The Entrepreneur Forum | Startups | Entrepreneurship | Starting a Business | Motivation | Success

When to incorporate?

Remove ads while supporting the Unscripted philosophy...become an INSIDER.

ZoSo

New Contributor
Jun 25, 2017
2
1
13
30
Pittsburgh, PA
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.
 

Don't like ads? Remove them while supporting the forum. Subscribe.

DVU

In Progress
Read Millionaire Fastlane
Speedway Pass
Sep 24, 2016
256
590
253
21
Croatia
Besides the general info, I think you should consult a lawyer for that.
 

CareCPA

Platinum Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Summit Attendee
Speedway Pass
May 2, 2017
804
2,864
650
31
Pennsylvania
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

Whatever it takes
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Summit Attendee
Speedway Pass
Feb 9, 2016
549
1,620
485
29
Edmonton, AB
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.
 
OP
OP
Z

ZoSo

New Contributor
Jun 25, 2017
2
1
13
30
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

Legendary Contributor
Staff member
EPIC CONTRIBUTOR
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Summit Attendee
Speedway Pass
Oct 22, 2010
2,702
9,184
2,206
Woodstock, GA
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
 

Create an account or login to comment

You must be a member in order to leave a comment

Create account

Create an account on our community. It's easy!

Log in

Already have an account? Log in here.

Sponsored Offers

  • Sticky
MARKETPLACE Lex DeVille's - Advanced Freelance Udemy Courses!
Advanced Upwork Proposals II IS FINALLY LIVE! Here's a look at what's inside: Improved YOU...
  • Sticky
MARKETPLACE You Are One Call Away From Living Your Dream Life - LightHouse’s Accountability Program ⚡
Here is where you eliminate uncertainty from the future! I wanted to post this image as I...
  • Sticky
MARKETPLACE KAK’s “Kill Bigger” Incubation Program- With DAILY personal attention.
Hey Guys! I wanted to give a quick update on what this program has become. In its infancy, we...


Don't like ads? Remove them while supporting the forum. Subscribe to become an INSIDER.

Fastlane Insiders

View the forum AD FREE.
Private, unindexed content
Detailed process/execution threads
Monthly conference calls with doers
Ideas needing execution, more!

Join Fastlane Insiders.

Top Bottom
AdBlock Detected - Please Disable

Yes, ads can be annoying. But please...

...to support the Unscripted/Fastlane mission (and to respect the immense amount of time needed to manage this forum) please DISABLE your ad-block. Thank you.

I've Disabled AdBlock