I have discussed with many colleagues about incorporating a small freelance translation business, and most of them recommend doing so due to tax benefits. I have also discussed this with business lawyer friends and last year there was a bill proposal for removing these tax benefits for small incorporated businesses. Luckily, this bill did not pass and I have now finally incorporated.
The most common entity option for freelance translators seems to be an S-corporation. This can vary by state, depending on the state laws. After contacting SCORE, a great no-cost resource for small businesses in the US, I was referred to a great financial service business, called Main Street Tax and Financial Services (“Main Street”) to incorporate. That is when I also heard about another entity, an S-elected Limited Liability Corporation. This is what they say about an S-elected LLC: “While taxed as an S-Corp, an S-LLC is not required to have the same meetings & document maintenance requirements of an S-Corp. For all liability issues, the entity is treated as an LLC. For all tax issues, the entity is treated as an S-Corp.”
I chose this option and opted to have “Main Street” to do all the work for me for a reasonable fee. If you consider incorporating, I recommend booking an appointment with SCORE first and then choosing a financial service company to do the incorporating for you. SCORE can recommend these companies also help you with other questions you have for your small freelance business.