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When to incorporate?

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ZoSo

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Jun 25, 2017
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Hi guys. Have been a solo operation running digital marketing and analytics for a couple years now. Income is set to cross over the 6 figure marketing 2019 and just wondering, for tax purposes, if there are any benefits to be had about forming an LLC or S-Corp and paying myself as the sole employee?

Liabilities are low and I'm not concerned about getting sued by my clients. Just wondering if it's still worth doing? I've been operating as a 1099 for a while.
 
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DVU

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Besides the general info, I think you should consult a lawyer for that.
 

CareCPA

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Hi guys. Have been a solo operation running digital marketing and analytics for a couple years now. Income is set to cross over the 6 figure marketing 2019 and just wondering, for tax purposes, if there are any benefits to be had about forming an LLC or S-Corp and paying myself as the sole employee?

Liabilities are low and I'm not concerned about getting sued by my clients. Just wondering if it's still worth doing? I've been operating as a 1099 for a while.
On the tax side, there are some cost savings to be had at that income level if you elect to be taxed as an S Corporation. There are opportunities to avoid the 15.3% self-employment tax on part of that earnings, depending on what is considered a "reasonable salary" for your industry.
 

TreyAllDay

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Hi guys. Have been a solo operation running digital marketing and analytics for a couple years now. Income is set to cross over the 6 figure marketing 2019 and just wondering, for tax purposes, if there are any benefits to be had about forming an LLC or S-Corp and paying myself as the sole employee?

Liabilities are low and I'm not concerned about getting sued by my clients. Just wondering if it's still worth doing? I've been operating as a 1099 for a while.

I only really know incorporation tax benefits, not much about self-employment. However, the tax rate is much lower where I live - if you don't need to pay yourself immediately you can take it as profit and be taxed at a much lower rate.

In my province, you're also allowed to write off much more as a corporate entity.
 
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ZoSo

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Jun 25, 2017
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Pittsburgh, PA
On the tax side, there are some cost savings to be had at that income level if you elect to be taxed as an S Corporation. There are opportunities to avoid the 15.3% self-employment tax on part of that earnings, depending on what is considered a "reasonable salary" for your industry.

Great to know. I knew S-Corp was another option I could go with but I need to learn more on these tax savings.

I only really know incorporation tax benefits, not much about self-employment. However, the tax rate is much lower where I live - if you don't need to pay yourself immediately you can take it as profit and be taxed at a much lower rate.

In my province, you're also allowed to write off much more as a corporate entity.

That's the thing. All of what I earn is either going to room and board type stuff for myself or reinvesting it in other channels. I doubt much would be left in the business' bank account at end of month.
 

ZCP

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when you hire your first employee or begin selling your first consumer product is a good time.
if a service business, when you start hiring and having people on your premises or on the clients premises is a good time.

on the liability side, something to think about ...... if you do not have anything, you will not be a target. if you have assets or a large insurance policy, target. just make sure you act as a corporation (minutes, meetings, books, etc.)

for tax purposes, have your cpa run inc vs non inc scenarios....... math will drive
 

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