Let me preface this post by saying that I’m not a financial advisor, planner, or anything like that, nor am I an attorney, or in any position to offer legal advice. For the final answer on this subject I suggest you speak with an attorney and a CPA. I work with both, and have two attorneys 
Having said all that, let’s continue!
Each time I’ve started a business I formed an LLC and I incorporated under a business name. I formed an LLC because,
- I legally separated my personal stuff from my business stuff. People sue in the United States, and if they do, you need to protect your personal stuff.
- The taxes are simpler – one yearly tax return that’s combined with your personal taxes (1099 I believe – ask your CPA)
- Less reporting requirements – I didn’t have to hold quarterly meetings with myself (I talk to myself enough) and write down what was discussed
- It was only me in the beginning, and I suck at financial stuff and wanted to keep the amount of “financial stuff” to a minimum
I incorporated under a business name,
- Because I wanted to build a business with full-time employees
- To give the impression that I had a much larger company, before it was a larger company
- Separate my personal credit from the business credit
- It sounded cool to be “CEO” of a company
When you first start out, this is one of the first choices to make – do you go the personal branding route, or do you start to build a company, with you as employee number one? As Darrin Eden told us, this is not a decision to take lightly.
The biggest part of this decision is determined by your ultimate goal. Do you want to build a personal brand, working as yourself and becoming well known for your work, or do you want to grow a business to have one or more full-time employees working with you? Not an easy choice.
If you’re not already self-employed, this isn’t a choice you have to make just yet, but you will soon. So when you do, consider what you’re working toward, listen to what others advise
, talk with an attorney and CPA, and make a move.
UPDATE: If you are looking for some reasons to incorporate, here are 22 reasons to incorporate your freelance business.
My biz is a C-corp that files with S-corp status. Very similar to LLC. No double taxation.
I have to talk to myself a bit, but I can pick where to do it from, and it’s a write off
My CPA has me move from a standard LLC to an S-corp to save self-employment taxes. And I’m used to talking with myself, do it all the time.
Incorporation is not right for every business. A business can be “legitimate” even when operating as a sole proprietorship and insurance can often provide the same liability protection as incorporating does (can do).
Also, the term “CPA” should not be used to denote “tax professional”. Some CPAs are tax experts and some know nothing about taxes. More accurate is “tax professional” which would include enrolled agents who are the only tax professionals licensed by the IRS.
Jan Zobel EA
Thanks for the clarification on “CPA” Jan, as well as the insight on ensuring your business is covered from a liability standpoint.