Incorporating your security/consulting business

[theprez98]

Over the years I have been approached by various parties and groups to do various bits of consulting work on the side. Since I have been either in the military or otherwise gainfully employed by someone else, in general I have done this completely on my own as an individual (my company, like most others, has concerns about holding down a "second" job so part of this is doing the proper homework as well).

Every now and then I read about the possibility of incorporation, so this time I figured I'd ask around to see what your experiences have been.

What I am looking for are the benefits/drawbacks/headaches that you've personally experienced in terms of incorporating your own (preferably small) business, whether it was just yourself or perhaps others as well. Your comments would be even more relevant if you've been involved in a Delaware corporation which is what I'm currently looking at.

You might well ask, why? I have a few reasons, but your comments will help define for me whether or not those reasons are valid and strong enough to justify following through. A few pluses and minuses:

+ protection of my personal assets in case of legal issues
+ all the various benefits of Delaware corporations: no corporate income tax outside of Delaware, friendly corp law, etc.
+ provide a professional "front" for my work (I'm not looking to create a second full time job or replace my current job!)

- paperwork (the incorporation part seems reasonable enough with places like legalzoom.com pretty much doing all the dirty work, but what about other paperwork?)
- ?

Very interested to hear your comments, and thanks!

[Thorn]

Re: Incorporating your security/consulting business

Over the years I have been approached by various parties and groups to do various bits of consulting work on the side. Since I have been either in the military or otherwise gainfully employed by someone else, in general I have done this completely on my own as an individual (my company, like most others, has concerns about holding down a "second" job so part of this is doing the proper homework as well).

Every now and then I read about the possibility of incorporation, so this time I figured I'd ask around to see what your experiences have been.

What I am looking for are the benefits/drawbacks/headaches that you've personally experienced in terms of incorporating your own (preferably small) business, whether it was just yourself or perhaps others as well. Your comments would be even more relevant if you've been involved in a Delaware corporation which is what I'm currently looking at.

You might well ask, why? I have a few reasons, but your comments will help define for me whether or not those reasons are valid and strong enough to justify following through. A few pluses and minuses:

+ protection of my personal assets in case of legal issues
+ all the various benefits of Delaware corporations: no corporate income tax outside of Delaware, friendly corp law, etc.
+ provide a professional "front" for my work (I'm not looking to create a second full time job or replace my current job!)

- paperwork (the incorporation part seems reasonable enough with places like legalzoom.com pretty much doing all the dirty work, but what about other paperwork?)
- ?

Very interested to hear your comments, and thanks!

Short answer: It depends.

Long answer: It really depends on your current tax situations, your holdings (jointly and singly owned), and what kind of liability(s) you might incur. There's a lot of pros and cons to every type of organizational type (Sole proprietorship, Partnership, LLC, S-Corporation, Corporation, Limited Corporation, etc.) Not only should you talk to a good lawyer who knows the finer points, but you should talk to an accountant. Aside from legal standing, all have different tax advantages and liabilities.

Have said that, over they years, I've had several different legal structures for my businesses from full corporation (I was a corporate president at age 21! ;) ), to a sole proprietorship.

[Club81]

Re: Incorporating your security/consulting business

Ask an attorney that knows your state tax code, but I would strongly recommend LLC. It protects you, but is flexible in that you can choose how you want it to be taxed (like a partnership, like an S-Corp, etc...). An attorney can set it all up for you for a decent price. You'll be registered in your state, have your company books prepared, and make sure everything is in place with the IRS tax-wise.

For the record: I think it's a great idea to have this in place for all your projects.