Self Incorporation - Build Your Own Ultimate Tax Shelter!
Self Incorporation has become much easier with the many excellent
incorporation services available on the internet. On this page you
will find must-read information about the benefits of
organizing your business as a corporation, as well as links to
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 - Potential Benefits:
- 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
Self Incorporation Without A Lawyer?
By self incorporation, I don't mean that you will be actually preparing
the corporate forms yourself. Although you may certainly prepare your
own forms if you want to, with the many excellent corporation services
available on and offline, most busines owners these days find that doing
so is not cost effective. Time might be better spent on coming up with
a great corporate name and a catchy company brand statement.
Perhaps the most obvious benefit of self incorporation on the internet
is that it might save you a bundle 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 littleas $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 as elsewhere.
Self Incorporation - Online Services
The following section contains a few reputable incorporation services that I can recommend,
listed in order of my personal preference and feedback that I have received from
clients and visitors to this site. I suggest that you investigate these
services on your own, find out which ones meet your needs and appeal to you,
and base your decision on the information you gather.
The Company Corporation is probably my first choice of online
incorporation services. They have been around for a while, and
they even authored the book "Incorporating your Business for Dummies"
in the famous "...for Dummies" series. In fact, that is an excellent
book about self incorporation. I haven't kept track and don't know when
that book was last updated, but it still contains tons of useful
information. Some of the incorporation procedures might have changed
with time, but as an overall introduction to self incorporation, this
is one of the best and easiest to understand resources I've seen.
If you can get your hands on it, I recommend that you grab it!
Try Googling "Incorporating your Business for Dummies"; you might even
be able to find a used copy on eBay. I also like The Copmpany
Corporation's website interface, which matches a knowledgeable
representative to you based on your industry, line of business and
state of residency. Higly recommended.
Self Incorporation with MyCorporation.com. MyCorporation.com is another
solid choice if you wish to self incorporate. They have knowledgeable
and helpful customer representatives, and I really like the
professional look of their corporate kits. A while back
MyCorporation.com was acquired by Intuit, the company that brought
us QuickBooks, Turbotax and Quicken.
Legalzoom.com is my third choice of recommended online
incorporation services. Like the two other services mentioned above,
Legalzoom has also been offering their services online for several
years. They also offer a wide range of other legal services for
businesses and individuals, but this link will take you to their
business services formation and business services page, which includes
incorporation and the formation of Limited Liability Companies (LLCs).
There are many other self incorporation services onthe web. I might
add other incorporation service providers to the above list as I receive
more feedback from visitors to this page.
If you feel that you want to see a wider selection of self incorporation
service providers, I suggest that you do a searchon "self incorporation"
on your favorite search engine. Self incorporation services vary
widely with respect to pricesas well as quality of service.
"Buyer beware" applies to the topic of self incorporation as it does
I strongly recommend that you take your time to shop around and to
compare prices and customer service levels before you commit yourself
to one self incorporation service.
Also, don't be afraid to ask questions or to tell the
customer service representative that you want to do some more
research before you buy. Finally, please feel free to share your
experiences with me by filling out a visitor feedback form on
my "Contact Me" page.
I take this information into account when listing and rating these