How To Incorporate Your Blog

I’ve talked about the tax advantages of incorporating your blog but how do you actually do it? What is involved? How much does it cost? Do you need a Lawyer? Etc. After this article, you should have all the information you need to Inc. your blog.

The Easy Way – Have The Lawyer Do It

If you’re not comfortable filling out forms or answering a few questions with some business lingo in it, then you can just have a lawyer set up the corporation for you. I also recommend this procedure if your corporate structure is extremely complex (think Google or Microsoft setup).

For an average incorporation I recommend doing it yourself. A lawyer charges $750 (plus filing fee) and up to incorporate a company and truth be told, it’s not really a lot of work – it only take 15 minutes. The reason lawyers can charge the rate they do is because most people don’t know how to go about incorporating. Well, here’s the step-by-step.

*Disclaimer – This is the procedure for incorporating a company in British Columbia. The fees and cost will be different in other jurisdictions, but the procedure is pretty much the same.

The Name Search

Before you can incorporate your company, you’ll need to make sure the name has not been taken. You do this by filling out the Name Approval Request form. You’ll have to come up with three possible names for the company. In case the first choice is taken, it will go to the second, then the third. If all the names are taken, your application will be rejected and you’ll have to start all over again. If you want to avoid the name search, you can just create a number corporation. The Registry will just assign the next number to your corp, like 863867 BC Ltd.

A corporate name must have three elements: the Distinctive Element, the Descriptive Element and the Corporate Designation. In the case of TTZ Media Inc., TTZ is the distinctive element, Media is the descriptive element and Inc. is the corporate designation.

The cost of doing a name search is $30. Fill out the form and mail it to the Corporate Registry office along with the payment and wait for their answer. Alternatively, you can take the filled out form down to the local Chamber of Commerce and they will submit it for you and call you when the name is approved or rejected. However, that brings the cost up to $45. The chamber can help you fill out the form and give you an idea on whether the names will be accepted or rejected. I’ve always used the chamber because it’s much faster than doing it by mail. Time is money.

Registering The Company

After your name has been approved, you’ll be sent a name reservation number. You’ll need this number to register the company. Registering a new company in BC is very easy because it can all be done online at BC Corporate Online. The page you’ll be interested in call File an Incorporation Application.

The application is pretty straight forward to fill out and shouldn’t take more than 15 minutes. In the first page, you’ll see the box to enter your name reservation number and whether you want the company to be incorporated immediately or sometimes in the future. If you get stuck filling out the form, you can read the Steps to Incorporating a Company PDF file.

The cost of filing the application is $351.58 and must be paid at the end of the application. Once payment has been accepted, your new corp is alive and legal. Congrats! You just saved yourself $750 by incorporating yourself instead of paying a lawyer to do it.

In a few days, you’ll received your incorporation documents in the mail. Take these documents to your bank and open a company bank account. Then take it to your accountant to set up the books.

Rolling The Blog Into The Corp

At this point, you’ll need to roll all the assets that was used to run the blog into the new corporation. This is known as a rollover and your accountant can help you with it. Here’s a piece of advice when doing a rollover. Roll the assets in as a shareholder loan instead of equity. When forming a new corp, most people capitalize the assets they put in. While the books look better that way, it’s really not the best way to do it.

Add up all the assets used or will be used by the corp – domain names, servers, computers, printers, get rich quick books, filing cabinets, pens, papers, cars, cash, receivables, etc. Assign the lower of cost or market value for each item and roll that into the corp as a shareholder loan. Let’s assume all the assets came to $25,000. By rolling it in as a shareholder loan, it would create $25,000 on the asset side and $25,000 on the liability side and give the corporation a net worth of zero. If you were to roll the assets in as equity, the corp would have a net worth of $25,000.

There are two reasons why you want to do a shareholder loan instead of equity. The first one is when the company starts making money and is able to pay back the loan, that money is not taxable. The corp is merely returning the $25,000 (dollar value of the assets) that you loaned it. Had you capitalized the assets as equity, the $25,000 the company gives you would be considered income to you and taxable. The second reason for doing a shareholder loan is in case anyone tries to sue you. The lawsuit ends pretty quick once they find out the company has a zero net worth. You can’t get blood from a stone, right? 😈