Re: Pros and cons of incorporating?
I've been doing a lot of reading on incorporation and the like, but I thought I'd pose the question to you all about how the pros and cons specifically apply to an independent writing business.First off, there is the question of whether you want to represent yourself as a legal business entity, or as yourself. Both are legal ways of doing business, but each has tax implications. If you want to do business as yourself, you will probably always wind up getting assignments as a 1099 contractor, or sometimes as a temporary employee. But it will always be just you, perhaps with side agreements with other people who are sharing the work with you but each of them representing him/herself, legally. Sometimes clients prefer things this way; sometimes not.
If you want to represent yourself as a legal business entity, you have a number of choices, which include incorporation, partnerships (there are number of forms, including LLP's or LLC's, depending on the state you're in [and btw, some in some states LLC stands for Limited Liability Corporation; in others it's Limited Liability Company]), DBA's, individual proprietorships, etc. The fundamental difference between a corporation and a partnership is the difference between owners and managers, and taxation issues. Corporations offer some kinds of protection from liability for stockholders, but so do limited liability entities. It's complicated - you can see simpler explanations in the Nolo Press publications, or you can pay a lawyer to tell you.
Practically speaking, however, how you represent yourself in a tech writing business depends on the kind(s) of business you want to do. If you really want to be a single-person entity, and you want to keep things simple, you can take a fictitious business name, register it appropriately, and forget all the complicated tax stuff. If you want to be able to have employees or contractors work for you on a regular basis, you probably want a more formal business structure. As for whether you'll be taken more seriously by clients, it depends on the area where you're working. Some clients prefer working with individuals, some prefer the idea of business entities. Some tech writing clients understand that, when all is said and done, they're working with individuals who write, and don't really care what business form is used.
The downside of doing business though a business entity is the extra effort required at tax time. Sometimes there are extra deductions you get as a business; sometimes these are offset by minimum tax requirements (in California, you pay a minimum of $800 in taxes per year, for business entities).
Have fun sorting it all out.
Elna Tymes
Los Trancos Systems
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