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Incorporation Versus Self-Proprietor
The main advantages of incorporation versus sole proprietorship are:
- Incorporation provides “limited liability”, whereas sole proprietorship does not. A corporation’s net assets are separate and distinct from the net assets of the shareholders of the corporation. In most cases, the shareholders’ personal assets will not be at risk if the corporation alone is sued.
- Incorporation, as opposed to sole proprietorship, provides much more flexibility to legally minimize overall income taxes. The overall tax reduction with the use of a corporation can be substantial. Every situation is unique and should be reviewed with a professional accountant.