Independent Contractors
The joys of Self-Employment - No Boss ... Flexible Hours.... Lower Taxes.... Casual Dress....
The Ability to make your own Decisions about your Livelihood ....
There are tax advantages and ways to protect your personal assets from business related lawsuits by incorporating.
1. With a corporation, the Business Owner establishes instant credibility for his venture. He (or she) is now the President of a company that is properly structured to generate respect from customers, suppliers, banks, investors, lenders and others.
2. The corporation provides a protective wall that shields the Business Owner's personal assets if his corporation becomes the target of lawsuits that are related to company activities. The Independent Contractor's home, cash, retirement savings and other assets cannot normally be confiscated to satisfy a legal judgement against his (or her) corporation.
3. An incorporated business can operate very easily out of the Independent Contractor's personal residence. This "Home Office" arrangement can create valuable business deductions that reduce the amount of income taxes that are payable to the Federal and Local Government at year-end.
4. A sound corporate structure provides valuable tax deductions for health insurance, telephone, travel, entertainment and other legitimate expenses that help reduce the company's tax bill.
4. If the Independent Contractor performs work for a small number of clients, the corporation can help prevent him (or her) from being treated as a company employeefor income tax purposes. This is a very important distinction because when the Independent Contractor is incorporated, his clients are not generally obligated to withhold the income (and FICA) taxes that are applied to employee wages.
5. The corporate (or LLC) structure normally reduces the Independent Contractor's business insurance and liability costs. Remember, if your personal assets are protected from your company's lawsuits, you have fewer assets to insure and less premiums to pay |
