Eric Miller Animation Studios Incorporated! That is right, as of July 24, 2015 my company has been reborn as its own entity. I thought I talk a little about what this means without getting to technical and boring.
So now what? You might be wondering what this means. When I started my company it was a Sole Proprietorship, and basically myself and the company was one and the same. By incorporating it separates my personal assets from my business’ assets, and this basically gives me some legal protection and tax savings.
Currently the corporation is what they call a single-owner corporation, since I’m the only owner. This makes for some interesting things to happen when operating as a corporation. I’m now required by law to form a board of directors and have at least one meeting a year. Since I’m a single-owned corporation the board can be one person… me. This means I’m the chairman of the board, and the board of directors all at the same time.
If that is not crazy enough, the board also has to name the executive officers to run the company. The 3 positions that have to be named are president, secretary, and treasurer. I’m excited to announce who the board(me) has named for each of these positions.
President: Eric M. Miller
Secretary: Eric M. Miller
Treasurer: Eric M. Miller
I know, big surprise. So yeah, how silly is that? As long as I’m the only shareholder I have to have a meeting with myself, take notes, and vote myself in to all the above positions. As the company grows, and if I take on investors this will all change, but for now this is how it is. I mean I’m already wearing all those hats, but now I have to be officially named, and notes need to be recorded.
I’m also no longer considered self-employed, since I’m now technically an employee of Eric Miller Animation Studios. I even have to start taking a paycheck. The IRS says officers of a corporation have to take a “Reasonable Salary”, and give no real explanation of what that means. If anyone can tell me what that means please let me know in the comments below. This is a newer requirement to prevent officers of corporations from taking low salaries, and then get paid in dividends. Dividends are taxed at a much lower rate, so this was being abused to save corporate officers a lot of money in taxes. I remember hearing about Steve Jobs and Jeffery Katzenberg only getting paid $1 a year, and originally thinking they were doing it because they were cool guys. I later started to think it was for tax savings, and it turns out I was right. This new law is why Mr. Katzenberg now takes a $3 million salary, instead of his one dollar salary. I sure hope that is not what the IRS considers “Reasonable”, or my company will be in debt within the first month.
The take away from all of this is that nothing really is changing for my business other then being a little more official in the eyes of the government. There will be some tax savings, and added legal protection to me and my family, but that is really it for right now. There are some other advantages, but I won’t bore you with all the details.
If you have not already, I hope you will join me on my journey by subscribing to my blog. If you have any thoughts or advice I would love to hear what you have to say, so please feel free to leave me any comments below. Otherwise, be sure to stay connected with me on Twitter (@MillerAnimation). Only Time Will Tell.