1. Reduces Personal Liability
Incorporating helps separate an individual's identity from that of his or her business. Insurance may still be necessary, but incorporation contributes an added layer of protection.

2. Tax Savings
Careful planning of entity type can result in lower overall tax rates.

3. Reduces Likelihood of an IRS Examination
IRS Form 1040 and Schedule C (Profit or Loss from a Business), particularly of higher gross income levels, is the target for many IRS Audits. Incorporated businesses have a much lower audit rate, even if they have high income levels.

4. Anonymity
A Corporation can be established in such a way that shareholders/owners remain anonymous. Often this same anonymity can be accomplished for officers and directors.

5. Adds Credibility
A corporate structure communicates permanence and credibility. Even a company with only one stockholder and employee may incorporate.

6. Easier Transfer of Ownerhsip
Through the sale of stock, ownership of a corporation may be transferred without substantially disrupting operations. The need for complex legal documentation is also reduced.

RETURN TO TAX TIP SELECTIONS