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As far as simplicity goes, consider this. As a sole proprietor, you must file a Schedule C with the IRS if you intend to take any deductions. Filing a Schedule C also dramatically increases your chances of an audit. Also, when you are audited, the audit covers all of your personal finances. If my corporation is audited, the audit does not automatically extend to my personal finances.

Having a corporation actually simplified my situation, even when I was a one-man consultant shop. I've always maintained separate bank accounts for my businesses, which gives me a clearer picture of my business performance by isolating my personal finances from the picture. I find the required filing to be minimal in contrast to the added clarity.

I can't make the argument that it requires less paperwork, but IMO, it does make the paperwork simpler.



You may also end up with schedule C income anyway if your legal entity provides you with a dividend or other payment outside your regular salary, and you are likely to want to do that anyway because non-salary distributions are not subject to social security taxes - saves you 15%.




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