Should You Become a Personal Corporation?

By Mark Coburn
Published on November 1, 1984
article image
Illustration by MOTHER EARTH NEWS Staff
Forming a personal corporation means more than having an impressive business card. There are multiple tax advantages.

Every year, thousands of self-employed people trade their job-related independence for the regular wages and fringe benefits available only to salaried workers. And as part of the deal, they actually give their workshops and tools to their new employers. Stranger still, many of these ex-self-employed workers even insist that their new bosses move in and share their very homes!

And how do these corporate employees, these wage slaves, feel after they’ve handed over almost everything but their underwear? Well, most of them feel even freer and in charge of their lives than when they were working for themselves. I should know: I’m one of them. And my wife is another. And if you are self-employed, or even if you run a sideline business, maybe you should weigh the pros and cons of finding a corporation to work for, too.

As I’ll bet you’ve guessed, the “boss” I’m talking about is a personal corporation or a family corporation owned by your family. In my case, it’s Coburn & Mehs, Inc., the firm my wife, Doreen, and I founded last summer. I’m the president, and Doreen holds all the other offices. Although we own 100% of the stock, the corporation gives us paychecks … so, technically, we’re employees.

But before I get too carried away with telling you about the benefits of incorporating (and there are many such advantages), I should put things into a realistic perspective: While incorporating can prove invaluable to many self-employed people, a lot of other folks are better off on their own. Individual tax situations can pretty well legislate the decision for many of us. But there are other considerations involved — factors that might be more subtle, but are equally important.

For instance, even if you satisfy yourself that you can save a bundle by incorporating, are you willing to take on the additional accounting and paperwork chores required of a corporation? If filing and bookkeeping send you screaming out the door, you’ll either have to hire an assistant, change your attitude and learn what you’ll have to know in order to keep the IRS of your back yourself, or forget about forming a corporation at all.

But now let’s take a look at the reasons so many people are electing to incorporate their businesses.

Comments (0) Join others in the discussion!
    Online Store Logo
    Need Help? Call 1-800-234-3368