I’m a Business, Man
One thing that I’ve come firmly to believe over the last several years is that every developer should have a business entity. Please do not confuse this with me saying that every developer should hang out a shingle and become a freelancer. The staff developer is alive and well and not going anywhere in the near term future. And, besides, full time hustling isn’t for everyone.
Still, I stand by the claim that every developer should have a business entity. What I’m referring to here is the idea that you should be your own company, capable of doing business on your own terms, with your own branding. You should exist on a map of the business world independently of whatever company direct deposits paychecks to you.
Because, right now, for many people, this is the default state of affairs. As far as the world of commerce is concerned, they exist only as (human) resources on a company’s ledger sheet — essentially property of that company. And in a world where long term relationships between companies and employees is increasingly a thing of the past, that’s a bumpier ride than it would seem. Wouldn’t it be nice to have a reliable presence through all of that, whatever comes?
We tend to think of going into business for ourselves as mutually exclusive with working a corporate job. But there’s a different path, which is to establish yourself as a corporate entity alongside your working for a company. That allows you to maintain gainful employment and a steady paycheck while dipping your toe in the waters of freelance as a weekend warrior.
But, above and beyond that, I would argue that it gradually starts to help make you more marketable as a salaried employee. If you’re a software developer, you’re competing against other developers for jobs, and you’re competing against a whole slew of people, former-developers and others, for higher paying management positions. Don’t you think, “I’ve run a business” might help with that job application? How many of those you’re up against will have maintained budgets, understood operating agreements, contracted with vendors, etc.
In Illinois, where I formed my LLC, it’s comically expensive to incorporate. I believe it’s more expensive in Illinois than any other state. It cost me $500 to form the LLC and it costs me $250 per year to maintain it. That’s an 11 year total of $3,000. So, let’s set that as an upper bound.
The gamble I’m talking about will then pay off for you so long as you’re able to negotiate $3,000 in extra salary over the next decade. Do you have any idea how likely this is? I mean, let’s say you make $50K per year right now and that, with your business credentials, you negotiate an extra 1% pay increase 5 years in. You’ll make an extra $500 per year over the subsequent 6 years and break even. That’s it. One slightly tinier raise, and you win.
I’ll close out this short post by saying that this isn’t purely a motivational speech. I believe in this strongly enough that I’m starting to work on an offering to help software developers with their independent business affairs. And, as sort of a beta of this, I’d like to invite anyone in the readership thinking of starting a corporate entity to reach out. I will basically help you start your business for free, walking you through everything you need to do. I will have to limit this offer to only a few people due to constraints on my own time, so, first come first serve. Feel free to send email to erik at daedtech or to send the request as a question through the submit a question form. Really, feel free to reach out however you’re comfortable.
But, whether you participate in this or not, I think you should do yourself a favor and make yourself a business.
Editorial Note: Thanks to everyone who wrote in about the Beta! I wanted to make a quick update for anyone still reading that the slots for this offer have been filled. I’ll keep you posted if I have any further, related offerings.
You should check out what it costs in California. :/
Wow. I’d seen comparisons like this before: http://www.incorporatefast.com/filingfee.asp
It looks like it still holds true that Illinois leads the way in filing fees, but I googled around about California and that “LLC tax” is onerous. I wonder why they do that.
Ho. Lee. Crap.
Illinois` fees looks horrible… for a non-Massachusetts state. :/
It probably isn’t only about the costs, but about taxes as well, isn’t it? In Czech Republic you can pay a way less on taxes as a business compared to regular employee.
For an LLC in the US, there is definitely a tax motivation. There’s a much lower bar to what’s considered a business expense when you’re incorporated somehow.
[…] not a business man — I’m a business, man.” A while back, I quipped this into a blog post title advising developers to think like […]
I saw this post waaay too late. Question: Do you still offer this as a service? I’m a salaried developer looking seriously into establishing my own business entity. 🙂
At the time I wrote this, a friend and I were exploring a specific info product business model. That venture never materialized, per se, but I am planning content like this following the release of Developer Hegemony.
I’m actually in the process of editing a couple of videos headed for Youtube — one showing how to obtain an EIN and one showing the process of forming an LLC in Michigan.