Can you incorporate yourself

The possibility of double taxation on income exists since the corporation will have to pay income tax on its earnings. Then, the shareholder may have to pay income taxes when the earnings are distributed from the corporation to the shareholder, commingling only in the form of dividends. This can often be avoided by either electing "S corporation" status or with careful planning of income and deductions.

Typically, money earned by the corporation will not be credited to your Social Security earnings. However, the salary paid to you by the corporation will be, and it will be deductible by the corporation. These are a few issues to consider when evaluating a corporate form of business.

There are additional pros and cons, and there are other entity types that should also be considered. Michael P. His e-mail address is mike lynchcpa.

By incorporating, you remove the risk of losing all your personal assets and holdings if your business fails or loses a lawsuit. To incorporate your business, you must file articles of incorporation with your secretary of state. If you are a sole proprietor, you will be the sole shareholder in your corporation. Nearly all states require you to specify the names and addresses of the directors. Most states require you to specifically give the names of the president, secretary and treasurer in the articles of incorporation, but some, including Arizona, do not.

If your state does, you may be able to occupy all of these positions. If this is not allowed, you can ask a business associate, advisor or friend to do so. An officer sits on the board of directors, so the person you select must behave as a director.

Whether or not you are the sole shareholder, you must follow corporate formalities. If the corporation has more than one owner, you'll need to collaborate on the governing documents to make sure everyone agrees to their terms. These documents are less vital, but still important, if you have a sole proprietorship.

Most state websites allow you to download a copy of the articles of incorporation as a PDF, along with detailed instructions on how to fill out these forms. You can submit them online, by mail, via email, via fax, or in person, though some states do not offer one or more of these options. Online filing is usually the best option when available. Most systems explain each step as you proceed through the online form.

For this reason, online filings are usually approved. Never leave parts of the form blank. If you have questions, call the agency for your state, and the staff will answer your questions. Once your paperwork has been filed, you'll receive confirmation. In most cases, your LLC should be formed in your state of residence, but there are legitimate reasons to create an LLC elsewhere.

This is why it's important to consult an experienced attorney. After your paperwork is filed, your LLC or corporation will need to hold a meeting to document its funding. Each person who invested in the new company, the amount of service, assets, or money they donated, and their ownership percentage should be recorded in the bylaws or operating agreement.

If you have an LLC, the investors are given memberships certificates. For a corporation, they receive stock certificates. All of them receive a copy of the signed agreement or bylaws as well as any initial resolutions passed at this meeting.

This is relatively easy to do online, and when you do so, you'll also receive your business tax ID number. The IRS online form gives prompts that help you fill it out correctly. You can also file the SS-4 form via mail or fax.