I seem to recall something from game theory where in a game like Chess, where the game is deterministic, the players move sequentially, and it's illegal to draw, then if both sides play a perfect game, the side that goes first will always win
Incorrect, as the starting position could be a reciprocal zugzwang (not uncommon in chess endings).
Agree that Schedule C makes sense for many. But I'd guesstimate that IRS audit risk for a $200K corp. is at least five times less than audit risk for someone grossing above $200K on Schedule C.
The cash value of reducing that risk is hard to quantify: depends on the industry & the aggressiveness of the taxpayer.
Some independent consultants will have significant tax advantages from doing business as a C-corporation. Deducting health insurance premiums & unreimbursed medical/dental/vision expenses is reason enough for many. But for healthy twenty-somethings, the net tax benefits of these costs may be immaterial.
If you've got a long-term gig (over 6 months), the general contractor may insist upon your incorporating. Their fear is that the IRS will look thru the IC contract, say thay the underlying reality is employer-employee, and collect the unpaid payroll taxes from the the general contractor. (I believe that in the past, Microsoft has had IRS trouble with this issue.) Incorporation doesn't automatically refute the employer-employee presumption, but it sure helps.
Some states are friendlier to corporations than others. Illinois is relatively low-cost & low hassle; my understanding is that the cost in California is significantly higher. For plain vanilla C-corp, figure $1,000-1,500 as the average downstroke for doing it right (with cheap competent counsel).
Finally, C-corps have to "bonus out" each year to avoid double taxation. This is a real hassle that will generate another bill from your CPA. S-corps don't have to go thru this, but have corresponding disadvantages.
Best advice: ask your successful friends to recommend a tax professional.
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I seem to recall something from game theory where in a game like Chess, where the game is deterministic, the players move sequentially, and it's illegal to draw, then if both sides play a perfect game, the side that goes first will always win
Incorrect, as the starting position could be a reciprocal zugzwang (not uncommon in chess endings).
In his 1982 pamphlet "I Was Tortured in the Pasadana Jailhouse!", Fischer signed off as follows:
Sincerely,
/s/ Robert D. James
Robert D. James (professionally known
as Robert J. Fischer or Bobby Fischer,
The World Chess Champion)
...and you thought Michael Jackson was weird.
Agree that Schedule C makes sense for many. But I'd guesstimate that IRS audit risk for a $200K corp. is at least five times less than audit risk for someone grossing above $200K on Schedule C.
The cash value of reducing that risk is hard to quantify: depends on the industry & the aggressiveness of the taxpayer.
Some independent consultants will have significant tax advantages from doing business as a C-corporation. Deducting health insurance premiums & unreimbursed medical/dental/vision expenses is reason enough for many. But for healthy twenty-somethings, the net tax benefits of these costs may be immaterial.
If you've got a long-term gig (over 6 months), the general contractor may insist upon your incorporating. Their fear is that the IRS will look thru the IC contract, say thay the underlying reality is employer-employee, and collect the unpaid payroll taxes from the the general contractor. (I believe that in the past, Microsoft has had IRS trouble with this issue.) Incorporation doesn't automatically refute the employer-employee presumption, but it sure helps.
Some states are friendlier to corporations than others. Illinois is relatively low-cost & low hassle; my understanding is that the cost in California is significantly higher. For plain vanilla C-corp, figure $1,000-1,500 as the average downstroke for doing it right (with cheap competent counsel).
Finally, C-corps have to "bonus out" each year to avoid double taxation. This is a real hassle that will generate another bill from your CPA. S-corps don't have to go thru this, but have corresponding disadvantages.
Best advice: ask your successful friends to recommend a tax professional.
Something for everyone.... [Event "New York"] [Site "New York"] [Date "1924.??.??"] [Round "?"] [White "Reti, Richard"] [Black "Capablanca, Jose Raul"] [Result "1-0"] [ECO "A15"] [PlyCount "61"] [EventDate "1924.??.??"] [Source "ChessBase"] 1. Nf3 Nf6 2. c4 g6 3. b4 Bg7 4. Bb2 O-O 5. g3 b6 6. Bg2 Bb7 7. O-O d6 8. d3 Nbd7 9. Nbd2 e5 10. Qc2 Re8 11. Rfd1 a5 12. a3 h6 13. Nf1 c5 14. b5 Nf8 15. e3 Qc7 16. d4 Be4 17. Qc3 exd4 18. exd4 N6d7 19. Qd2 cxd4 20. Bxd4 Qxc4 21. Bxg7 Kxg7 22. Qb2+ Kg8 23. Rxd6 Qc5 24. Rad1 Ra7 25. Ne3 Qh5 26. Nd4 Bxg2 27. Kxg2 Qe5 28. Nc4 Qc5 29. Nc6 Rc7 30. Ne3 Ne5 31. R1d5 1-0 [Event "Havana m"] [Site "Havana"] [Date "1901.??.??"] [Round "8"] [White "Corzo y Prinzipe, Juan"] [Black "Capablanca, Jose Raul"] [Result "0-1"] [ECO "C25"] [PlyCount "52"] [EventDate "1901.??.??"] [Source "ChessBase"] 1. e4 e5 2. Nc3 Nc6 3. f4 exf4 4. Nf3 g5 5. h4 g4 6. Ng5 h6 7. Nxf7 Kxf7 8. d4 d5 9. exd5 Qe7+ 10. Kf2 g3+ 11. Kg1 Nxd4 12. Qxd4 Qc5 13. Ne2 Qb6 14. Qxb6 axb6 15. Nd4 Bc5 16. c3 Ra4 17. Be2 Bxd4+ 18. cxd4 Rxd4 19. b3 Nf6 20. Bb2 Rd2 21. Bh5+ Nxh5 22. Bxh8 f3 23. gxf3 Nf4 24. Be5 Rg2+ 25. Kf1 Rf2+ 26. Ke1 Nd3+ 0-1