Having gone through this myself recently, I can point out a couple of details that came as a surprise. If you're not in the US, stop reading right now.
I elected to form a California-based S-Corporation, which cost me $180 in all at incorporatetime.com. They were reasonably efficient - it took about 2 months to get all the papers returned.
Note that although an S-corp pays no FEDERAL taxes, your state may require taxes. CA has a minimum corporate tax of $800, even if the corp has $0 income. Also, if you do business in states other than your home state, you may be liable for corporation tax in those states.
Another issue is the sheer mechanics of getting your hands on "your" money if you set up an S-corp. Obviously, the checks you receive have to be made payable to your company, otherwise the IRS will assume the income is yours personally? That means you need a corporate bank account (for which you need a Federal Tax ID). If you bill your customers in chunks of $5k or more, be aware that banks impose an extended hold on checks for this amount. Ask banks what their policy is on this.
In my case (Bank of America), this is 9 business days, which means that I receive a check on, say, Thursday the 1st, the funds won't be available in the business account until Wednesday the 14th, assuming I get the check to the bank on the Thursday. Then you may have to go through the same process with your own personal bank. In my case, this means that I can't write a personal check using the money I received on the 1st until the 29th of the month. (I have to mail in a company check to my bank).
I realize that this could be circumvented by simply paying myself more through regular payroll & reducing the need for ad-hoc checks, but my understanding is that the lower you keep your "salary", the less you'll pay in Social Security taxes (14% of salary). Once your business is set up & cash is regularly flowing, this ceases to be an issue, but you should not make the mistake I made of assuming that your savings only have to cover the time until your company receives its first check.
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Having gone through this myself recently, I can point out a couple of details that came as a surprise. If you're not in the US, stop reading right now.
I elected to form a California-based S-Corporation, which cost me $180 in all at incorporatetime.com. They were reasonably efficient - it took about 2 months to get all the papers returned.
Note that although an S-corp pays no FEDERAL taxes, your state may require taxes. CA has a minimum corporate tax of $800, even if the corp has $0 income. Also, if you do business in states other than your home state, you may be liable for corporation tax in those states.
Another issue is the sheer mechanics of getting your hands on "your" money if you set up an S-corp. Obviously, the checks you receive have to be made payable to your company, otherwise the IRS will assume the income is yours personally? That means you need a corporate bank account (for which you need a Federal Tax ID). If you bill your customers in chunks of $5k or more, be aware that banks impose an extended hold on checks for this amount. Ask banks what their policy is on this.
In my case (Bank of America), this is 9 business days, which means that I receive a check on, say, Thursday the 1st, the funds won't be available in the business account until Wednesday the 14th, assuming I get the check to the bank on the Thursday. Then you may have to go through the same process with your own personal bank. In my case, this means that I can't write a personal check using the money I received on the 1st until the 29th of the month. (I have to mail in a company check to my bank).
I realize that this could be circumvented by simply paying myself more through regular payroll & reducing the need for ad-hoc checks, but my understanding is that the lower you keep your "salary", the less you'll pay in Social Security taxes (14% of salary). Once your business is set up & cash is regularly flowing, this ceases to be an issue, but you should not make the mistake I made of assuming that your savings only have to cover the time until your company receives its first check.
HTH
Dave
Perfect timing! I was just wondering how to "write" an Excel file & send it to a browser.
The actual content-type flag is "application/vnd.ms-excel"
Thanks!
Eel