Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 01-22-2007, 12:47 AM
Junior Member
 
Join Date: Jan 2007
Posts: 14
How does one decide whether or not to incorporate?

Dear TaxGuru,

When would you recommend someone to incorporate or not? I have business that is not incorporated.

Does income or profit have the only consideration, and does one really save taxes whilst incorporating?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 01-23-2007, 12:28 AM
TaxGuru's Avatar
Tax Guru
 
Join Date: Jan 2007
Location: New Jersey, USA
Posts: 2,417
Blog Entries: 3
I am afraid this is mostly a legal question, and you really need to consult an attorney regarding your particular situation.

Most people approach me to incorporate because they want legal protection, and being a Corporation, they feel it brings more legitamacy to their business, a feeling of financial strength. Other times, the client has several businesses which he wishes to separate from a potential new entity, so he chooses to incorpoarate.

Most Dr's, Dentists and IT companies choose to incorporate as soon as they start their businesses. If you have business partners it might be very prudent to either form an LLC or incorporate for protecting individual partners from the action of another partner.

Usually, profit is profit, strategically you can make a few decisions that may save you taxes but generally, in most cases, profit and taxes are not going to change materially.

It is often said in the profession, if you are small corporation, chances of being audited are rare! However, chances of a Schedule C client being audited are generally higher!!

This is not my opinion, it is often mentioned in tax forums from experts who have significant experience in handling IRS audits.

In short, definitely, consult your CPA/Attorney and consider the legal advantages at least and form an LLC or C Corporation.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply



Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.