I've been thinking about how to take advantage of the benefits of incorporation for my family, but I can't really come up with anything. I'm not self-employed and my wife is in school, so it's not clear to me how incorporation could help us. Is there a way we could pay for her education as a business expense? How about our cars or home? And it probably goes without saying that it has to be legal.
There are basically three reasons to set up a corporation or LLC:
1. It's an insurance plan that your state sells you. It limits your business-based liability to your business assets. But there's a big exception: You're still liable for whatever you do personally. So if your employee runs over a little old lady while driving the company truck, then you may lose your company but your personal assets are safe. But if you run over the same little old lady, then it doesn't matter whether you were driving the company truck on company business: You still ran over a little old lady. So this benefit doesn't usually become serious until you have employees.
2. If your business has co-owners who aren't spouses or immediate family, then a corporation or LLC is an easy way to define that co-ownership relationship.
3. There are some tax advantages to having a corporation own your business, but they're subtle. It's hard to define what you call a tax advantage, because there's a fine line between "The IRS allows this" and "The IRS is unlikely to notice this."