To Incorporate or not?

[Laeno]

I'm picking up some moonlighting income this year in order to work on some student loans, and I'm also planning to meet with a CPA re: taxes, etc.  One of the guys I talked to on the phone (we haven't met in person yet), mentioned incorporating, I believe he recommended an S Corp, to take advantage of my incoming 1099 income.  My FT job pays me W2, and I'm making a healthy salary there, and I expect low 6 figures for the moonlighting gig (assuming I don't work too much and burn out and just quit and move to the beach...).

 

Do I need to incorporate?  I'm not too likely to continue with a significant amount of moonlighting after loans are done (2-3 years), and my understanding is I should still be able to set up a solo 401k with just an EIN, which I can get with any 1099 income without the need of complicating my situation with incorporation.  I read https://www.whitecoatinvestor.com/incorporating-to-reduce-liability-and-to-save-taxes/ which seemed to point me in the direction of not incorporating.

[jfoxcpacfp]

No, you should not incorporate. The administrate costs (filing corporate income tax returns, payroll tax preparation, and filing payroll tax returns) outweigh the negligible Medicare tax savings. At low 6 figures, in fact, I would project no tax savings. My estimated break-even point to incorporate (for physicians doing this as a side gig) is around $300k. If you are concerned about liability for some reason, you can form a simple PLLC (except in CA). But remember that the LLC will not provide protection for any professional negligence on your part, so it is useless for the most part.