Think long and hard (and get a tax pro to advise you) before you go this route.

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