When it comes to creating a website, which is more advantageous: starting a company or running a personal business?

I started my business in 2018 and this is my third year.
I have been involved with the WordPress site of a female company president who is starting a company, and I have had more and more customers who have come to me for private WordPress lessons because they need a website to start their company. I have been researching various things because I want to start my own company and start activities in the future.

Should I start by setting up a company or going solo?

I think the first thing I considered was whether it would be better to go as a sole proprietor or to set up a company.

Can I fund my business with personal funds?

In my case, I am creating websites and teaching WordPress, so I don't need a lot of money to run the business. I can cover it with my own funds, so being a sole proprietor is enough.

Can a business be run by just one person?

In my case, I can do it by myself. I don't have any knowledge about management, but I can run a business. However, we are running out of resources, so we are increasingly relying on outsourcing.

Do you want to expand your business?

The answer is YES. I would like to try it and see how far I can expand it.

Can a sole proprietorship run the business without any problems?

Website creation and WordPress teaching are businesses that even sole proprietors can do. There are some businesses that cannot be carried out without a company. Is this the case for real estate? The other day, a person who was setting up a company to do real estate came to my lesson.

For website creation

As a result, it is an industry in which it is perfectly acceptable for a sole proprietor to operate as a business. If you want to gain trust and expand your business, I think it is best to incorporate.

About company formation and money

To set up a company, you will need at least 200,000 yen. In addition to that, you will also need capital.

Funds required for company establishment

The total cost will be about 200,000 yen, including the 52,000 yen certification fee and the 150,000 yen registration and license tax. In addition to this, you will need to prepare capital. I recommend having at least 1 million yen in capital.

Money gained from starting a company

Employment income deduction

By receiving a salary as executive compensation, you can deduct the salary as a necessary expense from your sales, which helps to reduce your taxable income.

Income tax and corporate tax

For sole proprietors, the higher the income, the higher the tax. In contrast, corporate tax is fixed, so the higher the income, the more advantageous it is to incorporate.

More things can be treated as expenses

All expenses incurred for business activities can be recorded as necessary expenses. This means that more expenses can be recorded than for a sole proprietorship, resulting in tax savings.

Family members can be employed

If you work in a business, you will be able to distribute your income to your family as a salary, which can help you save on income tax and local taxes.

Enroll in social insurance

Corporations are required to enroll in social insurance (health insurance and employee pension insurance). The insurance premiums are higher than those for national health insurance and national pension, but the employee pension insurance provides a higher pension amount in the future, so you can save money for the future.

Personal assets cannot be seized

Even if a company goes bankrupt, you generally will not be obligated to repay the debt to individuals. However, you should be aware that you may become a guarantor when taking out a loan.

What are the benefits of increasing credibility by establishing a company?

I thought about the benefits of setting up a company even though it would be fine for me to remain a sole proprietor in my website production business.

When looking for outsourcing

I think that incorporating is more trustworthy than being a sole proprietor, and will attract more qualified talent when looking for outsourced workers.

When accepting a case

From a client's perspective, I think it is easier to make a request to a company that is incorporated rather than a sole proprietor.

Easy to raise unit price

If you are incorporated, the unit price tends to be higher.

How much do you have to earn to make it worth incorporating?

This is what I'm most concerned about.

"Should I set up a company or be a sole proprietor? What are the pros and cons?I would like to introduce this site, which I found very helpful.

If your annual income is 6 million yen

Comparison of cases where two executives receive compensation so that corporate profits are zero

Individual business total 1,010,000 yen

income tax	430,000 JPY
Resident tax	430,000 JPY
Business Tax	160,000 JPY

Corporation total: 650,000 yen

income tax	200,000 yen / person
Resident tax	380,000 yen / person
Corporate tax	70,000 yen

If your annual income is 10 million yen

Comparison of cases where two executives receive compensation so that corporate profits are zero

Individual total: 2.32 million yen

income tax	1.18 million yen
Resident tax	780,000 JPY
Business Tax	360,000 JPY

Corporation total: 1.3 million yen

income tax	540,000 yen / person
Resident tax	690,000 yen / person
Corporate tax	70,000 yen

It is commonly said that it is better to incorporate a company if your assets exceed 6 million yen.
If you compare the tax amount and it exceeds 500,000 yen per month (sales minus expenses), you should consider becoming a corporation. First of all, I would like to do my best to steadily exceed 500,000 yen!

Finally, what is a LLC?

I've also heard that if it exceeds 4 million yen it becomes a LLC.
When I look at the business cards of customers who come to my WordPress private lessons, I sometimes see people who are LLCs. LLCs seem to be similar to what used to be called limited liability companies. I'll look into LLCs in the future!