Taxes/Incorporation

[bse5]

Do most successful/profitable webmasters set up an Inc (or LLC, etc etc)? I would imagine there are some tax benefits to incorporation..... I realize that, obviously, this is to some extent a personal decision based on your own financial situation etc but I just wanted to see if incorporating was common. Thanks!

[bse5]

wow! really??? awesome!


.............. no one has ANYTHING to say about this?

[Doolally]

I've just setup a Limited company in the UK to take advantage of the tax breaks. It's well worth doing rather than paying taxes on everything as personal income but probably only after you have reached a certain amount of income.

The best thing is to get an Accountant to advise on the situation for the country you live in.

[BJF]

bse5, I posted almost an identical question a few weeks ago. I have a meeting with a guy who is both a CPA and a tax attorney at the end of the month. I will let you know what he says. (This is for people in the US.)

[casinoranking]

In Canada it's not worth incorporating. Sure you get taxed less... but as soon as you pay yourself anything from the corporation you get taxed the full amount. So you save money if you dont pay yourself.

[bse5]

much appreciated BJF

[breakbets]

wow! really??? awesome!


.............. no one has ANYTHING to say about this?

Alright, cranky, I'll step in.

I set up an S-Corporation and pay myself via a payroll service. I don't understand why that's a good idea, but my CPA assures me that it is.

[CPReport]

The only reason our CPA had us incorporate is that he said we are more likely to be audited if you make alot of loot as personal income. Being audited doesn't bother me so much as it bothers him. I have a strict rule in business. Never MESS with the IRS!

[bse5]

BJF - just wondering if you've met with the CPA yet ? If so, did he say anything enlightening? Thanks!

[BJF]

My meeting is Wednesday. I will let you know.

[BJF]

Okay, I had a 2 hour meeting with a guy who is both a tax attorney, and a CPA. Here are the pluses of incorporating.

1. It shields you if you get sued. BUT, this is only a protection if they sue your business. If you have a car accident, or someone trips at your house this doesn't help you. In my case I doubt many people will want to sue a website.

2. If you have LOTS of medical expenses you get bigger write-offs as a corp.

3. Statisticly corps get audited less than schedule Cs.

4. Depending on the amount of your income you might be able to save some money on Social Security tax.

Here are the negatives,

1. $3000 or $4000 in expense.
2. Pay the state fee every year which in CA is $800
3. File a seperate tax return for the corp every year, and that expense of having it prepared.
4. Certain amount of paperwork you must do to maintain the corp.

In my case I decided I would not form a corp. Hope this helps.

[bse5]

very imformative. thanks!