I've just started my own consulting/web development business and have heard differing opinions on whether I should incorporate my business or not. At this time I am the only employee and I sub-contract some of my work. Anyone have any thoughts on incorporation?
Incorporting plusses: May be able to avoid some self-employment taxes in certain situations. You have some personal protection from liability, but still limited. Seems to give your biz a bit more legitimacy.
disadvantages: Costs a couple to a few hundred bucks Good chance you'll need a CPA Taxes are considerably more complicated More paperwork
Since you are just starting, you may be better off waiting until you establish yourself before getting into the mess of incorporating.
disclaimer: in my limited research these are the things I found, you may want to seek professional advice.
Number ONE, you should get a referral to a good accountant. A good accountant can give you an informed opinion on whether it's beneficial for you to incorporate (accountants are all about money after all, so it makes sense to consult one). My accountant cost me a couple hundred bucks but he came highly recommended from serious designers and really opened my eyes about a lot of things to be aware of. In my situation, he suggested that it made economic sense to register as a sole proprietorship.
Likewise I pondered whether to incorporate or not. I list below the advantages/disadvanatges in priority to me. Advantages - The company name "protects" me against anyone trying to register a similar type .com.au domain name. The company structure provides better protection against losing all my personal assets. The available tax allowances are better. Disavantages - Any (company) losses are not offset against my personal income. There are costs of incorporation, and the for preparing & filing an annual return. The key is to incorporate after having incurred the establishment set-up costs since they can be offset against your personal income.