It’s Time To Incorporate!
The time has come for me to officially create a corporation, and guess who’s going to be a CEO? Seriously though, I really need to form a company. I’ve been running my affiliate business as a sole proprietor for 6 years. I’ve paid enough in taxes and I’m ready to be a slave, to my company, and work for a salary.
Why am I incorporating so late?
It’s easy, it’s because I am a major procrastinator! Seriously, I could’ve done this a long time ago and saved myself thousands in taxes (and also protected myself), but I like to learn things the hard way.
At first I was going to go with an LLC (limited liability company) but after thinking and reading a lot on the topic, I’ve decided to go with an S-Corp. Once I form the corporation, my company will be its own entity, and I will become an employee of my company. Of course, I still have to consult with a lawyer before doing anything.
At first I was going to do it on my own by just using legalzoom or some similar service, but I really don’t want to F this up, and since I’m not an expert at forming companies, it’s best that I seek advice from a professional. I have exactly 27 days to get this rolling. So, by the end of the year, I will be a CEO.
Why am I Incorporating?
I am incorporating for a lot of reasons, the top being the following:
- I Get To Save on Taxes! I have no issues with paying taxes. But damn, can I keep some more of my hard earned money? I know it goes to good causes (some of it), but must you take all of that, Uncle Sam? One thing that people who are self employed hate about taxes is the self employment tax. Why must we be taxed an extra 15%? By incorporating, I won’t be self employed anymore, Booyakasha
- I Will Protect Myself! If someone were to sue me right now, they could go after my personal assets. When I incorporate, the most they can go after is the company (unless I mix personal and business income, then they can “pierce the corporate veil” and go after my personal stuff) Now that I’m a home owner, the last thing I need is for someone to sue me, not have enough $$ to cover the lawsuit, and end up selling my house to cover the lawsuit.
- I Get To Be CEO! How cool is that? Being CEO of a company. Although it’s not CEO of some large corporation with billions in sales every year (although it will be in the future :-), think BIG), I think it will be a great feeling.
- Business Credit! Once the corporation is formed, I can start building credit and hopefully borrowing a lot of money. We all know that in order to make money, we need to spend money, and it’s always nice when you’re not spending your money, although you have to pay it back :-).
I haven’t decided on a business name yet, I have some in mind, but the decision isn’t final yet. Once it’s official, I will announce the business name.
Did you incorporate your business? How was the process? Are you glad you incorporated? Let me know by leaving a comment.
Thanks a lot.
Jonathan
I would encourage you to take full advantage of the tax breaks. This consideration is especially critical to the type of corp entity you decide on (LLC, S corp, etc.) Another tax break to add to your list is the ability to deduct expenses that would otherwise be solely considered personal. E.g. if you work out of your home you can deduct a proportionally equivalent amount of your rent or mortgage used for work purposes. So, if your rent is 1000 / month and you use 15% of the dwelling for your office, you can claim $150 / month as a corp expense. Congratulations on making the leap, great choice. Looking forward to what name you decide on.
Still mulling over how to do this myself.
Maybe I’ll do an S-Corp, too, instead of an LLC.
Gotta go Bible dip and pray for a new name as well. I want something timeless and elegant and successful.
I’ll keep up with your posts and see if we both make that switch in 2009!
Hello, lower tax brackets, higher income!
Bret,
Thanks for the information. I look forward to seeing you again at Affiliate Summit West in Vegas.
Jonathan
Paula,
I already figured out which name I’m going to use. I still haven’t met up with the lawyer yet. It looks like it won’t happen until 2009 for me. Hopefully I can get this done in early January.
I will also monitor your progress and see if you set up an entity in 2009.
Good luck, and have a happy new year.
Jonathan