Are you considered “Self-Employed” if you are incorporated?
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Are you considered “Self-Employed” if you are incorporated?
I am the sole proprietor of a small painting and wallpapering business. although I enjoy the freedom of this status, I also have encountered some negatives with the Self-employed status, such as getting a loan, health insurance etc… Would incorporating remove the self employed title?
Asked on May 24, 2009 under Business Law, New Hampshire
Answers:
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 14 years ago | Contributor
Yes, it would; however not knowing you financial situation this may or may not be of an advantage for you overall. Depending on the type of corporation you choose (for example a sub S or C corp) it also opens you up to different tax consequences and lots more paperwork. It will however, give you more insulation from personal liability. Note: While technically you would be considered an "employee", for some type of corp. (an S for instance) your tax return would tip off a lender that your are essentially self-employed.
You would really need to sit down with your accountant and attorney and mull over the pros and cons. This is both a financial and legal issue.
M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney
Answered 14 years ago | Contributor
There are many types of corporations: S-Corps, LLC's, Traditional Corps. - and the one that is right for you depends on may things, and most importantly, your income. Some of the type of corporate entities available do rid you on first glance of the self-employed status. But just ridding you of the status in the first instance may not be an automatic home run when applying for a loan, etc. You should see a Tax Attorney or Accountant to better help you plan.
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