Force Monkey, Inc. (?)

Over the past few months, I've been working with an increasing number of Salesforce.com developers and customers, helping them navigate complex CRM deployments on the Force.com platform. Despite the dismal economy, I'm busier than ever. In fact, I've been so consumed with an increasing number of projects, contracts and clients, that I've decided to incorporate my practice.

This isn't the first company I've founded. In my college, I started a small "business" with 6 close friends. It was a gaming company called LIONE Rampant, and we ran it quite successfully for seven years. As we grew older, finding girlfriends and wives, we decided we were getting too old for that "silly gaming stuff". We sold the company -- to some of our then-customers -- and went off to get "real jobs". These new owners, in turn, ran the company for seven years and sold it to some of their customers. It delights me to see that a business venture I created has "stood the test of time", and is still operating more than 20 years later, even if I'm not directly involved with the business. Not many companies can say that, gaming or otherwise.

I don't game any more (well, maybe a few FPS and MMO hours, here and there). Instead, I spend a lot of my time developing applications, helping companies get more from their technology investments, consulting on best practices for operational management, process improvement, and CRM deployments -- particularly on the Force.com platform. I've decided it's time to put more formality in my business practice.

I'm researching the the different legal structures, and trying to determine the best one for my practice: sole proprietorship, LLC, C-Corp or S-Corp. The business entity types are all familiar to me from long-ago days, when I was researching how I should incorporate LIONE Rampant. That company was founded as a C-Corporation, but I'm leaning toward an S-corporation for this current venture.

I reached out to my Twitter network, asking how they managed their own consulting / software development companies:



As always, they were helpful and eager to share.

Jeremy Ross (@jeremyross) operates his business as a C-corporation. That means his business is taxed at the corporate rate, and there is the risk of double taxation when paying out dividends to shareholders. Those can be minimized, but it seems like more overhead than I'm willing to adopt.

Scott Hemmeter (@arrowpointe) is the owner of ArrowPointe (http://sfdc.arrowpointe.com/). He's published several Force.com applications, making them available through the Salesforce AppExchange. He also provides consulting services on the Force.com platform. From our past conversations, I feel his business model is closely aligned to what I'm looking to do. Scott started as an LLC, but changed to an S-corporation, because it has some tax advantages over the LLC.

Uncle Sam considers LLC Owners to be self-employed, which means they must pay a 15.5% "self-employment tax". The entire net income of the business is subject to this tax. In an S-corporation, only the income that is paid to the "employees" is subject to the employment tax. Other income, paid to the owners as a distribution, is not taxed. I don't mind paying my "fair share", but if I can find a way to reduce my taxes, well, that's just more money I'll use to help stimulate the economy!

With an S-corporation, there is a bit more overhead: I'll have to form and work with a "board of directors", for starters. There are more record keeping rules to keep up with. I'm familiar with those burdens, having maintained the books and organized 7-years of LIONE Rampant BOD meetings. It sounds like a lot of work, but it's really not.

I've a bit more research ahead of me, and I'll probably talk with a CPA before I formally file this week. I must confess, I'm excited about the prospects of my new venture.

Are you managing your own consulting practice? I'm curious about your operations, and the legel business entity that you've adopted. Please share your comments below.