Is there a easy way to incorporate and protect yourself? I also was told that incorporating can help you save taxes.

You might check into business filings incorporated at http://www.bizfilings.com/

From our persepctive, I'm not sure it saved on any taxes, and it sure did increase the amount of filing and reporting we had to do.

Simular protection can be achieved by becoming an LLC also.

I found incorporating very beneficial. It gave me better standing with my bank for a start.

It shows that you are not a 'here today, gone tomorrow' business, but a company that will be there for the foreseable future. People are more inclined to trust and do business with a company than with an individual, or group of people.

If you conduct your marketing and your business soley online, then incorporation will make very little difference to your image, but if you conduct marketing and business on the streets, then incorporation will make a huge difference.

Originally posted by ClusterMania
Is there a easy way to incorporate and protect yourself? I also was told that incorporating can help you save taxes. We've had many long discussions here about incorporation in general and comparisons between incorporation and other forms of business entity like the LLC. If you do a search for "incorporation" using the link at the top of the page you'll find them.

As for taxes, it could help... incorporation opens up some possibilities that you don't have with other business forms. Or, if you do things wrong there's the "double taxation" bugaboo (I don't think I've ever used that word before. Hope I used it correctly). But really that's way more than I want to get into here!

Thanks for your input. I live in Canada and was just wondering how everything worked. Do you need employees to incorporate?

Need employees to incorporate => Doubt so
I know someone who's in Canada running a one man business who incorporated....

as for tax reduction, definitely a no. You're being taxed twice => corporate tax and personal tax.

Limited liability is about the most important factor for you to incorporate.

Originally posted by Omni
as for tax reduction, definitely a no.I do not know Canadian law, but in the U.S. there can be numereous tax benefits to incorporating if the corporation is properly set-up.

For example, you as an individual may not be able to deduct vitamins and cosmetic surgery as medical expenses, but with a properly drafted medical expense reimbursement plan the corporation could deduct these items as legitimate expenses. Likewise, you may not be able to deduct your daughter's college expenses, but if she was an employee of the corporation, she could be eligible for the corporation's educational reimbursement plan.

Just remember, that along with potential tax benefits, there are also tax traps to avoid.

I would encourage anyone considering incorporation to seek the advice of an intelligent tax accountant before you incorporate. Most accountants would love to give you a free initial appointment where they will explain some of the tax benefits and tax traps to incorporating your business. Also be sure to investigate the option of forming an LLC (Limited Liability Company) which combines the liability protection of a corporation with the tax-flow benefits of a partnership.


Best of luck,

Keith

Originally posted by Omni
as for tax reduction, definitely a no. You're being taxed twice => corporate tax and personal tax.Seems like there's never a conversation about incorporation without someone making that statement. It's at best an oversimplification, especially if you're talking about a one-person corporation.

The double taxation situation occurs only in one circumstance: your corporation makes a profit, which is taxed, and the after tax profit or a part of it is transferred to you as a dividend or other distribution and so is taxed as individual income.

In a one-person or other small corporation (speaking here of a standard C-corporation in the US), though, you can easily avoid this simply by making sure that any money that comes from the corporation to you is an expense for the corporation, not profit. You can pay yourself a salary, you can pay yourself 1099 income as a consultant, you can reimburse expenses, etc. You can have the corporation buy some items that you would have bought yourself and thus avoid transferring that amount of money from the corporation to you.

Add in the kind of things that 4solutions mentioned, that would without incorporation be your expenses but in a properly managed corporation are taken from the corporation's profit, not from "your money." So you avoid tax on that money completely, let alone not being taxed twice.

Then for the profit that the corporation does make, the tax rate (in the US) is a flat 15% -- less than your individual rate. So overall a one-person corporation is an ideal way to reduce taxation. If properly managed and properly set-up in the beginning; so I'll echo 4solutions statement: talk to a tax accountant first.

And I'll repeat who to talk to... people often say, "talk to a lawyer..." and that's not a bad idea to get some pre-organization questions answered. But a lawyer might not be familiar with tax law and current IRS interpretations. Talk to an accountant, too.

we have been on both sides of this..

if you get sued the allusion of a corporate veil is all that it is.
in a suit you will get drilled professionally and if your name is in any way on the corp record such as treasurer or other you will get named.
if it can be proven you are creating a veil and have received significant financial reimbursment from the corp you are also in violation of racketeering etc-rico. like i said been there done that.

the only advantage have a pa is for tax write offs

that is a different issue and any and all loop holes in tax law should be taken advantage of.

the gov takes and gives, its your duty to figure out how to take
do it in a pa but dont expect it to protect you from suit, anybody that tells you different hasnt been there..

we have!

Point well taken, miami_g,

Yes, I've been on the receiving end of several lawsuits... none of which I lost. Which is not to say that I won, because they were all very, very expensive lessons with attorney fees. As I've said before on WHT, lawsuits should be avoided - they will drain your cash, your time and your energy.

A business corporation really is the second layer of defense in what should be a multi-layered asset protection plan which includes corporations, limited partnerships and trusts. (Your first layer of defense should be a well written and signed TOS/AUP agreement).

All of these entities are to slow down people who think that court is like the lottery. They sue with little justification other than the greedy gleem of winning a huge winfall. But once their attorney sees that there it will be a tough road ahead to break through all these entities, they often times go away or at least become more reasonable.

Nothing is 100% perfect. A corporation (or LLC) is simply one of many tools that prudent business people should consider using to protect themselves in today's marketplace.


Kind Regards,

Keith

Originally posted by ClusterMania
Is there a easy way to incorporate and protect yourself? I also was told that incorporating can help you save taxes.

We incorporated through bizfilings.com - pretty simple process.

If you want to avoid the double taxation issue and you meet the criteria, form as a Subchapter S corporation and avoid the double taxation...

Best of luck..

Bryan

Never knew about that, but anyhow good luck