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? 😈


56 thoughts on “How To Incorporate Your Blog”

  1. LOL I love that last part. But sometimes people will still go on suing thinking they can garnish future earnings. Hilarity can ensue LOL

    1. I wonder This BLOG has change its face from “How to earn money” to “How to save money” . Nice Posts John, now you are upto government Money leakage.

      1. In my humble opinion,saving money is making money(ie;you’re making money for future use) πŸ˜‰

        1. Syed Balkhi says:

          true … saving money is making money… but in this case what is he saying is Making money and save on the money you make so your net income is higher than what it would be after taxes and all.

    2. Great tips, John! The process is very similar here in Manitoba.

  2. louie says:

    Yes lawyers are the easiest way to get something like that done and probably done right but if you don’t have that resource you can always look into the paralegals that do the work but you do the filings. Great points given john, kudos!

  3. Simon Lau says:

    Great article John. Once I graduate I’m going to look into doing this in Ontario. Maybe I’ll do it sooner depending on school load etc

    1. whydowork says:

      Hey Simon,

      If money (or time) is tight I’d recommend going through this company:
      http://www.ontariobusinesscentral.ca/forms/biz-articlescorp.asp

      They’ll get it done for under $200. My first corporation was filed through this site without a problem. πŸ™‚

    2. You can pay someone to do it for you, ok it will cost you more but it saves you your valuable time πŸ˜‰

  4. Jan Alvin says:

    Its great but it costs so much for a student like me

    1. Its not really that expensive and also think about it in the long run and not the short run as when it comes to paying your taxes you will be saving yourself more then its costing you to incorporate your blog/business or whatever πŸ˜›

      1. Syed Balkhi says:

        i agree because i am a student also and you have no idea how much taxes i will be paying.

  5. For US incorporations, try legalzoom.com to go the cheap route, however a lawyer or a cpa is really recommended, and use your State Comptrollers website (or local county clerks office for assumed name) to check for the name availability. Make sure you have atleast 3-5 different names thought up, since there is a very good likelihood that most of the names that you have thought up, someone else has already thought of before you.

  6. Another one of your great, informative articles.
    This is not something that I’d do anytime soon, but down the road I would definitely take your rollover advice. 😈

    Cheers,
    Alex.

  7. Wicked post John…I’ve been waiting for this. πŸ™‚

  8. RacerX says:

    Brilliant Move on the shareholder loan. I would have capex’ed it otherwise, but makes sense as future untaxed income and the $0 asset piece.

    You are the Blog master *bow*

  9. Pyjammez says:

    NICE POST YET AGAIN! John Chow is easily the best.

  10. Verne says:

    Great post John!

    If anyone’s interested in reading up more on the why and how of incorporation from another Canadian business (a creative agency), check out The business of entrepreneurship: incorporation. There are 3 parts to the series that cover what incorporation is about, the advantages/disadvantages of doing it, how to actually do it, and some helpful links and resources.

    Hope it helps those interested in this topic and adds value to what John has described here.

  11. Nice information… Im going to bookmark this post.

  12. Hi John,
    You have now answered pretty much all of my questions, save for one: is it worth it for someone like me that only makes $38k a year to follow the steps you have laid out?

  13. Tom Beaton says:

    Heh it is so fitting that John knows every trick in the book. It is nice to share though. So that those who have the success can think about these things in order to maximise their income.

  14. Syed Balkhi says:

    yup i agree … lawyers are the best to do this job because it says on the application if you make a mistake your fees are non-refundable. Then you have to send the money all over again.

  15. Aww Johnny. I just love your evilness πŸ‘Ώ

  16. Steve Olson says:

    My wife and I own an S corp, Soconik, Inc. My blog is rolled under that corporation. If you are going to be in business, this is critical advice, for liability reason and tax reasons. Also it makes things easier if you want to grow and expand ownership outside yourself or your family.

  17. Selfpreneurs says:

    John, since you’re based in Canada, do all these steps apply to the United states as well?

  18. Selfpreneurs says:

    Nevermind John, I just read the disclosure – sorry I just woke up

  19. Note that putting a blog into a corp would only make sense if the blog makes enough money to justify the extra expenses (legal/accounting).

    1. Syed Balkhi says:

      true, but if everyone wait till they start making enough money they will loose alot in taxes as well. It is like saying i am making a business, but won’t register until it is making money. It is called investment which is a necessary part of business πŸ™‚

  20. OneBrownGuy says:

    The last series of posts have been amazing. It’s cool to see all the background financial setup and functions you do with your companies. At the very least it provides a great jumping point for research. Sometimes you just need to be shown how someone does something to start your own research. My own situation doesn’t allow me to do everything that John Chow does. But, it has given me enough info to find my own solutions. Thanks again!

