Quote:
Originally Posted by no_worries
How does the setup affect the protection? With either of those entities the protection is the same; and if it's a one truck operation (owner driven) that protection is zero. Assuming that everything is done by the book, you have to reach approximately $60,000 net before realizing meaningful tax benefits from incorporating. Sadly, the vast majority of one truck operations aren't making those numbers. Until the operation is consistently hitting that threshold, incorporating is simply throwing money away.
From a personal protection standpoint, I don't know if one is better than the other. There isn't much difference between them. All of the structures will offer some level of protection. I received a call from a guy who works for a company that does Nevada corporations. According to him, a Nevada corporation will not allow the corporate veil to be penetrated. I have not researched it, but I have my doubts. If you mix corporate and personal funds the corporate veil could be penetrated.
It is sad to think that most owners don't net at least $60,000. I don't think that one would need to have that much income in order to have some tax benefits. You could have the corporation set up a 401k for you. You could pay yourself a small salary and have any profits be paid as dividends, avoiding Social Security or self employment tax, since Social Security is paid on wages. If you are a sole proprietor anything left over after expenses will likely be considered income and taxed accordingly.
There is no one size fits all when it comes to taxes, corporations, etc., The best thing to do is consult with a professional who can look at the individual's circumstances and advise them accordingly.