Popular Wealth

May 22nd, 2008 – To Inc. or not to Inc. This is a hot topic on various sites because the benefits can be substantial, is your blog earning an income?

When should I incorporate my blog business?

The short answer is when it would provide you with tax savings. If you’ve just begun earing money with your blog chances are you’re paying taxes as if it’s a proprietorship, the blog income is simply added to your personal income and taxed all at once. The benefits to a proprietorship include the ability to write off startup loses against your personal income, once incorporated your blog empire stands on it’s own and is independant from your personal income. If your blog earns enough income that when the corporation tax rate is combined with your personal income tax rate you are paying a higher rate of tax than you would if the blog business was taxed seperately… consult an attorney and evaluate your specific needs.

How do I incorporate my blog as a business?
The simple way – ask a lawyer to handle it for you OR hire a company. There are companies that can help you like Incorporate Fast. OR you can do the work yourself, heres what you’ll need to do although do not consider this legal advice, it’s a guideline and you should consult with your states tax department rules.

#1 – You need a business name, chose one you can live with. When you think you’ve got a winner you need to request permission to use that name and to make sure it’s not taken. Here is a link to a request form – http://www.fin.gov.bc.ca/registries/corppg/forms/0708BFILL.pdf

#2 – Register the company name – your state likely has a website available to help you do this online. Google “state name + incorporate” or other similar terms until you find the official government service.

#3 – Add your blog to the new corporation. This is comonly called rolling over assets into the corporation. You can list your assets (domain name etc) as belonging to the corporation OR you can capitalize on them by using whats called a shareholder loan. If you simply give the corporation your blog, it instantly has a market value and you’ve just incured capital gains taxes. The shareholder loan route involves lending the blog to the corporation and the corporation repays the loan over time. To do this you not only hand over the blog, but all associated costs such as hosting costs, computer costs and anything related to running the blog. Deciding which method is best, or if there are other alternatives, requires researching your individual circumstances.

#4 – Is it smart to incorporate my blog? Probably not just yet unless you’re earning a living from your online efforts OR you own other companies that when combined you’d be better off drawing a salary from the corporation as a whole over paying high personal tax amounts. There are also liability issues to consider. As a proprietership YOU are responsible for losses, damages and lawsuits whereas a corporation shields you, to some extent, from business dealings possibly costing you personal damage to your real assets.

Do you earn your living online? If so, evaluate incorporation.