Time to Incorporate
I've been ranting on about trademarks enough lately, so here's something else that I've got to work on soon. I need to Incorporate soon. I'm making some money with my CafePress stuff (though nowhere near enough to even pay my rent), but it is some taxable income. In addition I have advertising costs with Google Adwords. So let's brake this down real quick:
$150 Monthly Revenue from CafePress
$60 Monthly Advertising Spend
So with having CafePress pay me as an individual that's taxes on $1800. Now if I'm in the 27% tax bracket I'm paying $486 in taxes on this income. If I were to formally create a business, I could subtract the advertising cost from the CafePress revenue (as well as other potential costs like hosting, domain name registration, etc.). So if we subtract the advertising cost that gives me $90 a month profit. That would translate into a tax bill of $291. So this saves $200 over the course of the year. But as I said there are probably more expenses that I can subtract from revenue. In any case the maximum tax savings would be $486 for the year. So this leaves a couple questions. 1) Will setting up a company cost more than $486? 2) What type of company should be formed (LLC, LLP, S Corp, etc.)? 3) In what state should it be formed? These are all things that will require some research and I'll be sure to post my findings in the near future.

- posted by Drew @ 3:32 PM