April's Coming!
  Written By Raven

It's January. Internext is over.

How many of you are in total disarray? Are you ready to pay your taxes? Do you have them calculated?

I'm never ready to pay taxes and No. Hell no, I'm not ready to pay anyone anything. Unfortunately, Uncle Sam disagrees and wants what I owe. I have no idea what I will have to pay; but, I WILL find out this week.

Who doesn't know the differences between a sole proprietorship and a corporation?

Did you know?
That when you are a sole proprietorship, when you own your own company by yourself, self employed, no help from G'd or kingdom, you are taxed on 100% of your earnings?

That's a big ugh.

INCORPORATE
Research the laws in your state. Find out how business friendly they are. For instance, I LOVE Washington State. Why? No STATE TAX. At the end of the year, I don't pay any. Yes, I pay a hefty sales tax; but, so does New York and they have a state tax. I think Washington is around 8.6%. New York is over 9% and that's just for sales tax. I won't be smug for long, because WA State is now talking about instituting a state tax. The powers that be waited until I get home.

I know people who have incorporated in Nevada, for instance. When we started our business, we did not research each state's practises. Knowledge means power and Nevada is supposed to be very friendly toward businesses. That's one of the reasons we've seen so many companies (sponsors) relocate their business addresses to Nevada. You don't have to live in the state where you incorporate. You do have to have a business presence, which means renting or buying office space. It's my understanding there are offices in Nevada who are set up for that purpose. They will lease you space, so you can show a corporate address. For us, it would not have mattered. We were poor and would not have had the money to open and maintain an office in another state. We rent space in our accountant's office, which is included in the retainer fee I pay her monthly.

I don't know everything there is to know about incorporating or what kind of corporation is best for my company. What I do know is this. I can't do this myself. I don't want to do this myself. Enter the tax preparer. Some people have accountants. I have my tax preparer, who is just as good, but, not as costly. I'm very fortunate, in that, I have a very good tax lady who takes my jumbled mess and turns it into a tax return. I pay her monthly and listen to her bitch about my lack of organisation. It's a fair trade. She gets to complain and gets paid for it. I get her to pay attention to the details and get me all the deductions this great country allows me to have, so I DON'T overpay Uncle Sam. Here are some advantages to incorporating.

1. Incorporating reduces personal liability, which means your business is kept separate from your personal identity. As a sole proprietorship, creditors can come after your company, which means you can lose your house, savings, cars, and all of your personal assets. Once you've incorporated, your risks are limited to the money you've put into the company.

2.Having a company name gives you credibility. Even if you're the only shareholder or employee, having the ".inc" after your company name gives you stature and sends a more powerful message to the world.

3. There are several tax advantages and deductions when you incorporate. You can now deduct health insurance, life insurance, travel and entertainment expenses. In our industry, all those conferences and dinners are now taken off the gross income, which reduces your taxable dollars.

With a corporation, you can 'hire' yourself as your own employee. When you talk to your accountant, you begin paying payroll taxes on yourself. This way, your tax obligations don't bite you so much at the end of the year and you're continuing to pay into Social Security, in the event it's still available when we retire.

Being incorporated gives you a certain status. Rather than saying you're self employed, you give out your very cool corporate name, adding 'Inc.' to the end of it. I love telling people the name of my corporation. Rift Raft, Incorporated. There's a story behind the name and it still makes me smile. Most people who hear it for the first time think it's adorable. Many of my business acquaintances have very cool names for their businesses. It's a personal thing. Gives me a sense of instant importance.

The cost of incorporating varies. It really depends on where you go to get the deed done. The price ranges from a few hundred to a few thousand. Mine cost me around five hundred or so, mainly because I did much of the legwork and I didn't go to a lawyer. Lawyers are more expensive.

There are more tax breaks for those who are incorporated than there are for those who are sole proprietors. If you earned 60,000 in a year's time, with an 'S' Corporation status, you save close to $4000 a year. That's not small change. It just seems as if you're paying taxes all year long. In a real sense, you are. Every quarter of your fiscal year, you get to pay Uncle Sam for the privilege of operating your business. Your business license must be displayed proudly on your wall and you owe your pound of flesh to the government. At the end of the year, your accountant hands you a paper, which itemises your deductions and lets you know how much you owe to the Federal government and to the State in which you live. I am fortunate to be living in a state which does not yet have a State Income Tax, so I won't owe money for that. Don't feel badly. I get to pay a fairly high Sales Tax; and, eventually, they will pass a bill, instituting a State Tax for Washington.

Since I don't know much about the subtleties of corporations, I hired someone who does know these things. I've always had somebody else prepare my taxes, math being my weak suit. I would rather pay another to research what's best for me financially, than wade through the dry, boring documentation myself. Being incorporated means paying less in taxes. That's knowledge enough for me.

As the Internet matures, all of us are going to have to conduct our businesses like a real business. No longer will we get away with sloppy bookkeeping and accounting, especially since we're in the adult industry and the government has their eyes on us and our wallets. More and more regulations will ensure our cooperation with the IRS. There are forms to fill out. We are accountable for every dime we earn over $600. Many companies no longer send out 1099 forms, so we're responsible for figuring out our earnings and what we owe to tax man. It pays to have one who knows finances work on your stuff. Otherwise, at the end of the year, you'll be moaning at the size of the check you have to write.

I'm going to my accountant's office this week, armed with folders and receipts. I am far more ordered this year than ever before. This is the year my corporation will look into some tax shelters and ways to defer income. This is the year we up our payroll taxes, so the end of the year doesn't make me faint like it did last year. I am finally realising that I AM the corporation. My involvement is imperative, so my tax lady can serve my interests. She is going to give me a crash course on 'How to organise my filing system'. We are going to talk about SEP IRA, which is a retirement fund for small businesses. She does everything she can to lessen my payment to the IRS, which lessens my anxiety when I write the check to the federal government, the state government of Georgia and the renewal fees for the privilege of being a corporation, licensed to conduct business.

She has this magnificent ability to be anally organised. I don't.

Over coffee and dessert, I'm sure she will ask for a check, which I will give over.