My Advice: Start with a Sole Proprietorship. When the payroll taxes (Social Security, Medicare) become cumbersome, move to an S-Corporation.
Sole Proprietorship
Advantages: Ease of getting in and getting out. “I’m in business.” gets you in. “I’m done.” gets you out.
Disadvantages: Every net dollar in US Taxes is taxed twice (Social Security 15.3%) AND Federal Income Tax at whatever rate you’re at. This shouldn’t be a problem when you’re earning $12,000 a year. But at $90,000 you might want to limit that social security tax. Can’t limit it in a Sole Proprietorship which is reported on a schedule C.
C-Corporation
Every US corporation starts out under subchapter C of the Federal Tax Code. Corporations are incorporated in a state. You do not want to be a C-corporation. Too limiting, to structured. A C-corp is like a cardboard box. Income goes in, deductions go in. They are netted out and can only be pulled out by you as wages or (taxable) dividends. Too complicated, cumbersome and expensive to dissolve.
S-Corporation
Advantages: My Mom’s very favorite. You incorporate
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