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My husband and I are in the real estate business also and we are incorporated for the very reasons listed by Michael. The benefits of deducting otherwise after-tax medical costs have been significant and since we are both retained by the corporation we both get hefty pension plan contributions. Recent changes to the tax code allow both spouses to have pension plan contributions now.

We are both employees and contractors with our firm so we get some benefits from the corporation and some benefits via Keogh plan contributions through our Form 1040 returns. The tax reporting has not been onerous. The attorney reminds us when to have our annual director's meeting (at a nice restaurant or on our patio over a cocktail), we send him/her a copy of our minutes, he/she sends us the form to file with the state. Legal cost about $150.00 annually (assuming no need for other legal expertise). We have a tax accountant do the tax return although Turbo Tax for corporations could do it also, but I like the patina, so to speak, of a respected firm doing the taxes when I have to submit copies of tax returns for review by financial institutions. We also chose a fiscal year end different from 12/31. We had a logical reason for doing this because of the natural cycle of our business. This allows us to defer or advance revenues and expenses for cash flow planning purposes from the company to us personally. Also we do not leave any cash in the business since we do not have much in the way of assets beyond office furniture and equipment. Taxes on the first $50K of corporate earnings are 15% if you retain income in the business, but if you are going to return all excess funds to yourself eventually, it probably doesn't make economic sense to pay the corporate tax and then at some later date disburse the cash to yourself to be taxed again. But our business is simple and has no inventory or depreciable assets to shelter cash flow.

The notion of shelter from liability is less clear when you have a corporation with no assets. It is likely that the "veil" of incorporation could be pierced in a lawsuit, but it is the best that we have to date.
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