Q.Does incorporating a small business offer any tax breaks?

A.Maybe yes and maybe no. Most tax benefits flow to profitable, established corporations, not to start-ups. Corporations do have the ability to split income between a corporation and its owners such that some income can be kept in lower corporate tax brackets. Corporations can also offer greater medical deductions than sole proprietors or partnerships (100% versus 60%). However, incorporating does add state fees, as well as legal and accounting charges. Unless there are sunstantial profits, there may not be any tax advantages to incorporating.

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