I generally don't recommend that moonlighters incorporate as a way to save taxes. Any expense that is deductible to a corporation is also deductible to a sole proprietor. Plus, certain expenses such as the home office deduction and vehicle expenses are easier for sole proprietors to claim.

Every business decision comes down to a cost/benefit analysis, and for moonlighters, I just don't see how the tax benefits of incorporating outweigh the costs. (A lawyer might be able to show you that you will protect yourself from certain risks by incorporating.)

I have written an article for the July newsletter about whether it makes sense for people who do some moonlighting or consulting on the side to incorporate. That article will be posted as part of the MDTAXES monthly newsletter on July 1st. Please hold off incorporating until you read my article.

Zip Code: cpa@mdtaxes.com