# SS number against incorporating?



## GBov (May 4, 2008)

Just about to get my farm (wooohooooo) but now I am trying to decide what to do tax wise for next year.

Is it better to run a hobby/home stead farm as an incorporated business or is it better to just save all my receipts and file taxes with my social security number?


----------



## NEMarvin (Jul 11, 2010)

The main reason to incorporate is to protect your personal assets from any potential business liability. If you are concerned about that, you may wish to incorporate. 

The second reason many people incorporate (S corp, usually) is to make some of their income come through as dividend income (reported on a K1) which can save self-employment tax (schedule SE). However, if you are audited, and you are asked why you incorporated, don't tell them it was to save money on taxes; just say it was the first reason (liability). Usually the costs of incorporating don't make sense for tax savings unless your income will be quite a bit.


----------



## ErinP (Aug 23, 2007)

> The main reason to incorporate is to protect your personal assets from any potential business liability. If you are concerned about that, you may wish to incorporate.


However, if you're a sole proprietor, this is pretty much pointless. 
If you're worried about a business liability, that's what liability insurance is for. Incorporation merely adds another layer of paperwork that a mediocre attorney can work through in less than a day.

Incorporation from a legal standpoint, only makes sense if you have multiple entities in your corporation (ie, siblings, parent/child, partners, etc.) Spouses are usually seen as a single entity so far as the law is concerned.


----------



## mistletoad (Apr 17, 2003)

If you are running your farm as anything other than a business there is nothing to file unless you manage to make a profit.


----------

