Self Incorporation - Build Your Own Ultimate Tax Shelter!

Here you will find must-read information about the benefits of organizing your business as a corporation, as well as links to the some of the most useful incorporation resources on the web.

For starters, here is a quick recap of the reasons why you would be considering incorporating your business:

Self Incorporation may protect your personal assets. Your corporation is considered a "legal person" completely separate from you. This is probably why self incorporation has become increasingly common in today's "sue-happy" environment. A corporation makes it much more difficult for someone to go after your personal assets and any business losses are limited to what you invested.  Self Incorporation projects a more professional image. Having an "Inc." after your business' name demands respect. The corporate form is well respected by banks and financial institutions, customers, vendors as well as the general public. For this reason, you may find that your corporation creates greater ease in doing business. Also, many businesses and institutions favor corporate accounts and offer discounts.  Self Incorporation could help you save on taxes. After self incorporation, it is possible that you'd find that you pay less taxes than you did as a sole proprietor. This is, however, not always the case. Therefore, it should not be your main reason for self incorporation. More about this is covered elsewhere on this web site. Self Incorporation could help you avoid an IRS audit. Self Incorporation of your small business most likely would dramatically reduce your chance of your tax return being selected for audit by the IRS. This is because the IRS spends more time and resources on examining Schedule C (Sole Proprietor) tax returns than it does for small corporations. Why? The IRS often assumes, and perhaps with good reason, that far too many people who file Schedule C returns are not really trying to make a profit. They are merely deducting hobby and personal expenses in order to create an artificial tax loss that they hope will give them a larger refund. In other words, they cheat. This is probably why the IRS audit rate is so much higher for Schedule C returns than it is for small corporations. The IRS reasons that while almost anybody can claim that they are running a legitimate business, few people would go to the step of  self incorporation of their business unless they were actually expecting to make a profit at some point. Granted, many people who have done self incorporation run at a loss for several years before they turn profitable. It is also true that in most cases the corporate owner is able to deduct these losses. Still, overall, most people who have done the self incorporation step are hoping to make their company profitable. In addition to the benefit of a lower audit rate, owners of small corporations are also able to take advantage of certain tax deductions that are exclusive to corporations. This will be covered in more detail later.

Self Incorporation Without A Lawyer?

Perhaps the most obvious benefit of self incorporation is that it might save you a bunch of money. Lawyers usually charge anything from $800 or so to several thousands of dollars. However, it is possible to incorporate online yourself for as little as $100 or less. There are even cheaper alternatives, but I cannot recommend them as I have not used them. I suspect that the expression "you get what you pay for" holds true here as well.

Other Self Incorporation Services

If you feel that you want to see a wider selection of of self incorporation service providers, I suggest that you do a search on "self incorporation" on your favorite search engine.

Self incorporation services vary widely with respect to prices as well as quality of service. "Buyer beware" applies to self incorporation as well!