This year I really took my blog to the next level by re-branding and also incorporating. I’ve seen so many online discussions about how to incorporate ones business and if it’s necessary. There are so many questions around whether one should remain being a sole proprietor or look into registering the business as an LLC or corporation. The bottom line is that you need to do what is best for you and your business. JenOni, Inc. is registered as an S Corporation with the state of NC.
Q: Why did I incorporate?
Here is my WHY: It limits my liability and the exposure of my personal assets in the event that someone decides to sue me. The last time I checked, how much I gross wouldn’t prevent someone from suing me! So, why would I wait to reach a particular threshold before I incorporate? No matter what type of income you are bringing in, if you treat your blog as a business and are bringing in consistent income… you need to protect yourself and personal assets.
Q: What can someone sue a Blogger for?
A blogger can be sued for copyright infringement, deformation of character and slander just to name a few things. I’ve seen so many bloggers hire corporate lawyers to send out cease and desist letters for different reasons. I think one of the biggest issues is copying someones blog post or using pictures without permission. In addition to not giving credit to the original author or photographer.
Q: Are their different options when incorporating your business?
There are multiple ways to incorporate your business and it all depends on what your objective is. There are different classifications when you incorporate and you need to determine how you want to be taxed. How you classify your business is a sub chapter of the IRS tax code. This definitely requires the expertise of a professional. An S Corporation files corporate returns and also has a schedule placed in your personal tax return which is taxed at the personal income tax level (also referred to as your tax bracket). S Corps allow you to retain earnings in the company and there is no double taxation like with a C corporation.
Q: Why is it beneficial to incorporate businesses?
Incorporating creates additional tax benefits that being a sole proprietor doesn’t receive. Let’s not forget the security of protecting your personal assets. What that means is that you can sue my company but not me personally. So my home, bank accounts, investments are all protected.
Q: What costs are involved when incorporating?
Every state is different. Incorporating is more expensive than being a sole proprietor but, you’ll reap the benefits later on as you build your business. Keep in mind that you are protecting your personal assets. You should also think about your business and where you see yourself going before you choose a classification. An LLC may be a good fit if you are going to have limited growth and don’t plan on raising any capital.
Q: Why, should you have a good business team?
I want you to keep in mind that everyone has a particular role to play. A knowledgeable business consultant can assist you in filing and getting all your financial paperwork in order. An accountant and/or tax preparer can assist you in bookkeeping and filing your annual taxes and/ or quarterly taxes if you have a retail business. In addition you can hire a corporate lawyer to look over any legal documents or contracts before you sign. I’m actually researching trademark lawyers at the moment because that’s my next task.
Q: Why would a local business consultant be a better fit than an online business registration company?
I like being able to call on someone at a moments notice, meet them if necessary and have that one on one relationship vs. dealing with an online business where I may bounce around to multiple people to do the job. I also like the option of having someone to follow up with if I have any additional questions or concerns. In addition tax laws and fees will vary from state to state so do your research. A person can explain the WHY’s better than a website!
Tip: An LLC is NOT an incorporation. It’s the formation of a company that gives you the tax benefits of a sole proprietor and a corporation. It’s like a hybrid, you get the best of both worlds. Filing as an LLC is a popular route to go but, do your research and find out if it will work for your business before you file. An LLC can also be classified as an S Corp. Remember, it’s what will work for YOU and your BUSINESS!
Bonus: Please don’t let anyone like an accountant talk you out of something because it creates more work for them. If that’s the case you need to look for a different person to do business with. At the end of the day you are paying someone to do a job and they shouldn’t try and sway your thought process based on their workload. #ImJustSaying Some things do create more tedious paperwork than others but the people you do business with should always have your best interest at heart.
Disclosure: I am just sharing my personal experience and honest opinion along with some factual information. I filed my incorporation through the consulting firm, Laing & Co. with the NC Secretary of State along with my EIN number from the IRS and additional required forms. I will continue to consult with them as my business grows.