Incorporation

Subject: Incorporation
From: Frank Harper <Frank -dot- Harper -at- ES -dot- ATL -dot- SITA -dot- INT>
Date: Wed, 8 Nov 1995 07:44:11 PST

I have followed this thread for the past week and would like to put my two
cents in..

Incorporation is something that is specific to each individual. I have been
incorporated since 1989. I did so on advice from my CPA. I file as a Subchapter
S corporation. It is a hassle with all the paperwork, but one I find worth it.

The companies here in Atlanta are very reluctant to work with independent
contractors mainly because of the IRS 1706 ruling. So most contractors are
either incorporated or work through an agency.

When I am asked by a contractor if they should incorporate, I give them this
advice which I pass on to you:

Talk to your CPA. If you do not have one, hire one. It is a lot cheaper than
fighting with the IRS. Only a person with the training and knowledge of a CPA
who is very familiar with your tax situation can honestly answer the question.

Peter Kent is right, the only advantage I see in incorporating is that I can
pay myself a reasonable salary (average tech writer rate for the area). Any
income I derive from the corporation is taxed at my personal rate, but not
subject to Social Security (7.65%) or state unemployment (2.6%).

Any benefits the corporation pays are counted as income - i.e I can write off
medical insurance as an expense to the corporation, however it is taxed to me
personally as income. So there is no advantage to it.

--------------------------------------------------------
H. Frank Harper | I am not the same having seen
Technical Writer | the moon shine on the other
hfharper -at- pobox -dot- com | side of the world.
--------------------------------------------------------


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