James R. Kay,
Helping you keep more of what you earn !
Should You Incorporate Your Business?
Generally, business owners face three major considerations in deciding whether to incorporate.
Limited liability for corporate debts and court judgments.
Corporations enjoy the most favorable tax treatment in areas of employee health benefits and retirement plans. Reducing income taxes and the ever-present social security tax is much easier in a corporation. Expenses that are considered personal for a sole-proprietor become business expenses in a corporation. These benefits are generally more favorable in a C-corporation as opposed to an S-corporation.
appear more legitimate in the eyes of bankers, customers and
you have a corporation it's almost a given that you are receiving
professional advice from an attorney and a CPA. Good advice
increases your chances for success. Those you do business with are
interested in your success. If you are successful you will be able
to repay obligations, deliver products and provide services well into the
corporation even looks more legitimate to the Internal Revenue
Sole proprietorships are a favorite target of IRS auditors and have a
much higher chance of being selected for an audit than a corporation.
What form of organization is best for my business?
Choosing the right form of organization can be a very simple choice for some businesses. For others it can be very critical. Many times it depends upon the type of assets you intend to put in the business. It may depend upon the prospects of selling the business assets in the future for a substantial profit. Franchise tax issues are also an over-riding concern. You don't want to make the State of Texas a 4.5% partner in your business if you avoid it.
Caution - The discussion on this page is general in nature and is not intended to be legal advice. Always seek the advice of a tax professional and/or attorney when contemplating decisions of this nature.