I am considering incorporating as I understand it is a smart move for the self-employed (eliminating liability, separating personal income from corporate dividend). Should I be speaking with a tax attorney or financial planner? And secondly I would appreciate any info from people who have gone through this process themselves.Thanks in advance.
I am considering incorporating as I understand it is a smart move for the self-employed (eliminating liability, separating personal income from corporate dividend). Should I be speaking with a tax attorney or financial planner? And secondly I would appreciate any info from people who have gone through this process themselves.I suspect the liability protection is overused as a reason to incorporate. As a closely held corporation, virtually no one will lend money to the corporation without your personal guarantee of the debt. So you're still going to be on the hook for the largest part of any debt.Neither a tax attorney nor a financial planner are the best professionals to advise you here. I'd want an attorney familiar with corporate law, and probably a CPA or EA as well, as the tax planning issues get far more complicated with two entities (the corporation and yourself).Finally, the process of incorporating is remarkably simple. I'm sure there's variation based on the state you're in, but my incorporation last December took only a couple of pieces of paper and a little over a hundred dollars. I could have paid even less had I done more of the work myself and not paid a service to do it for me.--Peter
I would recommend that you talk with an attorney about the ramifications of incorporation and which corporate form you should choose. S corp vs C corp vs LLC vs Partnership.Part of the consideration is your legal liability and how your profits will be taxed. If you incorp, you will need to pay yourself ( and payroll taxes), and file a seperate tax return. C corps get taxed once at the corp level, then again on your personal taxes. There are a lot of good resources on the web that can help you understand the core issues before talking to the lawyer.
There are many lawyers out there who know very little about tax law. You may prefer to have a lawyer draw up the papers for you, but first I would discuss the tax ramifications with an enrolled agent or CPA or competent tax professional. Not all accountants are well versed in civil and business law. So to consult with both an attorney and a tax profesional may be the most prudent thing to do.
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