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Michaela: Welcome back to the show. And today, we’re going to be looking at the great entrepreneurial adventure using ColdFusion. How Samuel Knowlton went from side jobs to freelancing to his own business. And we'll look at some of the risks involved in doing side jobs you might not be aware of in particular is this really wacky taxi came across that didn't even make sense to be honest to me. And we’ll also look at some of the liability concerns you may have in working for other people; freelancing or in your own business. And some of the perks you can make some money by incorporating as well so. We'll also look at infrastructure you might want to set up, and how you support your clients if you start a business, and the tool sets you use for your ColdFusion business. So welcome Samuel.
Samuel: Thank you very much Michaela.
Michaela: Yes and if you don't know Samuel is the founder and president of in league which is a beauty ColdFusion software development house. Been around for about 16 years now. Congratulations! I think in dog years that's probably about four lifetimes right.
Samuel: Well that said still what half your company so you have something to look forward to.
Michaela: There you go. So we… how do… you started off doing site jobs is that how you got started new business or?
Samuel: Yeah, I think most of us… I had a full time job out of school and I think most of us take some side work kind of when something sounds interesting or we want a little bit of money on the side. And I've never set out to own my own business. But I wanted to move to New York City and become an actor which is not something I recommend for your ColdFusion career. But I had to leave my full time job and earn some money while I was going to auditions. And so I took some work and over the course of maybe three years it grew and it grew into…
Well we finally were able to come up with an arrangement that allowed us to essentially buy back what we done and then license it's a new customers so that we owned all the IP which was kind of a very integral thing to our continued existence. So then after a few more years of that we grew to the point where we could hire other people. And before we knew it, we were running a small business. And we are still quite small there's only a few of us.
Michaela: So when you started out doing Cyclops did you realize that with things you had to get in place or there were risks you were running by doing that or?
Samuel: I had a limited realization. I was very fortunate in that my first client was an international tax attorney. Our the work we did had nothing to do with international tax, but he was able to mention… You know when I was all of 21, 22 years old. He said, “By the way make sure that you understand how this works.” And he gave me a crash course in double entry accounting. So they're very like fundamental things that all of a sudden I learned I needed to know because I didn't have any type of business background or training other than that.
Michaela: Now why… you mention double entry accounting. It sounds quite dangerous. Just like a double barreled shotgun or something. Why should a ColdFusion developer need to know about that? I mean don't you just need earn the money?
Samuel: It really depends on the scale right like at first what I first learned I probably didn't need to know it. If your business is… you know if you're doing whatever 1,000 dollars or something a year and you're buying you know maybe you bought yourself an iPad for your side job, you probably don't need a whole accounting system to track your one expenditure.
But if you're doing anything consistently like the minute you have assets or expenses that belong to your side job life; whether you realize it or not it's starting to turn into a business. Whether or not you filled out any forms like that just happens. And so you need to be aware of what to look for so that you can realize well this is happening and get out in front it rather than just react when all of a sudden someone says yes I'd like to see your balance sheet please and you have no idea what that is.
Michaela: So what are some of the risks that someone doing side jobs is taking if they don't do this right?
Samuel: They're sort of two broad categories. One is liability. So if you work for a big company and we call it working for the man whether I was the government or just any big company and something goes horribly wrong, the worst thing that's going to happen to you is that you might lose your job. Like no one's going to come to your house and say, “Listen you us all this money.” Like they're gonna sue your employer. Hopefully your employer has an army of lawyers to handle that stuff. I mean it's bad right it's I don't want to minimize that for if it's happened anybody.
But at the end of the day you just going to get a different job. When you are the entity whether or not it's you or your company, you know the buck does stop with you. They can come after you and if you haven't organized then they can come to your house. And if someone does sue you which thankfully has never happened to us we have spent a lot of time trying to avoid that as everyone should. But if it does, there's no distinction between your stuff and your businesses stuff. But the example I like use is if I run a hotdog stand and I sell you a poisoned hot dog and you incur 100,000 dollars in medical expenses and I'm having organized this just me as a hot dog stand proprietor.
