If you plan to expand

If you plan to expand the business and hire employees, then incorporating can have advantages. You may end up saving taxes and limiting your liability.

If you plan to get investment

If you plan to get investors to put money into the business, they will usually be more comfortable with a corporation, since corporations are better regulated and have a well-defined structure. For example, every corporation must have bylaws and a Board of Directors.

Some clients prefer to work with a corporation because they are under the (mistaken) impression that this decreases the chances that the Internal Revenue Service will complain about the arrangement and seek back taxes from the client. Most clients, however, are smarter and realize that following the guidelines that are explained in the next few pages will help them, and you, avoid problems with the IRS. Incorporating, by itself, won't help.