By incorporating your business and electing the sub-chapter S status, you will be able to reduce your income tax by passing the corporate annual profits and losses directly to you, the corporation's shareholder, as a taxable dividend not subject to the social security tax.
For example: An S corporation reporting an annual profit of $75,000 would save you about $11,000 in social security tax. A sole proprietorship or a partnership does not have this benefit.
Other benefits of incorporating include providing limited liability protection to your personal assets, entitling you to more liberal insurance and pension plans, and reducing the potential of an IRS audit.
We can set up your corporation without any interruption of your business activity. Our fee to set up your California Corporation, including minute book and seal, starts at $395.00.