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Small Business Incorporation

Reducing an Income Tax Burden Through Incorporation

Working as a CRNA offers unique employment options, including freelancing and locum tenens, which present several tax deduction possibilities. Freelance employment provides CRNAs with the opportunity to operate as a small business owner.

CRNA Financial Planning® believes that incorporating may be a way to reduce potential business liabilities and offer tax reduction opportunities for the underlying business owner. While the firm cannot assist the CRNA in incorporating their business, they can offer objective insight and provide referrals to attorneys.

One of the first decisions a freelance CRNA must make is how to structure their business. There are two primary business structures, sole proprietorship and Limited Liability Corporation (LLC).

Sole Proprietorship
This business structure offers no legal distinction between the business itself and its owner. All business profits and losses are passed directly to the business owner’s individual tax return. Essentially, acting as a sole proprietor offers no less liability than if the individual were simply acting in his/her own capacity.

Limited Liability Corporation (LLC)
This business structure acts as a hybrid between a partnership and a corporation. LLCs are not responsible for taxes at the business level, meaning income is passed through to the respective business owner’s individual tax return. The bottom line profit generated from the business isn’t considered earned income to the members and is therefore not subject to self-employment tax (one of the more significant benefits to incorporation). In addition, insurance premiums, such as individually owned disability insurance or health insurance, may be considered deductible business expenses.

Establishing an LLC is a simple, easy, and affordable process when you partner with a qualified attorney. Professional fees for establishing an LLC range from $300 to $500. Despite the initial set-up cost, incorporating pays dividends each and every year through the tax results and savings opportunities created as a result.

*This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor. Outside providers or professional services are neither affiliated nor endorsed by CRNA Financial Planning® or Private Advisor Group.