Okay, so you’re going to start a publishing business. First a disclaimer… I am not a tax adviser. I am not a lawyer. I am not giving you advice. I am merely telling you our thought process and what we choose and why. Now with that out of the way…
The big decisions are not over. You have to decide what kind of business do you want to set up; a self-proprietary, a limited liability corporation, or a regular corporation. A quick and dirty explanation. (For a more detailed explanation Google them. There are tons of websites out there that will do into more depth and detail on this subject.) A self-proprietary business is one where you own it and you are totally responsible for all profits and losses, including all liability. A corporation is a legal entity of its own and pays its own taxes to the federal government. You are the employee and also pay taxes to the government on your earnings. Because it is a separate entity, the corporation accepts all liability. A limited liability corporation is a mixture of the two, sort of. The important thing is that the liability is the responsibility of the business. The owners liability is limited, hence the name.
When I first started out, for about a month, I was a self-proprietary business. I filed a DBA (doing business as) with my state and puff, I’m a business. (DBA is so that you can run a business in a name other than your own personal name. For instance, I could be Angela Abderhalden Book Publishing. My name is in the name of the business. But if I wanted to be ABC Publishing, I have to file a DBA.) When Jason and I decided to go into business together, we made the decision to spend the money and the time and file as a LLC (Limited Liability Corporation). This way in case we get sued, our personal assets cannot be touched.
I haven’t bored you yet, have I? Good because in the next blog you need to decide what state to incorporate in, if you are going the LLC or the INC way. If you are a self-proprietary route, it’s the state you live in. Stay tuned.