Monday, October 25, 2010
Be damn sure you know what you're doing and why BEFORE you incorporate.
I live in Columbia SC, I'm 68 years old and may never be able to retire but thankfully my health at this juncture is not an obstacle to working as a 100% commission salesman. Would you comment on a 1099 person incorporating as a business advantage and whether there is is any advantage to doing so in Wyoming or Nevada as websites in those states strongly suggest.
If there is a reference or a site that elaborates on this would you refer it to me.
I assume you are asking because of tax consideration not liability concerns. No matter in which state you incorporate the federal tax laws and regulations and requirements are the same.
States differ on laws and regulations and requirements. For instance, there may be no state tax, lower fees, and less oversight in some states.
Before considering incorporation you must first look at whether or not you are taking advantage of all the business expense and heath insurance deductions and pension contribution plans available to a sole proprietorship.
If you are taking full advantage of being an indie -- which, if you haven't read my book, Self-employed Tax Solutions, I assume you are not -- then you need to compare the cost of incorporation, the accountant fees for preparing corporate tax returns, the hassle and abundance of a more elaborate recordkeeping of finances as well as corporation activities against the amount of state taxes saved.
And, keep in mind: As states struggle in the current economy today's tax rates may not be tomorrow's rates.
If you are going to incorporate be damn sure you know what and why you are doing it. After you've spruced up your knowledge on indie taxes then read my posts on incorporating.
And a request of you and anyone else sending a question to me: Please send me the link or the source of your info.