One of the more difficult things about being regular working schlubs like us trying to step outside of our preordained caste and start our own publishing company is finding time. There’s never enough of it to do what we need, to muddle through the regular day-to-day activities such as work, pay bills, spend time with the family, pay bills, feed the addiction to eBay, pay bills, do the chores, pay bills, etc... Then add to the pile, “small business start-up” and the pile becomes perilously close to toppling over, crushing all beneath it. Jac fell victim to such circumstance, no longer able to commit. Fortress was now down to three.
However, we bravely marched forward (to the beat of our own drummer, of course) and other things were starting to come together for us. We formed a “to do” checklist and slowly checked off each item as they became “to done.” At the top of the list was, “Come up with ‘to do’ checklist.” That pretty much entailed visiting a lawyer and harassing our CPA friend. We wanted to keep our time with them limited, so we tried to answer our own questions first to sound like we knew what we were talking about. Our first stop was to the local area Chamber of Commerce where we picked up a book entitled “Starting a Business in Pennsylvania.” I doubt every state in the nation will have the same book, but I’d wager that you could find something similar. Being the people person that I am, I much rather sit down with someone to get information. Being the cheap-o that I am, I much rather do it for free. Well, the “Starting a Business in PA” book helped, in the form of SCORE.
SCORE stands for Service Corps Of Retired Executives. They are just like their name implies, executives long since retired available to the public to assist in business workings. Free of charge. Interestingly enough, they’re located in the same damn building as the local area Chamber of Commerce. But the service is free and I’d be talking to executives, people who may have possibly been in the same situation we found ourselves. As luck would have it, laryngitis settled itself in the very day I had the time and opportunity to visit with them. Ask anyone who knows me and they’ll tell you that me getting laryngitis is God’s way of saying, “I’m sorry you have to put up with this guy.” Normally, I wouldn’t have minded, except for the fact that I’m a working schlub who doesn’t have enough time. So, the louder I tried to talk, the fewer audible words came out of my mouth. The particular gentleman who met with me had not one, but two hearing aids. Comedy ensued. You don’t need to be Karnak to see where this is going.
“Hi. I’m st_rting up a b_sines and w_s wond_ring where to start?”
“I’m s___ting up a b___ness an_ wa_ won____ng wher_ to sta__?”
“I_ s_____g up a b______s a__ w__ w_____ng wh___ to st___?”
“I_ S_____ UP A B_____ _ND W__ __NDER___ W____ TO __ART?!”
“Are you on drugs, man?!”
After some time, and the decision for me to communicate via pen and paper, I got the answers we were looking for. Even though the meeting cleared up some things, there were still a few questions we needed to ask a lawyer.
Upon our first meeting with the lawyer, Chris and I quickly learned how monkeys at the zoo must feel as patrons stare at them. As we cartoonishly shuffled through papers looking for our research findings and subsequent questions, the only possible thought he could have been thinking was, “These two knuckleheads are starting their own business? They shouldn’t even be allowed in public.” Once we calmed down enough to be mistaken for human beings, Chris and I had one major question to answer: what business entity were we going to be?
We gave a brief overview in a previous article, so we won’t bore you with those details again. But we had our choices narrowed down to General Partnership, LLC and S Corporation. After one of the most intense meetings of our lives (only about 30 minutes, but sitting in a lawyer’s office always brings out the “fight or flight” reaction) and extensive note taking, Chris and I ran (literally) to the nearest bar after meeting’s end. Luckily, it was just across the street. After a jolly round of chiding remarks from both my future business partner and the waitress about my proclivity toward drinking beer that requires some form of citrus to be found floating in it, we reviewed our options.
A General Partnership is easy to form and easy to get money in and out of. However, there is no liability protection involved whatsoever. According to our lawyer, an LLC depends upon what state you’re in. In Michigan, they’re the greatest thing since sliced bread (hey, he’s a lawyer – they’re not known for having the greatest cliches), but in Pennsylvania, they are run very similar to Corporations. Although it’s easier for the members involved to get money out of a LLC, it still didn’t offer all the liability protection we were looking for. Plus, if it’s going to be run like a corporation, we may as well form a corporation, even though it may be difficult getting money out. Let’s not forget, Chris and I would be shareholders, and just like being a shareholder of any other corporation, we simply can’t take assets whenever we want to. Just because you may hold some shares of Wal-Mart doesn’t mean you can walk out of the store without paying for the merchandise and say, “I’m a shareholder. I own this.” Those rent-a-cops hit harder than you’d think and pepper-spray to the eyes doesn’t feel as pleasant as one might imagine.
So, it was decided! Before we hit the bottom of our first pitcher of beer, we decided that we needed another pitcher. However, it was shortly after that we decided to form an S Corporation. We wanted the protection, and thanks to the “S” status, all of the profits or losses flow through the tax forms to our own personal taxes. That means any money we earn gets taxed only once and (the more likely scenario) any money we lose, we get to deduct from our personal taxes.
The moral of the story is – if you plan on starting your own publishing company, or any small business for that matter, take full advantage of the free resources offered to you. Trust me, there are plenty of them. Start with your local area Chamber of Commerce and see what happens. Just make sure you clear a spot in your working schlub schedule for a bought of laryngitis first….
Next Issue: “Struggle.”