[OT] Becoming incorporated? Few quick questions, S-Corp fine, etc?

I figure a lot of you are probably independent contractors so I have a
couple quick OT questions…

I currently work full-time in a company as W2 employee, but will be
picking
up side contract work. I’d like to become incorporated to avoid 1099
implications and to have some basic liability asset protection.

I see that you can file to register to become incorporated online.

  1. There seems to be numerous sites that allow you to apply for becoming
    incorporated. Are any better than others? is there something to look out
    for
    when doing it online that could be a ‘gotcha’ that screws me?

  2. Is just setting up the most basic S-Corp fine (I don’t plan to have
    employees or plan to be doing a lot of work out of state.) The first
    google
    hit for applying shows some of the packages
    http://www.incorporate.com/choosing_incorporation_packages.html Is the
    basic
    $99 package fine? (Does it protect me enough from someone taking my
    house if
    they tried to sue?)

  3. Approximately how long does it take for everything to go through? I’d
    like to start doing work for someone in a couple of weeks and of course
    would want the checks paid out to my company name I come up with. (Worse
    case, I’ll have him pay me at a later date rather than weekly until the
    name
    gets registered. I’m just hoping this doesn’t take a long time to
    process.)

Thanks for any advice.


Rick R

On Sat, Jul 18, 2009 at 8:24 AM, Rick[email protected] wrote:

I figure a lot of you are probably independent contractors so I have a
couple quick OT questions…

You might consider joining the Rails Business list
http://groups.google.com/group/rails-business?hl=en where this is on
topic.

In fact you might find some answers in the archives of that group,
since it’s come up several times.


Rick DeNatale

Blog: http://talklikeaduck.denhaven2.com/
Twitter: http://twitter.com/RickDeNatale
WWR: http://www.workingwithrails.com/person/9021-rick-denatale
LinkedIn: http://www.linkedin.com/in/rickdenatale

I think forming an LLC, or Incorporated business is great. However,
talk to a lawyer/attourney if you can, because a single member LLC or
a single stakeholder Inc will NOT necessarily protect you from the
liabilities you’re looking to protect yourself from. The misconception
most people have is that the incorporation (rather than obtaining sole
proprietor licenses) is enough to shield themselves from legal action
from passing through to their personal assets, but with single-owner
LLC/Inc’s, many judges will still pass through judgements to claims on
personal assets if you do not follow all the rules around LLCs and
corporations, such as quarterly and/or yearly meetings with minutes,
state filings, etc.

Spend the extra time to research your decision thoroughly. It’s a lot
of work for a one-person company, and it may not make sense for
everyone. But, if you’ve determined that it actually is, congrats!

-Kevin

On Jul 18, 2009, at 8:24 AM, Rick wrote:

I figure a lot of you are probably independent contractors so I have
a couple quick OT questions…

I currently work full-time in a company as W2 employee, but will be
picking up side contract work. I’d like to become incorporated to
avoid 1099 implications and to have some basic liability asset
protection.

First, I agree with both Kevin and Rick when they suggest that you
talk to a lawyer about this. You’re going to spend more than $99, but
a few hundred now is better than getting screwed later. The rules that
apply to an LLC vary by state so you can’t rely too much on any advice
you get from a mailing lise.

Second, you need to be very aware of what kind of employment agreement
you have with your W-2 employer. Some agreements effectively make any
work you do the intellectual property of the employer. That could put
you in a bad situation if you do something cool (aka, financially
attractive) for a client.

-Rob

Rob B. http://agileconsultingllc.com
[email protected]

On Sun, Jul 19, 2009 at 9:47 PM, Rob B.
[email protected]wrote:

On Jul 18, 2009, at 8:24 AM, Rick wrote:

Second, you need to be very aware of what kind of employment agreement you
have with your W-2 employer. Some agreements effectively make any work you
do the intellectual property of the employer. That could put you in a bad
situation if you do something cool (aka, financially attractive) for a
client.

Hmm, that’s a very good point I never thought of.

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