Question

Self employed registered Representative for a broker dealer and Self Employed nvestment Advsior Rep. for an RIA

Forum|Forum|4 years ago
October 27, 2021
1 reply
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I receive a 1099, I am responsible for most of my expenses. Though some are deducted prior to receiving my monthly payout, and therefore my 1099 is net of those expenses. Would there be any advanatage to incoprorating ( though I am paid as an individual under my social security number)? If yes, is there any way to do so, prior to the end of tax year 2020 ( Decemebr 31) and take advnatage of the benefits provided by incorporation for the full yer 2020?

AdamNe

Hello @DS1035X ,

In general, incorporation is not retroactive. If you incorporate your business in the middle of a tax year, you will need to file two tax returns. Your business income and expenses up until the date of incorporation for that tax year will be claimed on your personal return on Schedule C, and your business income after that date will be claimed on the tax return appropriate for the entity that you chose to form.

If you are considering forming an LLC with yourself as the only owner, there are no tax benefits you will receive. There may be other benefits, and you should consider contacting a business advisor or attorney to discuss the other ways incorporating can protect or assist in your business dealings.

If you are considering forming a corporation (S-Corp or C-Corp), you will want to research the new way your income will be taxed in each case. S-Corp income flows through to the shareholders on Schedule K-1 and is then taxed on the individual's tax return, and C-Corps pay taxes directly.

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