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From: warren@.cs.pdx.edu (Warren Harrison)
Newsgroups: comp.sys.ibm.pc
Subject: Re: shareware authoring (company requirement ...)
Keywords: business
Message-ID: <2208@psueea.UUCP>
Date: 12 Jan 90 18:10:12 GMT
References: <10889@attctc.Dallas.TX.US> <3412@cpoint.UUCP>
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In article <3412@cpoint.UUCP> alien@cpoint.UUCP (Alien Wells) writes:
>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.  
>
>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).
The double taxation problem can be effectively removed by becoming a subchapter
S corporation. I found one of those books that you get at the bookstores on
how to set up your own corporation to be quite useful. Make sure you get one
for your own state (ie, not a generic one for the whole world since state
regulations vary). This may not be your cup of tea, but with the help of
such a book, I was able to start up an S-Corp and file all the needed papers
myself (Oregon) without the aid of an attorney. Since then I have had an
attorney review the papers I filed and he could find nothing amiss. If you
plan on having more than one shareholder (yourself), then a $100 for an
attorney would be a good investment, since the major sticky issues come up
if you have to plan for multiple shareholders.
>
>Get the advice of an accountant.
It's probably not a bad idea, but based on my experience with shareware
it'll be a long time before you have it paid for. On the other hand,
if you do make a lot of money and do some things wrong, it could be an
expensive mistake.


==========================================================================
Warren Harrison                                          warren@cs.pdx.edu
Department of Computer Science                                503/725-3108
Portland State University