To incoprorate or not..

[Scott Pickett]

I'm not an accountant, and I am Canadian, so what I'm about to add should be
taken both with a grain of salt and modified for the arcane and esoteric
rules which govern life south of the border....

The only advantage that I have seen with respect to incorporating is
limiting liability.  Right now, if in the course of refurbishing some
dowager's diamond encrusted Steinway D you loose it in the river, you
(personally) are on the hook for the bill.  That is, even if it is insured,
the insurance company could decide to come after you and take the money out
of your hide (and house, car, tools, etc....).  If you incorporate, the
liability is limited to the assets of the company.

The disadvantages to incorporating are mainly, so far as I understand,
paperwork related.  That is, you have to file a corporate tax return every
year (in Canada that's a T-2 or T-3, I forget) in addition to your personal
stuff.  Plus, you are required to have a list of officers, shareholders,
keep a corporate minute book, etc.  Also, the corporation has to pay tax.
So, in essence, any money the corporation makes via your piano work gets
taxed twice: once as part of the corporations revenue, and once as part of
your personal income.  Some of these disadvantages are offset by certain tax
breaks that are offered to corporations, all of which vary between countries
and states.  In Alberta, Canada, the rule of thumb is you should consider
incorporating if you are billing more than $80,000.00 / yr.

The best thing to do, IMHO, is to plan (after tax time) to sit down with
your accountant and be prepared to fork out a couple of thousand
buckadingdongs to do a detailed pro / con analysis of where you're at.

There you go, for what it's worth.....