Path: utzoo!utgpu!jarvis.csri.toronto.edu!cs.utexas.edu!yale!husc6!m2c!jjmhome!cpoint!alien
From: alien@cpoint.UUCP (Alien Wells)
Newsgroups: comp.sys.ibm.pc
Subject: Re: shareware authoring (company requirement ...)
Keywords: business
Message-ID: <3412@cpoint.UUCP>
Date: 9 Jan 90 19:02:25 GMT
References: <10889@attctc.Dallas.TX.US>
Reply-To: alien@cpoint.UUCP (Alien Wells)
Distribution: na
Organization: Clearpoint Research Corp., Hopkinton Mass.
Lines: 45

In article <10889@attctc.Dallas.TX.US> bobc@attctc.Dallas.TX.US (Bob Calbridge) writes:
>Does anyone know what the legal implications are of
>authoring a shareware product are?  For instance, does one need the set them-
>selves up as a business?  I assume that you are required to report your
>income from this to the IRS.  

This really has nothing to do with shareware, all the same issues arise if you
start a home catering business.  I strongly recommend that you do not take the
advice of Usenet (myself included) as gospel, go out and get some books on the
subject or get the advice of an accountant.  The latter is probably wise, since
you will need accounting advice to line up all the paperwork and tax work 
anyway.

Here is fundamentally how it works.  You have three basic options:
	- Run the thing yourself and just call everything you make income.
		o unlimited personal liability
		o profits considered personal income
		o easiest to do (least paperwork, etc)
	- Run the thing as a sole proprietorship.
		o unlimited personal liability
		o profits consided part of business
		o paperwork is fairly simple
	- Run the thing as a corporation
		o all liability is corporate
		o profits considered part of business
		o paperwork is more complex

The issue of liability is 'what happens if the company runs up bills it
can't pay'.  This can be out of poor business practices, accidents, law
suits, etc.  A corporation simply goes chapter 11.  A sole proprietorship
or individual setup means that you go with it.  All personal assets are
fair game (which is why so many contractors put all their assets in their
wife's name).

Other than liability, the main advantage of being a company or corporation
is to play tax games.  Some things become legitimate business expenses that
would be taxable to an individual.  In addition, through the use of salary
and such you can play games with where the profits go (you or the company) 
to play tax minimization games (beware, dividends are doubly taxed).

Get the advice of an accountant.
-- 
--------|	With Altzheimer's Disease, every day is a new day!
Alien   |   		- Earl McKennon
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