Fog Creek Software
Discussion Board




Corporate Bookkeeping

Joel, if I'm not mistaken Fog Creek is an a (S?) Corp. I'm wondering how much bookkeeping and administrative overhead that entails. You mentioned in another thread that you spend about 2 hours a week in QuickBooks. Does that include payroll? And do you find that there's much time involved in the corporate governance stuff that's legally required?

Just curious because my lawyer is recommending that I incorporate my business. I'm slightly wary of the bureaucracy that might entail, probably because it's an unknown and I imagine myself wallowing in paperwork rather than building the company. What has your experience been?

John C.
Saturday, February 21, 2004

We're a regular ("C") corporation. The advantage of that is that over an S corporation is that if we ever grow to the point of going public, or if we raise outside capital in which different classes of shareholders have different classes of stock, we can do that without re-incorporating (at great expense.)

The bookkeeping we do would be the same no matter what legal form we took. In the US at least it's possible to incorporate in about ten minutes, and there's a little bit of paperwork but it's not worth worrying about.

Joel Spolsky
Fog Creek Software
Saturday, February 21, 2004

Doing business without incorporating is borderline insanity. Corporate laws protect you as the business owner in a number of ways (most importantly with personal property and liability).

As for what type of corporation, best to ask a lawyer because there are a number of seemingly slight differences that could turn into major problems down the road.

It matters a little less if you are a single person running the company, but if there are partners involved it can get really complex.

Marc
Sunday, February 22, 2004

Marc, yes, thanks, I should've clarified that the question is not so much "incorporate or not?" as it is "corporation or LLC?" When I went in to talk to the lawyers I was expecting them to tell me an LLC is the way to go, and I'd done a fair amount of research on LLCs and felt like I had a good grasp of the requirements. I know much less about corporations, and the combination of my lack of knowledge and the sense that corporations entail more administrative complexity was nagging at me. So it's off to the bookstore to absorb as much as I can... anyway, thanks.

John C.
Tuesday, February 24, 2004

*  Recent Topics

*  Fog Creek Home