Everyone has thought of going to work on their own and becoming their own boss. But the economic downturn has made it a reality for many. If you choose that route, or have it thrust upon you, one of the most important things you can do for your money is to incorporate yourself.
Personal family lawyer Alexis Martin Neelyexplains that incorporation does two crucial things: it saves you money on taxes and protects your business. If you are incorporated, you can deduct business-related expenses and also make bigger retirement contributions. You also receive liability protection that protects you and your personal assets from business-related issues like lawsuits.
Neely makes clear that, when it comes to incorporation, you shouldn’t go the cheap route. Always hire an attorney and don’t just go through a document service. Having a lawyer draft the documents and work with you through the process will ensure that you receive all the protection and benefits you are allowed under the law.
Under the umbrella of incorporation, you have several options, Neely explains. An LLC (limited liability company) will probably be the best option, but make sure your lawyer and CPA help you with the decision. You can also incorporate as an S-corporation, but Neely recommends staying away from sole proprietorships. These offer no real protection at all and should only be considered for people using their business as a hobby and not expecting any growth. If you’re serious about your business, opt for an inc. behind the name.