Table of Contents Introduction Just What is a Corporation, Anyway? Do I Really Need to Incorporate? Types of Corporations Which Format is Best for You? The Incorporation Process: What's Involved? Should You Consult an Attorney? Okay, You're Incorporated. Now What? Treat Your Corporation Like a Business "It's a Judgement Call" Acknowledgements

“It’s a Judgment Call”

Certainly, many sole proprietors operate successfully without incorporating. Consider Betsy Frick, who manages two St. Louis-based businesses, Applied Instructional Design and Resumes from Scratch, with no plans to become an "Inc."

"So far, I just haven't found a compelling reason," Frick explains. "You have to weigh the advantages versus the disadvantages. Advantages might include appearing bigger than you really are, getting work from corporations that only hire other corporations, and gaining some tax deductions. Disadvantages include added administrative paperwork such as issuing yourself paychecks, holding board meetings, and filling out more tax forms; time to do all these tasks; and costs such as paying additional taxes, business phone line rates, business banking account rates, and so on. If I had employees, or if I were doing environmentally sensitive work such as cleaning up toxic waste spills, then I would certainly consider it. It's a judgment call you have to make for yourself."

Donna O'Leary-Abkowitz, a technical writer in Massachusetts, decided not to incorporate after consulting an attorney and an accountant. Both advised against it, she notes, because "This profession basically has low liability and the added costs to incorporating are not worth it." While she has encountered a few companies that will hire only incorporated contractors, this has not been a major obstacle. "The bottom line is, you have to dig deeper to find what you want," she says. "What else is new?"

To incorporate or not? It's up to you, and the decision is easier to make for some business situations than others. If you have partners or employees, it's probably wise. If you plan to stay solo, the advantages are less clear-cut.

Weigh the costs and benefits carefully. Since everyone's situation is unique, be sure to consult your own legal and tax advisors for guidance about your particular enterprise.

"Would I do it again?" muses Richard Schmidt, who incorporated his management consulting firm, RSA Ltd., in Delaware 11 years ago. "I don't know … Perhaps not, but then it seems nice to say that I head a corporation."