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Should Writers Incorporate as LLC?

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The subject of incorporation is one I’m familiar with. I first incorporated back in 1999 when my brother and I were starting online businesses right and left. I needed a cushion between myself and my assets. Without incorporating you and your business are one in the same. When your business gets sued, you get sued.

Incorporate as an LLC (Limited Liability Company) and you’ll put a layer of protection between yourself and your business. In effect you’re creating an entirely different tax entity. Now you have separate taxes to pay for your business and for you as an individual.

This is a good thing for a number of reasons. One, I’ve just mentioned – you have more protection in the case of litigation against your company – no longer can a court of law take your personal assets like bank account, car, boat, houses, etc. At least not very easily. There are exceptions. Here are some good points and exceptions about forming an LLC in Florida.

Other advantages to LLC formation:

  • Profit and loss flow through to the individual tax returns of the owners of the company.
  • Flexible management and organization of the business. Not as strict as other business entities.
  • Limited Liability Companies don’t have the same ownership restrictions as some other corporate entity types.

Disadvantage of LLC’s:

  • LLC’s often have a limited life (not to exceed 30 years in many states) Some states require at least 2 members to form an LLC, and LLC’s are not corporations and therefore do not have stock — and the benefits of stock ownership and sales.

There’s a whole couple hundred reasons you should incorporate when it comes to taxes. There are so many things you can deduct as a writer from your income before you get taxed on it.

And, get this. Say you’re writing a book on spec for someone. The company or individual pays your company, “Mike Fook, LLC.” $22,000 which you promptly put into your business checking account. You promptly write a check for $22,000 to pay your backrent for the office where you write. Guess what? You save a fortune on taxes because you didn’t pay yourself a salary out of the $22K, you paid a business expense.

If you hadn’t incorporated and deposited the $22K in your personal checking, how much of that do you think you’d pay in taxes? At least $7,000 – right?

Now, I leave it to you – should you incorporate as a writer?

What do you think?

Here is some good information on LLC incorporation in Florida at a good friend’s site – he’s helped over 10,000 people incorporate their businesses in Florida over the past decade. You need NOT live in Florida to incorporate in Florida and reap the benefits of this low tax state. Inc. in Florida – you won’t be disappointed.

About

All content by Mike Fook. Mike writes fiction and non-fiction books in digital ebook format. Some advice for beginning writers - "Write Your Ass Numb!". Write what you love, and don't stop putting yourself out there. The world doesn't know you yet. The world is steeped in mediocrity. I encourage you to spit in the soup with some regularity. If you have any comments - feel free to leave them in comments, or send email. I usually try to say something confounding when I reply. Contact me at Google+.

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8 comments… add one

  • Walter

    You and your business are “one IN the same?” And you’re a writer?

    Would you believe “one AND the same?” It’s “one AND the same,” NOT “one IN the same.”

    • MikeFook

      Hi Walter,

      You get my new, “Dumbass of the Day” award. I wasn’t giving one out previously, because I’ve had few dumbass comments, however, yours was special.

      I’m glad you said something, and I’m amazed that more people don’t. I know there has gotta be 5% of the population of the USA that cares about grammar. Less than 1% could tell you the “right” way to write a book error-free. Less than 1% ever comment about incorrect grammar found on a site. Look around, at some of the popular blogs that have hundreds of thousands of people reading their articles.

      Read the couple hundred comments that follow.

      Guess what?

      Very few – usually nobody – cares to correct an error in which a two-letter word should be three.

      I cannot even remember the last time someone commented here about some fuckup I made, and I make heaps.

      You know why Walter?

      Nobody cares. Welcome to 2012. Techcrunch, arguably the best technology blog, and most well-funded on the planet – regularly fucks up spelling and grammar. You’d think they’d have that down by now, right? Nope. In nearly every article there is a mistake. If I can find them, you’d have a goddamned field day. Go check that out. Stop reading my shit. Go read a dictionary, you’ll be digging that style.

      The point Walter, is that the article is about something. You just spent a handful of seconds reading an article about incorporating as an LLC and what you got out of it was that a word was off in a rarely used idiom.

      Who the fuck cares?

      Comment about the article. If you liked it – say why. If you got something out of it – say why. If it blew – say why.

      Otherwise, go write something amazing yourself and let us all know where to find it.

  • Lloyd Tackitt

    Amen Mike!

    • MikeFook

      The nerve of that guy – right? LOL. I just re-read the entire article and couldn’t figure out what you were saying “amen” to. Then I read his comment and my reply. Now I get it. Thanks Lloyd, what a knob that guy was…

  • Laura Lindsay

    BEST. REPLY. EVER!!!

  • SusanFletcher

    I concur with Lloyd and Laura – good on ya! (maybe Walter will try to correct my Australian idiom / saying – oh well.

    Very helpful – as we’re about to start an LLC. There are 2 writers… and 2 investors. I’m trying to figure out what percentages are appropriate. The two investors have all of the financial risk, the two writers have all of the time we will put into the manuscript. They want a trilogy and movie out of it. I say they are dreaming…. let’s just get the book done first. The basic, general plot is the investors’ idea… my partner and I will develop the story, give depth to characters, write the manuscript, etc. The investors handle legal, business, production, marketing, publishing, etc.

    Any thoughts on that? I realize they have next to nothing (just an idea) without the creative / written work… but they are putting in all of the financial risk, etc.

    Thanks in advance – and I would welcome any other comments as well from other writers who have had similar experiences…

    • MikeFook

      Hi Susan,

      Someone is going to pay you to write a book on speculation? How cool is that???? That sounds perfect to me. I’d love to hear how that all came together. Did the one investor already have a killer story in mind and started searching for someone to write it and found you? Have you written many (any) books before this?

      Are the investors going to pay your salary, expenses, etc? If yes, then it sounds like you’re creating something on spec and so the investors will own the book outright, and all that comes from it. If they’re also willing to share a percentage of it with you – great!

  • Christie

    Hey Mike, GREAT article and just what I need today. I’m a blogger and have written one e-book, with two more in the works. Now that I’m finally making a little money I believe it’s time to start that LLC. Is writing one of the things we can do and have our LLC in whatever state we want – because we don’t have a brick and mortar store or employees? I’d love to have mine in a no-sales-tax state if possible!

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