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I am about to enter an agreement as a consultant. I have…

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I am about to enter...
I am about to enter an agreement as a consultant.

I have expenses related to that work (gas, workplace - which is at my apartment which I rent, and other misc. expenses).

In order to make things simple and benefit from a taxation standpoint, I am considering incorporating as an S-Corp and having the agreement signed between my S-Corp and my client instead of me and my client.

Is it indeed significantly more advantageous from a taxation standpoint or is there only limited benefits from working under an S-Corp I am the sole owner and director of?

Regards,

- FL
Submitted: 4 years ago.Category: Tax
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Answered in 3 minutes by:
10/2/2013
Tax Professional: Robin D., Senior Tax Advisor 4 replied 4 years ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
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Robin D. :

Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.
You would need to look at the differences in the 2.
Earnings from a sole proprietorship are subject to self-employment taxes. An S corporation is a special type of corporation that allows the shareholders of the company to claim their share of company profits on their individual income tax returns. Plus you would need to pay yourself a salary and the S corp would pick up half the employment taxes which would be an expense. Of course a s a sole prop you get to adjust your income by half the self employment tax.

Robin D. :

An S corporation is considered a separate legal entity that has a separate existence from the shareholders of the company. Shareholders of an S corporation therefore have limited liability against business debts, losses, lawsuits and other obligations.
Sole proprietors have unlimited liability for debts, lawsuits and other obligations that may arise during the course of operating the business.

Robin D. :

If you wish to really keep things simple stay a sole prop.

Robin D. :

My goal is to give you excellent service. If you are satisfied, please rate me. If you have follow-up questions on this same topic, use the reply box below. To start a new conversation with me on a new topic request me again.

Robin D. :

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