And you sue me then you can take my house, you can take my car, there is… you can take anything I own to collect it in a judgment against me for having messed up in the business world. Whereas if you're an employee of the hotdog stand you can get fired and they can maybe sue you and take the literal hot dog stand away. But like that's kind of where it ends. Like if the business doesn't own it, they can't come and take it from you. So that it's… I'm exaggerating a little bit, right. Most of us doing side jobs so I can help me update my website there's not a lot of like poison hot dogs floating around.
So for your typical you know, one offs help me build this website. You probably don't need to worry about that. I don't believe in an alarmist approach to this sort of thing. But the minute you're doing any type of real work or mission critical applications. You know the type of thing that allows you to charge real money to real clients, you need to at least have thought through what are your risks. And maybe it's not organizing. Maybe just get some insurance, right. There's plenty of solutions to these things. But you need to set aside some time and think through them so that you're prepared if something does happen which is after all what the whole insurance business is.
Michaela: Now when you said organize you know, what exactly… what are the options you have there if you can organize your business?
Samuel: The most common one is RLC or LLP depending on if it's you as an individual or just a sole member which is a limited liability company, or if you have one or more partners that you're setting up shop with a limited liability partnership. And these are state level entities. So there's 50 different versions in the United States I assume I don't know if every single state has one, but I think they do. And they're all more or less the same as far as we're concerned. And it's essentially the state recognizes the formation of this entity that is separate from you as a person, and that's… it's right there in the name they say limited liability it's so that you have like one little house under which all of your job stuff lives, and all of the money that you collect.
And you can pay or sell out of it and put things into it that's okay. And then you have your house where your things live and there's a certain amount of legwork and like filing requirements that go into this distinction. But it's a very, very useful distinction. It's what ameliorates the risk of going into business in the first place. It just makes… it makes your life a lot easier. It also confers a degree of legitimacy in the event you want. You know a bank account, or benefits, or anything like that. So you basically go to the U.S. state's business website and you can create this L.L.C. or I guess if you really wanted to, you could walk to some office and fill out to it.
Samuel: You know there's actually a tremendous variety in how you do it. And that's one of the things I talk about. I happen… I had the good fortune to grow up in the state of Delaware which most people haven't heard of for exactly this reason right next door to you. Because I was living in New York City and I wanted to do this and I looked up and in New York at the time to set up an L.L.C. you had to pay something like 1,500 dollars.
And due to some arcane law from the nineteenth century, you had to publish it in a newspaper. I am setting up this company with these people. It was like this… I don't know like Wild West thing where so that you couldn't just like change your business name without anyone knowing you had to announce it and the newspaper was where you did that. Because I know when you and I read the newspaper that's the first thing we turn to, right. Like who's incorporating?
Michaela: yeah
Samuel: I mean this week absolutely. Whereas in Delaware you fax in some stuff, you pay them 70 bucks, and then you've got it. And also the nice thing about Delaware… there's not one thing tax related with any of us by the way. A lot of people think, “Oh Delaware is like a tax haven.” It's not as you're not saving like annual tax money. But Delaware being so small when you call up their division of corporations, instead of getting like nameless, faceless person you get Shelley who remembers who you are and like will help you through the process.
And they may look at us like we're glad that you're here and we're providing you this service, and that makes a lot of difference. So you don't have to set up shop where your literal shop is. But there may be some additional requirements if you're not like we're not in physically in Delaware, so we do have some extra paperwork we have to do for Texas where we are.
Michaela: Yeah, there might be some paperwork back in your home states…
Samuel: exactly
Michaela: … you have to deal with because you will have quotes on office in your home state and your…
Samuel: nexus
Michaela: And nexus, yes. That's the word I was trying to avoid using.
Samuel: Most of us do try to avoid that word [crosstalk] [09:48].
Michaela: Yeah, but basically where you're going the work or where you have your company’s property you know, where that nexus is, and typically that's gonna be where you live.
Samuel: That does matter a lot too, and you do have to look into your physical presence the state for any additional requirements. But in terms of like what are my options just out the gate, where do I want to set up this entity. Delaware's it is very, very common Texas is not far behind it. Typically if you're in places like New York or California and this is one of the very first questions you ask someone like a C.P.A. or you know, what are the advantages they'll ask who are your clients are.
And they'll go through all that. Even so we're not talking about a huge amount of time and money it might sound intimidating, but it really isn't. Particularly for a place like Delaware. It's very, very, very easy to deal with and they are there to help which is kind of unusual when dealing with the government as a business.
