How To Avoid Double Taxation Of Your Small Business Profits
Have you been thinking about incorporating your small business or self-employment activity? The advantages are many!
For starters, you’ll be protecting yourself and your family from the possibility of a business ending lawsuit. Forming a corporation is Step One on the path known as “Asset Protection” — you are moving from the world of unlimited liability to the world of limited liability.
From a tax standpoint, there are both advantages and disadvantages to incorporating. Yes, forming a corporation can either reduce your taxes or increase your taxes, depending on what type of corporation you create.
There are two main types of corporations: “C” Corporations and “S” Corporations — and which type you choose can make all the difference in the world of taxes.
NOTE: The question of “C” Corp vs. “S” Corp has no effect on the asset protection provided by your corporation. This is a tax issue, not a legal issue.
A “C” Corporation can lead you into a Tax Trap known as “double taxation”....