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Is It Smart To Incorporate To Make Money On The Internet

Aug 9, 2008
Since self-employed individuals are hit with a self-employed tax of about 15 percent on top of regular income tax and, these taxpayers already pay higher rates than corporate tax rates, you can understand why this question is often asked.

By the above statement, one would believe that incorporating would make sense just to save on taxes alone. However, as it is looked into deeper you're likely not saving money in most cases at all.

First, a corporate tax is a tax on corporate profits, not an individual tax. Money that you take out of the corporation in the form of dividends or salary will be taxed on your personal income tax return. The tax advantages become fewer and fewer.

What is it that you really want to get out of incorporation? In regards to blogging and freelancing as an individual, incorporation may not save you tax dollars. Is there something else that you're looking for that might be of help?

Some corporations will take you more seriously when you are incorporated because this is believed to give your more credibility. For example, certain large business firms will not issue a 1099 tax form for an individual; they only hire incorporated entities.

Health insurance is very necessary and very expensive today. As a bona fide corporation (two or more employees constitute a group) you may be entitled to receive a corporate rate with most insurance companies. This is a big plus in today's world.

Most corporations allow for some protection from liability so long as you follow corporate formalities. Protecting personal assets from liability is an increasingly important issue for bloggers. This protection can aid in some kinds of judgments.

Don't be fooled, incorporating doesn't mean that you can do, promote or write anything that you want and escape liability. Keep things in perspective. Evaluate the many positive reasons why you should incorporate your business.

The main aspects may be to help you and other employees make more money with the Internet, the ability to have liability protection, increase your credibility, enhance your health insurance rates, and to be able to announce that you have a career not a hobby.

You must consider your plans for the long term. Your current tax situation and your plans for the future can't be made on a blog post alone. It would be to your advantage to thoroughly discuss all of this information prior to making any permanent decision.

A conversation with your legal or tax professional would be wise to gain insight and understanding for a lawful screening.
About the Author
Court is an expert on how to make money with the internet and also provides internet marketing strategy.
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