Wednesday, March 3, 2010

Black Diamond Games, Ltd.

Go drink a big cup of coffee and when the buzz kicks in, meet me at the next paragraph.

Ready? Caffeinated? Good. So we converted our company, Black Diamond Games, LLC, to a corporation, named Black Diamond Games, Ltd. In California, limited (Ltd) is the same as corporation (corp),  and incorporated (inc) but just sounds cooler. Of course, it's less common and confuses people, especially if you do business internationally, since Ltd is an entirely different entity in Europe. So the obvious question, why the change? It comes down to taxes.

California taxes LLC's based on their gross sales, while taxing corporations based on their net sales. Most game stores fall under the base tax for their gross receipts for LLC's, so it's a valid structure, but once you gross over the minimum, which we now do, California smacks you with significantly higher taxes. As you may know, game stores make a lot of smoke (gross), but not much fire (net). What we needed was a corporation. So I bought a Nolo book and after reading it, simply filled out a one page form to convert the LLC to a corporation and I was set. How hard could it be?

Oh yeah, just so everyone's on the same page, you need to send your creditors a letter telling them of the conversion. No big deal, I thought, how many creditors do I have? In my mind I figured about six to ten. After consulting my sophisticated accounting system (Quickbooks), I came up with 60 creditors. Geez! So 60 letters went out to everyone involved, expecting this to be the last of it.

Things began happening.

Emails began popping into my in-box. Credit cards were being sent out and did I know of this? After talking with a credit card fraud department on the phone, it finally dawned on me. I'm new. I'm different. It turns out the banks were sending out new credit cards, some with the Ltd after our name, some just because they felt like it (the cards were identical). At least they still thought I was worthy.

Next, my payroll company called to tell me I needed a new employee identification number. Several hours later, after pouring over the legal requirements, in which I may or may not, perhaps on alternate Sundays, need a new EIN, it turns out I don't, but will. So there. Our C-Corp conversion doesn't require it, but our S-Corp conversion from the C-Corp may require it when I file next week. It's complicated. Aren't you glad you had that big cup of coffee?

Not entirely unexpectedly, my landlord decided to resume being a dick. My new Ltd designation shows that I have a new company, their letter said, and according to section 13 of my lease, I must provide them my financial records and a check for $500 to see if they would like to transition my lease to this new, unknown entity. Not. As a legally converted company, I am not new, so I dispute their assertion. I eventually decided to tell them to blow (really I'm ignoring them) after I read the consequences of being in default on the lease. They can either decide to let me stay (no change), or they can decide to kick me out (go for it). With landlords offering up to a year of free rent on their many empty spaces, I would be happy to move ... and buy that Porsche with the $90,000 in savings. With a lease intact, it's a lessors market. With a lease broken, it's a renters market.

But what about the government? The Board of Equalization called to ruin my day. I would, in fact, have to re-apply for a sellers permit. They granted it quick enough and then made it retroactive to January. I informed them I had already scheduled my January payment under the old permit, but that was no problem for them, they had already canceled the payment. Umm, what? Do it again, they said, using the new permit number. However, the new number wasn't in the database yet. No problem, they said, just give it a little time. The taxes were due in four days, I was going on vacation and the information needed to make the payment was being sent in the mail, likely showing up while I was gone. Did I mention the 10% late fee? Fortunately, the letter arrived 30 minutes before I left for vacation and all was right with the world as I frantically made my sales tax payment.

And finally, all of the douche bag companies that contact new businesses began contacting me, as if I had once again fallen off the turnip truck. "Hello, can I speak to the person in charge of...."   No, you may not. Credit card processors began calling incessantly. Credit card offers from my existing creditors flooded my in-box. My alarm system company called to offer me an alarm system while I was writing this paragraph! Scammers of all sort acted fast to take a swipe at my start up money before I spent it all. Would I like a gold plated corporate sign for my wall? Unfortunately, those days and that money are long gone.

So we are Black Diamond Games, Ltd., a California corporation that is in all ways identical to Black Diamond Games, LLC. Really, I swear.