Published October 2nd, 2023
Starting a new job can be a risky venture, especially if you're becoming self-employed. Self-employed means bearing all the burdens yourself. You invest in materials, training, transport and advertising. You put in the time, energy and enthusiasm needed for success.
That's a huge investment for anyone to make. And it can equate to huge losses when things go wrong. No one wishes ill on any one, but bad things happen, even to the best, hardest working people among us. Jobs go bad, people get hurt, or even sued. If you're your own boss, you bear the cost of those events as well as the more day-to-day costs of operating your business.
You can mitigate the potential for loss in self-employment by incorporating . Forming a corporation will protect your personal assets and income as separate from your business assets and income.
That's because a corporation is its own entity. It isn't you . It pays its own taxes, pays its employees, and is responsible for its debts. It can be sued, but its employees are not personally responsible for damages. If your company is sued, your house is safe, your son's college fund is safe, your personal bank account is safe.
Additionally, as a corporation, you have some control over your personal tax situation. You are only liable to pay taxes on money paid out to you by the corporation. This includes, of course, both salary and profits. Money the corporation makes that is re-invested in the business, are not taxed as personal income.
Incorporating makes sense in terms of protecting your assets, and controlling your tax liabilities.
This article is not tax or legal advice. Please consult a professional to decide if incorporating is right for you.