Incorporating a professional practice

Unless you're concerned about personal liability, starting out as a sole proprietorship probably makes sense for most independent consultants. This is the most basic and common form of small business.

As sole proprietor you own everything and are personally responsible for everything that happens in your business. You pay taxes as a self-employed person, although you're responsible for the tax withholding of any employees.

One classic reason to incorporate is when you hire your first employee. Another is when you incorporating offers tax advantages.

Be sure to talk with your attorney about when to incorporate, based on your circumstances.

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