Incorporating as a writer

Many writers decide to incorporate after they have reached a certain level of income. The decision to incorporate is usually made because it can lead to a rather significant tax break, especially for a writer that earns over 100,000 per year. It also allows for the writer to draw a steady paycheck from their own income, because once incorporated, you earn a monthly salary, which is paid out by the corporation (you), to the employees of that corporation (you). Your taxes are also handled by the corporation, and depending on the benefits and other perks that the corporation (you) pays you and other factors, you may end up paying considerably less in taxes at the end of the year.

What many people don’t know is that when your corporation is first set up, you must hold a meeting of the board of directors and shareholders, even if all of these people are just you, yourself and you. You need to adopt bylaws, or if starting a L.L.C, an operating agreement. You must hold regular meetings of the board of directors with written minutes for each meeting, even if you are the only person in attendance. The I.R.S. may request these documents if you are ever audited and failure to produce them can have disastrous results.

There is a lot you need to know when starting a corporation. Luckily, there is an online resource that offers both free forms and a service that will provide prepared documents for a very reasonable $25.00 fee. You’ll also need to get a tax id number. If all of this is confusing to you, you may want to check out the differences between a corporation and a L.L.C., or simply order a corporate starter kit, which includes all the documentation and help you’ll need.

The company I’ve linked to is a Nevada corporation, but they offer services to help you become incorporated in all 50 states. If you’ve thought about it, check them out, but remember, incorporating is a huge step, and you may wish to consult a financial consultant or tax attorney before making any decision of this magnitude.

Popularity: 1% [?]