How to Incorporate Yourself to Save Money (and Protect Your Assets)

So you are a freelancer or independent contractor and you want to know how to incorporate yourself. Smart.

My feeling is that if you are self-employed in this way, you’re in one of the best possible work scenarios.

Independent contractor taxes, or freelance taxes, are a little confusing for sure…but with a little help, you can be using your independent status to save yourself some money.

Nonetheless, how you set yourself up to operate as an independent contractor, can make a big difference in your bottom line…

One of the most significant benefits of being a freelancer is that you get much of the preferential tax status of being a business owner! (Notice I said much.)

Are Taxes for Independent Contractors Better or Worse than the Average Employee?

Here is a basic tax planning spreadsheet I created that shows the potential difference in taxes owed between a person getting W2 income, 1099 income, and Business Entity (corporation) income.

Independent Contractor Taxes Are Largely Determined by How You Collect Your Money

What Determines the Way I Get Paid?

There are two ways an “independent contractor” or “freelancer” can be in business. They can get paid as an unincorporated 1099 contractor or can incorporate themselves and get paid to their corporation. There is potentially a tax difference between the two!

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