 | Quote: |  | | |  |
Originally Posted by grim0022 |  | | | | | | | | | I heard that if I register as a sole propriotor I am liable for everything, but if I register as a corporation I am not liable. I also heard that as a corporation you are taxed 3 times. Please let me know any information you know on this aspect. | |  | |  | |
You have liability no matter what you do. You are somewhat more protected with a corp but you can still do things that would allow someone to pierce the corporate veil.
As for taxes, here is what you will encounter.
- Payroll tax: You may pay less of this with a corp, never more than a sole prop.
- Income tax: You may pay less of this with a corp, should not be more than with a sole prop.
- Dividend tax: Does not exist with a sole prop. This is where you hear about the 'double tax'. Ignore anyone that tells you this. There are many ways to pull money out of your corp without being taxed on it. Your corp will pay income tax on net earnings and you will pay income tax on dividends but you will not pay payroll tax on dividends.
Advantages of a C-Corp over a sole prop. (DBA), LLC, S-corp, or partnership:
There are many deductions that put cash in your pocket that the other forms of business cannot. A C-Corp is a recognized entity, just like a person and has the same benefits and protections. Additionally, you can raise capital by selling stock, have a 100% medical reimbursement, have accelerated depreciation, have a number of other non-taxable employee benefits, and retain earnings. Each of the other forms of business may or may not allow you to do one or more of these things but none of them offer all of the benefits of a C-Corp.
Additionally, the S-Corp (and IMO the LLC will soon follow) has been abused to the point that the IRS is really after S-Corps and will warrant a much greater scrutiny of your tax returns if you use that form of business.
corporation or sole proprietor 
