Comments on: Should You Incorporate Your Business?

By: 7 Tax Tips for Artists

7 Tax Tips for Artists — Sun, 14 Feb 2010 00:10:26 +0000

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By: PixelBoy

PixelBoy — Mon, 01 Feb 2010 16:46:47 +0000

Tricia- That’s a tough one to answer. There are a multitude of factors to consider…but I know you looking for a straight-out answer. I’m guessing you have a nest-egg for those dry months with no work coming in and you always make enough to pay for the bills (personal and on the business end).

I would ask your CPA for a comparative example of “as is” vs. incorporated. Don’t necessarily take his word. I had an accountant many, many years ago when I first started and I was writing these huge checks to the government and he never pushed me in the right direction. Perhaps talk to another CPA…it’s like going to the doctor…get a second opinion before he/she does financial surgery on you wallet!!!!

Every year our incomes do fluctuate–especially with the economy the way it is! But average out the last four years and evaluate that number. If your career as an illustrator seems solid, then don’t worry about far and few “off” years. This has been my experience.

Honestly, in my opinion, if you can run your business, live decently and still save money, then I would avoid staying self-employed. When incorporating, the overall extra fees of state filing, attorneys, CPA’s does not compare to the taxation you can avoid.

Again, getting a second opinion from another CPA is truly what you should do and look at the numbers. : )

By: Tricia

Tricia — Sat, 30 Jan 2010 01:21:04 +0000

Hi Mark,

You mention that “if your income has increased substantially..” we should incorporate. What is that substantial amount? I’ve been having arguments with my CPA about incorporating. He says I should only do it if I know I’ll be a making a lot of money freelancing (like 2-3times more than what I need to survive). But I have no idea since every year is different. Is it still worth incorporating my business?

Thanks,
Tricia

By: Jesse

Jesse — Thu, 28 Jan 2010 04:05:26 +0000

Excellent post!

By: Mike Shoaf

Mike Shoaf — Thu, 28 Jan 2010 03:46:50 +0000

Thanks for this article! I’ve been wondering about some of these issues.

By: PixelBoy

PixelBoy — Wed, 27 Jan 2010 21:32:25 +0000

Good point. That’s true–every state can be vary when it comes to the fees.

By: Scraps

Scraps — Wed, 27 Jan 2010 16:16:25 +0000

It’s important to note that you incorporate in the state that you are in and every state is different regarding incorporation both in terms of requirements and fees (both initial filing fees and annual reporting fees). Sometimes an LLC (limited liability company) is a nice in-between step from Sole Proprietor to Corporation, depending on your circumstances.

(from an artist whose also a bookkeeper)