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I would say that the only rule of thumb on this one is to ask several accountants and agents in your state.
Why ask other agents or business owners in your state? Not all states are created equal with regard to ease and cost of setting up a business entity. Trust me when I say its a LOT more complicated that it should be. Not only do you have to set up the name with Sec of State, but you may need to get the name approved by your DOI. Then you have to pay fees to both the Sec of State and the DOI [at least in my state]. After you have completed all of that you then have to go back and get some of the commissions payments paid to your Corporation and not just your name. Does your State DOI require an entity license?
Why should you pay several accountants to check on this for you? Because State Incorporation may save you money in some ways and cost you more in taxes in other ways. Example here in CA you must pay a minimum entity tax each year.
Rough Guess though I would consider it if your business was not growing, not over the $100K income mark [and more in CA, NY, etc], and you were not planning on doing this for another 10 plus years. If you are considering hiring employees I would be more likely to suggest it.
Yes incorporating may increase your accountant costs, but if you are filing as an LLC or S Corp your expenses are really typically tied into your personal return and those expenses will be written off to some extent.
Lastly I really would encourage you to find some agents in your state that have done this and they can give you the lowdown.
Best of Luck!
Rough Guess though I would consider it if your business was not growing, not over the $100K income mark [and more in CA, NY, etc], and you were not planning on doing this for another 10 plus years.
I am an individual independent agent. Paid a lot in tax last year. At what point in income has anyone figured it makes sense to incorporate and elect S corp status and pay some of profit as income to avoid paying some self employment tax.
Yes...! Thanks Ill edit it.Please forgive me if this is a wrong question-will delete the post if you ask.
I'm having trouble with the following sentence-did you mean to say "not consider"?
I am an individual independent agent. Paid a lot in tax last year. At what point in income has anyone figured it makes sense to incorporate and elect S corp status and pay some of profit as income to avoid paying some self employment tax.
I am an individual independent agent. Paid a lot in tax last year. At what point in income has anyone figured it makes sense to incorporate and elect S corp status and pay some of profit as income to avoid paying some self employment tax.
Says the agent from Texas, [I think.]Its not that difficult to do