I need to incorporate myself.?

Question

Im going to start doing outside sales for a small business finance company. What should I look out for? What are the differences between S Corp. C Corp and LLC Etc? Where do I start? How long does it take etc? Thanks in advance

Answer 1

Before even answering the above question, an important piece of information not mentioned in your question is your state of residence, or where you will be performing said sales.

Another issue to think about is whether you'll be doing more than say $20,000 per year in take-home pay from this opportunity, or if this is a side business that might not make that much in profit (after expenses are taken out...). Each state has their own tax laws regarding the amount of tax you must pay, and how each type of corporation/organization that you file as would be treated in terms of taxation. The big benefits to a corporation (S & C) are the ability to shield your personal property from suits, and to issue stock. The downside might be a minimum corporate business tax you would need to pay, if your state has a very high tax - such as NJ.

Sub-S corps allow you to deduct the business losses on your personal tax returns. C corps don't.

LLCs are based on your personal income level with a degree of liability protection as well. Your tax here, as mentioned, would be based on what you and your spouse (if filing together) made during the year - that's the organization's tax bracket as well.

So, after all that, if you're going to be making 6 figures and up in profit, definitely go with a C Corp (best possible setup). If you're less or will have greater expenses, a Sub-S might be better. Or, remaining as a 1099 independent contractor is sometimes the best way to go.

Good luck,
JG