Do you need to incorperate

It is based on the timing of the income. Your corporation can be a fiscal year and allow defering of income.

As far as a sole proprietor, it pays income on the self employment level. I preferred to have the expense in the corporate shell.

In addition to the self employment tax, the individual is subject to earnings and the current rate. I had the corporation set up to plan when I wanted to pay the tax and what level of income I wanted to have.

You are correct, I worked for the money. But I also planned how I paid the taxes.

The corporation also had additional insurance that protected the home assets to some extent. You can never fully protect assets in this type of profession.

 

now a lot pf people have the wrong impresion about corperations. now use to be forming a corperation was not a bad thing , in some cases it helped you establis credit for your company and people or companys were much more likely to do business with you if you were incorperated and it offered some level of protection if you were sued.
in fact you still can be sued if you the driver are at fault in any legal action you can be sued in cival court. if you have your personal information connected to the corperation in any way you have no protection at all.
as far as credit forget it no lending instatuition will geve the corperation credit with out all and i mean all your personal information and when you do that you render your corperation useless and you can thank your wonderfull banker for that.
my corperation is up in january and it will die at that time i willno longer be incorperation ill go back to doing business as a DBA and its even cheaper,
but to each his own. luck to all.-----southernpride

 

I am an enrolled agent to practice before the IRS. I had many reasons for using a C corporation rather than an S corp or individual proprietor.

 

Roadmedic

Things to think about:

Wouldn't the option of an LLC often be more appropriate? They are generally much more flexible in structure, management and reporting requirements in most states. No "double taxation" i.e. corporate tax followed by personal tax. The general consensus is that LLC's offer the benefits of incorporation without the disadvantages.

The potential disadavantage of a corporation from the point of liability protection is that protection is often lost if all of the requirements of reporting and running the company are not met. Examples are annual shareholder meetings and annual reports, even if one person is the sole shareholder. I believe there is a requirement of a salary being paid to the officers, which can be difficult to meet in this business. Also I don't think you can just take an "owners draw" from funds as you can with an LLC or as a sole proprietor, since your pay is a salary although you can receive "bonuses". The accounting for corps is much more complicated than the average person is accustomed to. Violate any of these requirements (and if involved in a major lawsuit they will follow the money and paper trails) and you are not entitled to protection, from all I've read and studied.

Another disadvantage is operating your corporation in other states that wish to tax you. NJ comes to mind first, since they are known for inspecting trucks, drivers and motor carriers during roadside "safety" inspections to determine their tax status. If found to be a corporation they will check to see if you have filed, and paid, your NJ corporate tax returns for income generated by shipments originating/terminating in their state. Not paid? Deadlined until received (with appropriate penalties and interest). So far the few states doing this are only structured to deal with corporations and have not YET rewritten the legislation to apply to LLC's.

Incorporation vs LLC needs to be based on far more factors than can be covered in the forums. Each individuals needs relative to tax treatment and risk tolerance vary. I'm sure you'd agree that consultation with a good attorney and accountant, both well versed in small business and trucking operations, is a prudent investment of time and money.

 

Again, it is based on the individual needs at the time of the incorporation.

I chose it for the payroll and benefit options I was going to put in place. I had a pension and profit sharing plan for 25% of the wages in place. The LLC was limited on the way I could utilize these.

I also was retaining the first 50,000 in net earnings into the corporation at the 15% tax bracket, where the LLC would have flowed to me personally and I was in a much higher bracket.

It is known as tax planning.