Brian:
I recommend seeking the advise of an attorney and having him/her draw
up the articles of incorporation. You can discuss with the attorney
what the advantages and disadvantages are of the different types of
incorporation (e.g., S, C, LLC). Each has it's own tax structure.
If the corporation is drawn up correctly and the rules of the
corporation are followed, then you will protect yourself from
personal liability in the event that something bad happens, like
accidentally dropping a client's customer table while working with
his database when there was no backup.
You should also think about getting an "errors and omissions" policy
for that exact same reason. While having a corporate umbrella does
protect you from being personally libel, losing a corporation is not
the best thing that can happen to you either -- so protect the
corporation as well.
Also, being in a corporation does come with some liability. For
example, if you are the secretary treasurer, then that makes you
personally responsible for state and federal withholding taxes for
employees. So don't think you're totally safe just because you're in
a corporation.
For example, I was a partner and the secretary treasurer of another
corporation. I left the corporation employ, sold my stock and
completely dissolved my relationship with the corporation. However
two years after I quit, the corporation hired an employee and a year
later went bankrupt. The State of Michigan came after me for the
withholding taxes for that employee even though the infraction
occurred three years after I had left. I spent two days fighting with
the State showing them that I was not responsible. After which, the
State of Michigan still would not release me from the liability other
than to say "We'll see... ". I had to turn it over to my attorney to
get the issue resolved. A big waste of time and money.
Additionally, if you pierce the corporate vail by not passing income
through the corporation but taking payment directly, then you forfeit
the corporate protection. Likewise, not having an annual minutes
meeting can dissolve the corporation leaving you unprotected. There
are at least a dozen rules like this that you must follow. So, hire
an attorney, have him/her prepare the papers, and ask what your
responsibilities are. There's no reason to start up a corporation if
you don't know how to use it or what your responsibilities are.
Cheers,
tedd
--
-------
http://sperling.com http://ancientstones.com http://earthstones.com
_______________________________________________
New York PHP Users Group Community Talk Mailing List
http://lists.nyphp.org/mailman/listinfo/talk
http://www.nyphp.org/Show-Participation
