OK, I've searched this forum a bit and didn't find much help. I run 2 websites that I plan to grow considerably and be quite large money-makers. Along with 2 other sites, but they ain't going to be half as large as my others. My question is, I want to form a corporation for both of my 2 larger sites, or one "main" corporation and the two sites being sub-corps. I'm clueless as to how to go do this, mianly since I'm trying to protect both of my investments and my own property (duhh, why else would I form a corp?). Can anyone point me in the right direction here? I'm 100% clueless.
I formed a single shareholder Limited Liability Corp (LLC). It has all the benefits of a C corp with none of the overhead - You can still file a 1040 with a schedule C. If it was me I keep the corporate structure simple for now - the accounting and legal fees will eat up your profits. Wait for the sites to grow and when they get large enough to cover the overhead costs then consider separating them. But either way consider spending a few bucks with a CPA or attorney before you move forward. -jay
Before proceeding, or taking the advice of the many lawyers here on DP, the advice to see a CPA and attorney is very good advice. Son and I just registered a company in Texas (tax purposes, as Iowa wanted too much upfront and more as time goes on and income increases). But did this through an attorney who specializes in such matters.
Tommy, I see it as protection for myself. The sites I run are ... controversial? Not even that, but wrongful information posted (as much quality control as a person can have, disclaimers, etc. ... sometimes that just can't protect you from everything) and I wouldn't want to, in a year or two once I get my own house, cars, property, etc. get taken just because of some article posted on a website that someone took the wrong way. Mainly because it's a website going to give health information, bodybuilding + fitness + nutrition, etc. Someone takes something the wrong way, has allergic reactions to certain supplemental chemicals, anything of that order I can be held responsible (I talked with an attorney once, he said I could be held responsible for wrongful information). Now as much as quality control can do, it dosen't protect me from everything. I have no intentions of screwing someone over with articles, hoping to hurt someone, obviously - but protecting myself is my main priority. Plus tax benefits, I talked with my aunt who is a CPA and a lot of things I can't do for myself in tax writeoffs / deductions I can do through the corporation.
Sounds like you've thought a lot about this. Keep in mind that piercing the veil of a thinly held corporation is not difficult. While it does give you an additional layer of protection at the end of the day someone can still come after you personally. If you're ready to start, you should to seek out the advice of an attorney that specializes in risk mitigation. As Iowadog said, there are a lot of us DP members practicing law without a license -jay
Ever hear the cliche' "piercing the corporate veil"? The only tax benefit I remember gaining while incorporating, was the avoidance of employment taxes on shareholder dividends. So check, with your CPA. If you have a state that forces a minimum tax on corporations, any tax benefits from redirecting income via a dividend could be quickly eaten. NJ had a $500 min tax, with a required yearly corporation filing feel of like $75 bucks. Your 'write-offs' are basically the same for any business, regardless of the tax entity. Back on the Limited Liability of a Corporation, it is 'limited' not ZERO, so if you really feel concern, you should have Errors and Omissions Insurance as well. Remember, for taxes, check with a CPA, for legal protection get a lawyer. Good luck, tom
Why incorporate? Because corporations are the "secret weapon" of the wealthy! If you complain about tax cuts for the rich, you're only half right. Try tax cuts for the foolish rich people who don't know enough or aren't willing to make the effort to set up corporations and other legal entities to reduce or eliminate their tax burden. The cash flow of most people goes like this: Make money -> pay a lot of taxes -> spend what's left. The cash flow of people who use corporations goes like this: Make money -> spend money -> pay taxes on what (if anything) is left. My "S" corporation is in Nevada, though I've never been there. Some states (California comes to mind) have pretty much gutted the traditional legal protections offered by corporations (I saw "piercing the corporate veil" mentioned) but Nevada does a good job of protecting corporations. The shareholders aren't even public record! Nevada also has no state corporate income tax, personal income tax, franchise tax, or tax on corporate shares. Nevada does have sales tax that varies by county, though, so you'll have to keep track of the counties for any sales you make to Nevada residents and report and pay those taxes regularly (quarterly in my case.) There are all kinds of interesting things you can do to protect your assets if you have a corporation. For example, if your corporation makes a loan to your current business in the correct way, the corporation has first claim on your business assets. If somebody decides to sue your business, your corporation can call the loan and take possession of your assets, leaving you (actually your corporation) with everything and them with nothing. Do check with lawyers and CPAs, though. I'm neither, but I did make the effort to find out about this and form a corporation. I may have some things wrong here. Don't sue me if I messed up. It's a waste of your time ;-) And don't ask who my Nevada resident agent is. I don't recommend them, so I won't name them. I think they're grossly overpriced and I'm looking for a new agent. Scott