As a tax lawyer, I can say with complete certainty that healthcare costs will trump taxes as the #1 lifetime expense for almost everyone (except the Buffets and Gates). #2 will be costs associated with childraising. Taxes are a distant #3, and for people with sufficient debt (mortage and/or student loan), may actually fall to #4.
Also, while the rest of your advice is sound, it is unncessary to organize an LLC or incorporate a S-Corporation for side projects. In either case, you will face additional taxes (nominally called "fees") for the privilege, along with additional tax filing burdens. You can already deduct business-related expenses as an individual. Indeed, both LLCs and S-Corps are treated as "pass-through" entities, so you would already be doing that for your LLC/S-Corp expenses.
The primary reason to form an LLC/S-Corp for a side project or for consulting is for liability protections (i.e., lawsuits, debt, etc.). Unfortunately, for single-member LLCs or sole-owner S-Corps, creditors will generally require the owner to contractually waive such protections.
The secondary reason, and the reason you're probably thinking of: you can sell the LLC/S-Corp, recognizing capital gains (lower tax rate) or even avoid taxes altogether (via certain norecognition transactions). In contrast, it is extremely difficult to sell an unincorporated/unorganized business, and you will essentially always recognize the gain in such a sale.
Amen to the childraising point. My wife and I took a total of six months of leave for each of our two kids (mostly her, though I did a 1-1.5 months at the end too). That's a year's salary down the toilet. We're mid-career (i.e. unlikely to see an increase in real income unless we get lucky or change career paths). So that's probably 1.5-2% of our lifetime earnings right there: even before the kids started daycare, and long before they'll go to college.
The love and affection what you gave to ur kids is priceless and much more valuable than the money (1.5-2% earnings)you drained. So, Don't even account it. With out these (spending time with kids taking off etc) how much ever you earn, you are still poor.
He was referring to the first six months of child raising. Therefore, the total cost is definitely higher and may well trump taxes, depending on when your definition of "child raising" stops.
The loss of income for 6 months was 1-2% of his lifetime earnings. I strongly doubt that 6 months of taxes will account for >2% of his lifetime earnings.
healthcare costs will trump taxes as the #1 lifetime expense for almost everyone
This is hard for me to believe, since health care is around 15% of GDP and taxes are around 25% of GDP. The top 1% only pays about 28% of taxes, so even "taxes paid by the non-1%" are more money than all expenditure on health care.
The GDP numbers are not segregated by the source of taxes paid. Those GDP tax numbers include corporate taxes. Even after all of the tax breaks, the U.S. does have the highest corporate tax rate in the Western world at 35%, and most corporations are not able to avoid taxes like GE. [EDIT: inserted not]
They don't, generally, as healthcare costs are bounded but income is not. So the rich ultimately pay proportionately less for healthcare relative to their income (though on an absolute sense, they pay significantly more).
"Unfortunately, for single-member LLCs or sole-owner S-Corps, creditors will generally require the owner to contractually waive such protections."
Relates to contracts you sign (and getting a credit or charge card which you end up signing personally even though it's a "business" card) but not necessarily to expenses or everyday debts (the local printer, the coffee company, merchandise on net 30 terms etc.) In short you can have debt that is shielded as a corporation.
"In contrast, it is extremely difficult to sell an unincorporated/unorganized business,"
Don't agree with this at all. I sold one (20 person company) and the fact that it was a sole proprietorship didn't make it any harder to sell from my experience.
Agree with the other things you said and correctly pointing out that you can deduct business expenses as an individual.
Also, while the rest of your advice is sound, it is unncessary to organize an LLC or incorporate a S-Corporation for side projects. In either case, you will face additional taxes (nominally called "fees") for the privilege, along with additional tax filing burdens. You can already deduct business-related expenses as an individual. Indeed, both LLCs and S-Corps are treated as "pass-through" entities, so you would already be doing that for your LLC/S-Corp expenses.
The primary reason to form an LLC/S-Corp for a side project or for consulting is for liability protections (i.e., lawsuits, debt, etc.). Unfortunately, for single-member LLCs or sole-owner S-Corps, creditors will generally require the owner to contractually waive such protections.
The secondary reason, and the reason you're probably thinking of: you can sell the LLC/S-Corp, recognizing capital gains (lower tax rate) or even avoid taxes altogether (via certain norecognition transactions). In contrast, it is extremely difficult to sell an unincorporated/unorganized business, and you will essentially always recognize the gain in such a sale.