Advantages of Incorporating (Series #3 out of 7)- Tax Savings.
When you incorporate there are numerous tax advantages at your disposal that are virtually impossible to accomplish with other business entities. By incorporating you create a separate and distinct legal entity.
Because of this, there are many transactions that you can structure between you and your corporation to save big money on taxes. For instance, if you own a building, you can rent office facilities to your corporation and claim depreciation and other deductions for it and your corporation can then claim the rental expense. Not with a sole proprietor or a partner in a partnership.
Also, after paying yourself a reasonable salary, your corporation can then pay dividends to you, which is taxed at a capital gains rate (approximately 15%). Compared to the self employment tax and regular income tax that a sole proprietor or a partner in a partnership pays which is usually 30% to 40%. Therefore, in the above example, the corporation saved the shareholder at least 15% in taxes.
These are just a few example. Give Attorney Daniel Alexander a call at (800) 530-4529 or check out our webpage at www.dalexander.com for additional information