Reviewed by: Jason Lulos, Pacific Book Review
Run Your Own Corporation by Garrett Sutton is an extremely well written introductory course on the life of a corporation. Despite your political biases which may inform whether or not you consider a corporation to be a person, Sutton explains that the concept of a corporation as a separate “being” is essential for the business man or woman’s own protection. Sutton spends considerable time hammering home the importance of sustaining the corporate veil, the visible invisible barrier that separates personal assets and business matters. In this book, you will learn the pros and cons of different types of entities (sole proprietorship, general partnership, C corporation, S corporation, limited liability company, limited partnership). You will also learn what you can write off, what deductions you can make and other tools for the setting up and filing your taxes. Any textbook or “how to” book on business must go into the seemingly mundane, but necessary, details which makes for dense, plodding reading. However, author Garrett Sutton structures his advice around three case studies as they make their way through the first few years of a corporation’s existence. These narratives are effective in practically applying corporate decisions and they make what could be an otherwise tedious reading actually quite enjoyable.
You will follow the ups and downs of an engineering company, a salon, and a house sitting service, each from business conceptualization and formation to different conclusions. There are clear benefits in going with limited liability because it establishes the corporate veil. And depending on the type of corporation you set up, there are pros and cons to each for filing taxes and managing the corporation between multiple partners. Sutton also devotes some time to the location of your business, not just to find the best market, but for tax purposes. Just as each type of corporation has its own pros and cons, so do different states and their differing tax laws.
There is a lot of information that I found enlightening to the point that, after reading this book, establishing a corporation seemed much less daunting. However, forming your own corporation or “entity” will require hard work and attention to detail, so choosing something you’re passionate about is imperative. A crucial detail is the name of your company or the name you will do business as (DBA); it is more important than you would think. In the case history of the salon, Alana and Sherri find that they have to change their name after already establishing their business. This is more than just a tedious obstacle as it comes with substantial fines. Registering, licensing, documenting everything and filing taxes on time are hallmarks of accountability. Attention to detail and formalities such as meeting minutes will save you potential future heartache and, in the spirit of making a profit, will save you money.
Bookkeepers, accountants, attorneys, payroll compliance, employee agreements, dealing with OSHA, insurance, buy/sell agreements, potential lawsuits, advertising, networking (including pros and cons of using social media), and succeeding: all important players and scenarios are covered academically but also in real world applications in the case histories. Sutton shows how to work with the system (government and economic limitations and with technical information including examples of documents, contracts and tax forms). In the first narrative, Green Engineers must overcome a misdirected lawsuit as well as unfair, yet legal, interpretation, by a certain government agency, of the laws surrounding the business name. The second narrative, the salon, illustrates the economic/legal (not just personal) obstacles that may arise when there is a lack of family support for the business. In the last, sometimes comical narrative, we find a pair of hapless friends who initially stumble but really defy everyone’s expectations en route from a house sitting business for their rich parents’ friends to a multifaceted business, including the development of an iPhone application.
Run Your Own Corporation is a must for any entrepreneur who wants to protect their business and see it grow in a sustainable way!