Tuesday, August 28, 2012

Incorporating Your Software Company

Book review of Inc. Yourself - How to Profit by Setting Up Your Own Corporation by Judith H. McQuown (published by Broadway Books).

It was an earlier edition of this book that got me thinking about incorporating DP Directory more than two decades ago. It's a great book, and would help any US-based software developer incorporate their company. The publisher releases updated versions of the book regularly, and has sold more than 500,000 copies.

I used an attorney to incorporate my business. I believe that I could have done the work myself, but I wanted to have an experienced professional do the paperwork for me.

Inc. Yourself begins with information that will help you decide if incorporating is the right decision for your business. It discusses how a corporate structure might limit your personal liability, how it affords tax advantages, and how incorporating your business offers other financial incentives when compared to running a sole proprietorship or a partnership.

There's a discussion of how to name your corporation, fill out the paperwork, choose a fiscal year, transfer assets into your corporation, issue stock, and keep corporate records. The book has insights on medical insurance, life insurance, hiring employees, and providing them with benefits. You'll learn about retirement planning, and disposing of your corporation.

You'll learn the differences between a C corporation, an S corporation, and a Limited Liability Company (LLC). I was surprised by the enormous number of legal differences between the three structures. It's important to choose the form of business that best suits your needs, and this book provides a lot of good guidance.

If you're serious about building your software development business, you should consider incorporating your business. In addition to limiting your liability, the corporate structure offers financial opportunities when it comes to providing medical coverage, buying life insurance, and providing a pension.

This is an incredibly useful book; it discusses all of the key issues, and gives you the perspective that you need to make an informed decision.

No comments:

Post a Comment