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magicman02 Veteran user 304 Posts |
Hi I have a question, when should you consider incorporating your magic business? When you are having a constant stream of shows coming in?
Also I heard if you are doing magic part time or full time and are not incorporated you cant deduct all the things you do as business expenses. (e.g. tricks you buy, envelopes, gas to the performance, miles you drive to a show, anything else that is business related) Is this true? What are the advantages and disadvantages of incorporation? What happens if you incorporate and have a really bad year and don't make a lot of money? I don't think I want to incorporate yet because I am still a full time college student and I don't think I can put all my time and effort into it. I want to do it after I graduated from college and are getting a stream of shows coming in. Thanks Amir |
Jim Snack Inner circle 1338 Posts |
This is a question for an accountant, however, here are some thoughts:
There are several forms for doing business, including sole proprietor, incorporation ("C" corp and "Subchapter S"), partnership and limited liability corp(LLC). It makes no difference which form you use, or whether magic if full-time or part-time, as long as you claim income you can offset that income by any business expenses you incur. There are some differences in exactly how expenses are tracked. One advantage of operating as a corporation (I use the "subchapter S corp form in my business) is that it allows you to divide your income into wages and dividends. Wages are subject to FICA withholding taxes, dividends are not. Thus, you can lower your overall tax liability. As a college student doing magic part-time, it makes sense for you to operate as a sole proprietor. You might want to consider a Subchapter S corp after you start earning over $50,000 annually from magic. That's not a hard number, just the one I used. Check with an accountant. Also check out the LLC form. I know of some magicians who operate as an LLC. Again, this is a question for an accountant. |
pxs Loyal user London 284 Posts |
Another advantage (in England at least) of incorporating yourself is that you can limit your liability if something goes badly wrong and your insurance is inadequate. Instead of you personally being made bankrupt, your company can be (fairly harmlessly) liquidated
Again (in England) whether or not you operate as a company, your business expenses are still tax deductible |
Jim Snack Inner circle 1338 Posts |
Also, this question has been raised before, so you might try a search. Here's one thread:
http://www.themagiccafe.com/forums/viewt......forum=44 |
cheesewrestler Inner circle Chicago 1157 Posts |
"Inc Yourself" by Judith McQuown is the standard introductory overview of the various ways to do that.
For the rules & procedures in your particular state, there's a series called "How to Incorporate and Start a Business in [name of state]" Be sure to get the latest editions. |
MagicalPirate Special user Shamokin, PA 828 Posts |
If you do plan to incorporate, a good company to use is The Company Corporation at:
http:www.incorporate.com They can handle your incorporation in all 50 states and their best use is for incorporating in Delaware and taking advantage of the additional benefits of incorporating there.
Martin Blakley, CSH, DASH, CMSA
http://www.thehypnoguy.com/HYPNORESOURCES http://www.docgrayson.com/ How To Sell Anything Online http://tub.bz/?r=1z Copyright to my own words retained 100%. |
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