Website Launch! Business Structure and Taxes

Well here I am one week later and one completely awesome website up and running (with a few minor adjustments being needed).  What a journey this has been since last August (nearly 6 months ago) when my business partner, Kevin Skinner, and I started working on this.  We've had to take a few shortcuts to get a minimum viable product but we actually have it!  How awesome that feels!  We have some tweaks and some changes to make things look, work, and flow better, but we have three product offerings that we can actually sell and the site is setup to sell them!  You can see the site here at https://www.discoverandchange.com/

I feel like I have accomplished so much more than my first startup from 9 years ago (wow how time flies).  I built the site using commodity components and in such a way that I can quickly make changes to both the assessment software I built and to the overall website.  That is one of my key take away messages that I think I touched on briefly before in one of my prior posts.  Do NOT RE-INVENT THE WHEEL.  I know that much of the plugins from wordpress I've chosen to use I'll probably throw away or re-write or find a better (purchased) plugin, but pulling together a bunch of existing functionality we have a minimum viable product that we can test with actual users.  Instead of spending another year building our website I was able to focus on the core business product which is our assessments and spend about 25-30 hours on the wordpress site (compared to the several hundred for the assessment product).

I'd also mention how important it is to have strategic partnerships.  Kevin and I have a partnership with Kevin's other company Bloom for Women and they produced fantastic professional videos for our education series.  They will use the videos on their platform and ours and we saved tens of thousands of dollars on video production with the condition that we will license our assessments to them for use as well.  I've been in startups where they partner over everything and end up making nothing.  Making key limited strategic partnerships have benefitted us in creating the educational components of our product offerings.  For that I am grateful.

This last week we had to look at our legal frameworks and I learned a whole lot more about sales tax and corporate structure than I ever knew about.  When we started Discover and Change I had always run businesses as an LLC and so I was confused when my partner Kevin wanted to do an S-Corp.  I pushed back on it, but finally agreed to it when our accountant said it would make the taxes simpler for us.  After studying the different legal structures for my class I came to realize that I like the advantages of an S-Corp.  I can pay myself a salary as an employee and defer my earnings in the S-Corp to a subsequent year and continue to draw from that as a salary.  This means that I can save myself on taxes rather than having it all pass-through like it does with an LLC.  The other nice thing I really like is being able to sell or transfer my ownership without approval from my business partner.  I've been in an LLC before where I was stuck and partners did not want to disolve it. Things got nasty and I didn't have a good way of getting out.  Having an easy exit strategy without requiring approval from my partner I really like.  On the flipside he could do the same and I could be stuck with someone I don't want to work with so there is that downside.  Now I like my partner Kevin and I don't see myself having the same problems as I did with my other business, but I still want that protection.  The downside of the S-Corp is there is more paperwork I have to file versus if I went with an LLC.

Now if I was running my own business without partners I would probably still go with an LLC.  A lot of my classmates want to go with sole proprietorships, however, I have enough assets (and children that have needs) that if something went wrong I do not want to lose everything because someone gets sue happy.

The other thing I would mention is how much paperwork you have to file when starting a business.  To get my s-corp running I have to file articles of incorporation, get a business name, register with the city, register with the tax commission, with the federal government (to get an EIN).  I have to register for unemployment insurance and workers comp if I want to treat myself as an employee.  I also have to file quarterly sales taxes and earned income taxes.  Just a ton of paperwork.  It makes me appreciate how much using an attorney and an accountant can save you to make sure you've done everything correct.  After going through our business exercises I've realized it's worth the $300-$500 to get things setup with an accountant and a lawyer.

Well It's been a very, very long week and so I'll just summarize with how glad I am to see my dream business launching.  I don't know that I would have pushed through with all the other hectic things in my life right now without my business class pushing me, so for that I am grateful.