Jul
I heard about it on the radio, Whats the purpose?
Answer:
there is also LLC's which, very simply put, are “lazy mans” corporations. Essentially the same thing as a corporation, but with less paper work and structure.
This of it this way, as a person you are who you’re. When you get married, you’re no longer you (per say) in the states eyes, you’re an entirely new entity (honest and true). Which is why you can now file your taxes differently.
If you become a corporation, or LLC, you create a new legal entity.
A perfect example of the benefits of creating a Corp, or LLC. State you purchase a home. Like most people you go out get a mortgage, and insurance and all the other things that go along with it, including taxes.
Now say you owned a corporation. Call it ABC corp. Instead of YOU personally purchasing a home, ABC corp buys the house with the intent of making a profit. Suddenly that home goes from the realm of personal property to a business expense, and that Mortgage is now a business expense that you can claim on your taxes.
But it still has a mortgage, so how does it pay a mortgage? Well, simple, You no longer being the home owner are now a renter. Being a renter you have to pay the corporation a renters fee each single month. Which in turn, and depending on the say can be deducted. So effectively you’re using a deduction to pay for a tax.
It's beneficial, and worth it, only if you understand what it is that you are doing. The problem with the radio is that they advertise something that takes a great deal of thought and long term planning, and usually what they advertise is a scam based on something that the wealthy have a very firm grasp on.
There is a reason why the rich “don't pay taxes”. They DO pay taxes, but its HOW they pay their taxes at the end of the year that makes the difference.
They use the deduction from one thing to pay for the profit of the other. Kinda like using your federal tax refund to pay for your state owed taxes, which is why is wont be cashing my economic stimulus check until April 2009.
Longterm planning already knows that I got my 2008 tax return early, and I need that to pay for my 2008 say taxes when they come do in 2009.
It's all about how money works, and i would suggest learning about how money works first before you think about incorporating yourself.
Answer:
The primary benefit of incorporation is that the company itself becomes an entity and is legally responsible for its actions, not the boss of the company. It grants for the owner's money to become separate from the company. So if you are sued, then the company is financially responsible, not you. Then there's the issue of controlling shares (over 50% of stock) and board of directors.
You must file Articles of Incorporation in the say you are filing in. Your state might also impose Corporate Bylaws, which you should be familiar with. A more thorough explanation is available on Wikipedia at:
http://en.wikipedia.org/wiki/Incorporati…
Book Mark it-> del.icio.us | Reddit | Slashdot | Digg | Facebook | Technorati | Google | StumbleUpon | Window Live | Tailrank | Furl | Netscape | Yahoo | BlinkList