Message Font: Serif | Sans-Serif
No. of Recommendations: 0
What are the advantages and disadvantages of starting a corportation as regards to taxes, investments, and liability by the owner? Can anyone recommend where to incorporate? Nevada? Delaware? Is there one good book that explains this in lay terms? Thanks.


This is a difficult question to answer and each particular situation must be examined on its own merits.

First of all - if you are talking about incorporating your "investments" only and there is no real profit seeking business other than that involved then your idea will stink.

Personal holding company rules will zapp you tax wise.

Now if you are self employed that is an entirely different situation.

IMHO - there is no real reason to do business this day in time without the semblance of a corporate veil around you. To many bad things can happen that in many instances an incorporated business would help alleviate.

There are many qualifications to that statement of course and I will likely get some vocal response to same from the other gurus on this board but....

if you can jump the following hurdles...

1 - you must keep good records - double entry bookkeeping, etc

2 - You must keep good corporate records, minutes, bylaws updated, etc etc etc

3 - You must be willing to draw a reasonble salary from the corporation - needs to be "regular" monthly salary comensurate with what your services are worth.

4 - You must be willing to pay a professional to assist you with tax returns and business planning.
(i know i will hear from this one)

Lastly - you need to seek some professional advice from someone who can analyze your own unique situation if you are in fact self employed and considering this change in your business structure before you make the jump.

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.