  21. Hexfire says:

    Great tips – if you’re new to the legal world though I’d highly recommend having a lawyer help you with all the filings the first time around just to be on the safe side.

  22. Add up all the assets used or will be used by the corp – domain names, servers

  23. Robert says:

    It’s slightly different in the U.S., but the American way to incorporate still provides the same advantages. It’s great to see people so impressed with this information. There are so many individuals who think life begins and ends with being an employee and living paycheck-to-paycheck. It obviously doesn’t. And johnchow.com and its corporate structure is just one example of how people can break out of the employee role and maximize their profits (i.e., not pay a lot of taxes).

    1. Syed Balkhi says:

      and the next cool thing about it is that the infinite possibilities. He is just sharing his experiences and making money online. Thats what i love about this site.

  24. @John, this is good advice but incorporating would also force me into hiring an accountant…how are the tax filing rules different? don’t you have to submit quarterly and provide some sort of financial statements..etc…? Most importantly, I don’t want to get ripped off by an accountant, what are the average range of fees that a typical accountant would charge…whats the ballpark amount your accountant charges? I’m in Ontario can I hire yours?

  25. Yeah protecting your company by making it have $0 net worth is an excellent idea and puts alot of people off suing you 😈

    1. Syed Balkhi says:

      i know i hate the suing part … John is too smart for his own good and our good :p

  26. Very insightful post John, and a great way to make blood from stone πŸ˜› you 😈

  27. Jay says:

    Very nice John. Along with the others, I am interested in knowing the extra responsibilities (filing corporate tax / extra cost for accountant / and any other responsibilities I have to do for being a corporate). I am currently in partnership with making net income of 10K+ per yr on consulting on top of my day job. I am really really interested in getting corporated my business as well but have always been afraid with the extra responsibilities & duties I have to do for Corporate. Any inside into what you need to do to run the corporate year to year would be really helpful to those of us on the fence. Your information has been extremely helpful being another BritishColumbian. Peace out.

    1. I’m wondering the same thing…I have always just done my taxes myself on QuickTax…how would this change if I incorporate…I don’t want an accountant to rip me off…I have no idea how much they charge…no clue!

  28. This is good advice because you are able to better take advantage of writing off your expenses and your personal assets are generally more protected by forming a corporation or other biz. entity. In the US an LLC is a good way to go. It’s a little easier on the paperwork side as you can run the taxes through your 1040 Schedule C. This avoids having to file quarterly reports. The disadvantage, however, is that you pay tax rates based on your personal total income vs. paying lower corp. rates on earnings not distributed as “salary”. Also, Self Employment tax is not the most fun thing to deal with.

    Nonetheless, great article. Especially on the asset loan! πŸ’‘

    1. Caleb says:

      I just found this same thing out concerning LLC’s and am currently searching for another route…perhaps,moving to Canada is the answer ❓

  29. Jake Cohen says:

    Interesting, very interesting. Being a fourteen year old and all I don’t know much about this, you just have a way of writing about stuff that makes it clear, funny, and entertaining and that’s why I think you get so many readers. Good for you, I wish I had your skills.

    http://www.talkprice.net/

  30. This post is great John! Keep going!

  31. Aaron says:

    Well, I incorporated over the weekend – feels good to be a CEO. Not sure where you came up with a $30 name search and $350 filing fee as I incorporated federally for $200 and a $20 name search. Grand total of $220. I chose a federal incorporation because in my line of business, I move frequently, thus the diretor’s office moves between provinces. Still have to register in each province, but at least the federal incorporation gives me some name protection across the country. Never would have taken the plunge, if it wasn’t for the tax breaks you’ve been describing in the last few articles. Muchly appreciated.

    1. John Chow says:

      Those are the prices for incorporating a company in BC.

  32. Mike Huang says:

    Interesting post, I’ll keep this in mind.

    -Mike

  33. Eva White says:

    Well John my blog does not earn so much that I need tax management. But I will surely keep your advice and tips in mind when I start earning well. πŸ™‚ πŸ™‚

  34. Hey, thank you for sharing as usual. This was really interesting.

  35. Terry Tay says:

    Very useful information for those looking to incorporate. Granted things may be different depending on where you live.

    I think some people prefer the Lawyer over the do-it-yourself because it is easier. The lawyer knows everything, or at least you hope they do, and you don’t have to worry about making any mistakes. If you have the money, and not sure what you’re doing, use a lawyer.

    It is fairly easy to do it all on your own though.

  36. Rob Hager says:

    Great post. I wish I had read it before I started my first company. I will use your advise when I incorporate my new blog.
    Thanks

  37. I have been reading the incorporation blog series, and I think that once my blog starts making big money ($5000-$10000 year) i would incorporate it.
    Untill then I would keep investing in dividend growth stocks πŸ˜‰

  38. Nathan says:

    How much cash do you need to open a company bank account?

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