Running Magic Pages has been an incredible journey so far. It started as a side project, and now consistently makes more money than my full time job. So, it's finally time for Magic Pages to become its own legal entity. That is exciting – but also quite bureaucratic 😄
Bit of a back story. Right now, Magic Pages operates as a sole proprietorship. Legally speaking, that means Magic Pages and I are one and the same. There's no separate "Magic Pages" company – it's really just me. I pay the invoices, receive customer payments, and manage the taxes through my personal income tax return.
This structure was perfect for getting started. It's simple and straightforward. However, now that Magic Pages grows month by month, this setup is becoming less ideal.
So, in the coming weeks and months, I'll be taking the steps to incorporate Magic Pages into its own separate legal entity – specifically, an Austrian Gesellschaft mit beschränkter Haftung (GmbH). This is broadly comparable to a Limited Liability Company (LLC) in the US or a Limited (Ltd) company in the UK.
Why the change? Well, there are two main drivers. The biggest one is taxes.
As revenue grows, channeling everything through personal income tax becomes increasingly inefficient. Incorporating creates a separate financial entity with different tax implications that are better suited for a growing business. (Yeah, I've learned a lot about taxes in the last few months. Believe it or not – it's actually quite a fun topic for me 😄)
At the same time, separating the business legally makes things cleaner and more professional. It establishes Magic Pages as its own entity. That in turn builds trust and sets up the proper foundation for the growth am working towards. It separates business assets from personal ones, which is well...just good practice.
So, what does this mean for my customers? Not much, really. There is an established legal process in Austria to move a sole proprietorship into a corporation – it's called an "Einbringung" (loosely translatable as "introduction"). All assets, financial obligations, etc. will seamlessly transfer over.
Sounds easy enough, but honestly, I couldn't do all of this without my tax advisor and would be hopelessly lost 🙃
So yeah, this incorporation will be a significant milestone. It will probably give me lots of bureaucratic headaches, but ultimately will be worth it, I think.
And yes, this is one of those less glamorous, behind-the-scenes steps of running a business. But it's essential groundwork for future growth.