I am curious of the process of and the legal/tax benefits of incorporating a private practice (psychologist) ?

Question

I am curious of the process of and the legal/tax benefits of incorporating a private practice (psychologist) ?

Answer 1

Limited legal liability as a corporation.

Ability to deduct certain business expenses.

Accounting and tax return will be more complicated.

Legal and incorporation fees.

You need a lawyer and an accountant, but it's not hard.

Answer 2

Talk to an accountant.

Listen carefully to the costs.

If you incorporate (or are taxed as a corporation), you do the following:

1.  Pay yourself a reasonable wage.  You can't make a net profit of $200,000 and then claim the wages are $20,000.  This involves issuing paychecks and filing form 941 with the approprate taxes.

2.  Any profit by a C corp would be taxed at 35% and then issued to you as dividends.  The dividends are also taxed on your return.  If you become an S corp, you would pass the profits through directly to your tax return.

The corporate returns are due 3/15.  The W-2s are due 1/31 to the employees and by 2/28 to the IRS.

3.  Your state will also have requirements.  Annual meeting, franchise tax, their own returns, etc.  Don't forget FUTA/SUTA.