Q&A: Should I incorporate as a self-employed person?
As an IT specialist who gets a 1099 from my employers, I am self-employed in a way. I was curious as to when I could incorporate.
Companies are formed mostly to shield themselves from liabilities and to spend. I don't think you'd be able to do anything as a single IT practitioner. A company has far other accounting and documentation needs. Your lawyer or accountant may have further details, but I don't know of anybody who incorporates to operate a small professional company.
What are the benefits and drawbacks? Additionally, if I should incorporate, what sort of business should I form? S-corporation, limited liability company, and so forth.
LLCs are a relatively recent form of business arrangement. When you are the single owner, you have the privilege of operating it as a sole proprietor for tax reasons, as well as the right to have partners participate in the company by bonds, just as if you were a corporation. LLCs often have the required liability insurance. And if it is structured similarly to a sole proprietorship or a corporation, the business is indeed a distinct organization, and the personal fortune is therefore protected. They are really simple to set up, and you can do it yourself if you have the time, or hire a lawyer to do it for you at a low rate.
Keep your accounts apart to get a separate Employer Identification Code from the IRS (rather than utilizing your social security number, which you don't want running around on documents in the workplace whenever you hire staff or assistants). A sole proprietor LLC is not necessary to keep it apart, so it makes tax time much easier.