Ah To Communicate

By Neil Ticktin, Editor-in-Chief

For as long as I can remember, readers of this magazine have asked for online areas to access information about the magazine, download files, and exchange ideas. We are proud to announce that Xplain Corp. (the publishers of MacTech Magazine) has made arrangements to have an online presence on CompuServe. Once this new area is active (probably by the time you read this), you’ll be able to type “GO MACTECHMAG” and you’ll be there.

The new vendor folder will include information about the magazine, important files such as our writer’s kit, a discussion area, and product information. If the discussion area is active enough, we’ll reprint your comments and questions.

New E-Mail Addresses - Use Them!

To help you get faster service, we now have a series of new electronic mail addresses. These new addresses reflect our new name as well as additional support. All told, we’ve gone from 4 addresses to 20! Please use them and throw away the old ones.

The new addresses are for AppleLink, CompuServe, Internet, America Online, and GEnie. Those of you who used our AppleLink address to send an Internet message, please use the new Internet addresses instead. It is a little known fact that AppleLink charges 50¢ per Internet message (in each direction).

Ask Us Questions, Give us Feedback

Since we were so busy this month, David was kind enough to pick up the slack for me and write a bit more. As you may know, David is a capable tax attorney. We would like to have the magazine take advantage of David’s knowledge, but we need to know what questions you would like to have answered. So here’s an open invitation to ask any of us, including David, about issues you wonder about.

Most of you like the Tips and Tidbits section. Now, we’ve changed the compensation for tips printed from a credit to a cash payment. This is your area, so send us tips. In fact, if you ask DTS a question, send in the question and the answer as a tip as well.

CD-ROM Update

By the time you read this, the new All of MacTech Magazine CD-ROM™ Volumes 1-8 will be shipping. This new CD is the best that we’ve ever produced. It incorporates all the feedback that we’ve received about the last CD.

As of this writing, Symantec is now shipping a much improved THINK™ Reference 2.0. Not only does this new version include Volumes 1-6 of Inside Macintosh, it has new features as well. The best part is that this and On Location™ 2.0 are both included on the CD. See page 52 for more information.

Upcoming Topics

For the last couple of months, we’ve been talking about changes in the magazine and new products and services. Next month, we will return to more traditional editorials. In the March issue, Don Bresee (our Technical Editor), Ken Gladstone (our new Technical Editor), and I will cover Macworld Expo/San Francisco from a developer’s point of view.

As the year goes on, we’ll be covering topics such as Bedrock, MacApp, C++, scripting, HyperCard, databasing and more. The more you tell us what you want to hear about, the better the chance that it will happen.

The Publisher's Column

By David Williams, Publisher

The end of 1992 was completely overwhelming. In all of the excitement of changing the name of the magazine and preparing the new CD-ROM and for Macworld Expo, we went on a buying binge that resulted in a new show booth, two Duo 230’s, a IIci 5/80, and a 486/33 file server. So after all of this and a number of other purchases, we were penniless, but fully equipped. Basically, for about a month, we spent like drunks. What’s most surprising about this is that Neil and I are in complete agreement on everything we bought for the company. I suspect that he would have preferred that the money I spent on my new stereo stuff and 4WD be contributed to the company for computer equipment, but he isn’t unreasonable enough to actually expect it.....OK, it’s close, he reeeaaally wants a 950.

What all of this brings to mind is the business decision-making process and how legal entities effect it. Both Neil and I spent, but where did the authority lie to decide to spend? Our little buying spree brings up the issue of legal authority in a joint enterprise. In actual fact, Neil and I never had to confront the issue because we do work closely and we are in agreement, but at the precise moment when disagreement occurs, most business teams have little or no clear idea of who is really in charge, and how a dispute is resolved. The answer, of course, lies in the choice of business entity.

The last article I wrote on this topic, in the November/December issue, focused on the legal aspects of proprietorships and partnerships, which are general liability entities with little legal management structure. As we saw then, any partner has the authority to bind a general partnership to a course of action, such as buying equipment. In any of the limited liability entities, management authority is legally controlled. In other words, the law dictates a structure of decision-making and power, while providing limited liability for those sufficiently outside that structure.

The limited liability entities are: limited partnerships, S corporations, and C corporations. What makes these entities so different from the general liability entities is that in every case, the grant of limited liability comes from the state government. In other words, rather than just agree amongst yourselves, you apply to the state to form the entity, and for a price, the state grants a limitation on liability. The price takes two forms. First, there is usually a tax or at least an annual filing fee to keep the entity alive. Second, there are statutory restrictions on structure and ongoing documentary requirements to maintain the liability shield. To form the entity, you have to have a fairly complete set of documents that describe most of the relationships between the players involved. A limited partnership does not provide a complete shield, while both types of corporation generally do. On the other hand, a limited partnership is usually cheaper to set up and easier to maintain than a corporation.

In a limited partnership, any general partner has full management authority, but no limited partners do. Liability falls in exactly the same pattern, only the general partners have joint and several liability for everything that goes on. Most states require at least annual reporting to the limited partners and that the general partners act in the limited partner’s best interests. A limited partnership files a form 1065, just like a general partnership, in which the tax attributes of the partnership’s activity are apportioned out to the partners based on their ownership percentages. One of the most powerful advantages of a partnership over a corporation is the ability to specially allocate certain attributes to certain partners and not to others, and to allocate based on other percentages than ownership. If any of these complex methods of allocation are used, there are very complex tax requirements that must be met else the allocation will be disregarded for tax purposes, so consult a competent tax advisor.

Corporations represent the most complete liability shield that states are willing to sell, and require the highest price. Usually, an attorney is required to form the corporation, and there is a substantial annual fee or tax to pay. An S corporation is one that has elected to be taxed as a partnership for federal tax purposes (most states have comparable elections, but there is always at least an annual fee), and files form 1120S, while a C corporation pays corporate tax on its net income and files a form 1120. The corporate form of business is exacting, and failure to meet any of the numerous annual documentation requirements such as minutes of required meetings and resolutions can lead to a collapse of the shield.

A corporation is ultimately controlled by its voting shareholders. Note that it is possible to have non-voting shares, which have no ongoing say in the business at all. The shareholders meet at least once per year for the purpose of electing a board of directors. The directors then meet to appoint the officers, such as president, who run the company. Decision-making is entirely formalized and is determined by the authority granted to the officers in the bylaws of the corporation. In other words, in a corporation, most questions of final authority and ultimate responsibility are answered during formation.

As should be obvious, this is a very simple treatment of a very complex subject. The purpose here was to provide a starting point for discussions with your attorneys and accountants, rather than to allow you to make the decision on your own. Most important, for every concept that I’ve touched on, there are ten that I’ve excluded which can be critical in a particular case.

For Neil and I, here in our S corporation, there is no question that the final authority over spending lies with Andrea, our Controller, who has the checkbook. Which is good because without Andrea to stop us, we’d equip ourselves right out of business. So, for Andrea, who now has only a few days left to pay for all of this new stuff, please keep those subscriptions coming!