Michaela: That is unusual. I also think Wyoming's quite a nice one.
Samuel: That sounds right.
Michaela: They’re very easy to… They have very low paper work and hardly any taxes unless you have property in Wyoming. But New York, or California, or any of the other states that have a slight deficits in that budget and gonna be looking for you to pony up money to them as well if you live there.
Samuel: You know and in my anecdotal experience I wouldn't draw the… Well look I wouldn't connect the dots between high tax state and like they're impossible to deal with just automatically. Like it might so happen that that's the case. But you know even if Delaware charged double or triple what they do for their annual franchise tax which is what you pay when you register a company there. It really is you can make more money.
But there's only ever going to be one of you until your business grows that you can delegate some of the stuff. That time investment, and the experience of how stressful is it to work with the state. If I do something wrong that is actually I think more important than the just the dollar amount. So that's why I like Delaware a lot. Like a savior. It's really not about saving money although not paying 1,500 bucks and publishing something for two weeks; isn't it definitely not.
Michaela: Now you mention it was some weird tax that… you know if you didn't incorporate they still try to get you in New York. Tell us about that [inaudible] [12:05] sounded.
Samuel: This is outside the category of liability. This is into the category of just taxes. So if you don't incorporate most places just by default. Like if I mow your lawn every week for a year and you pay me 1,000 bucks total throughout the year maybe you'll send me a tad 99 you're supposed to. But so long as I report that income on my tax returns, no one cares. And the state you know, if you have a state income tax you'll put it there and you'll pay income tax on it. The type of thing that you need to be on the lookout for on your local level. (And this is not just New York but New York City is a great example.)
They have something called the unincorporated business tax which means even if you don't set up a separate entity and you collect this money as an unincorporated business namely just yourself, you owe the special separate tax. And you wouldn't necessarily ever even know about it unless someone told you. That I mean there's you know it's more complicated than that there are exceptions and there's I mean it's the tax code, right. You could read it all day; please don't. It's the type of thing where you know, I'm not here to warn you I don't open up shop in New York City.
But just you need to know where to look to find out if that applies to you. I lived in outside of Allentown Pennsylvania for a couple years. They have a gross receipts business tax unlike income tax that you pay in your profits. Gross receipts you pay it literally every dollar you make whether or not you're using that dollar to pay someone else. That's like that they make can be a little surprised. You know that's one day the city just shows up at your door with a bag of money, and you better be ready to pony up.
Michaela: Right and you know they may have some places have property tax. So if you have business and some computer software, or the stuff they might want to take a percentage of that every year.
Samuel: That's quite possible. And again I’m not an expert on anything other than my own where in Austin Texas or anything other than what we deal with here. But so long as you know what questions to ask, these things can sound very intimidating and put people off of exploring this routes. So kind of it makes them feel safe. You know I'm just gonna get a regular job and earn a salary; and that's fine. But there's plenty to recommend that. But my point is just so long as you're aware of what questions to ask than these things can be navigated in. And maybe it's just a question of; do you know what? I'm gonna set up shop or business address will be at my partner's down the street outside the city limits and that will save us all this trouble. Like that's the type of thing that you are to think about.
Michaela: So you mentioned double entry accounting earlier. One of the things I've noticed that people who do side jobs or freelancing, they some of them kind of have a separate checking account for their business, and some people just stick it all through their personal account.
Samuel: sure
Michaela: Does it really matter?
Samuel: I've done both and I think for a lot of people, it depends you know, when you start to go out and you do a little side job. Like what I was 21, 22 maybe you'd work for a couple weeks, you earn 500 bucks, you get a check of 500 bucks. You put it in your bank account, and you forget about it. But if you’re a professional, and established, and you have a contract. Even if it's just a one off thing and if it's anything that happens more than a little bit, it's really to your advantage to go and set these up. Like it's an investment of time. It's not an investment of money. And even that doesn't mean you have to do double entry accounting.
It just means like yes, get a business bank account. Like that's really the bare minimum. Go to the bank, sit down, explain what you're doing, and they’ll tell you what you need. It usually doesn't cost anything if you already have a regular account there. So it's… it will help you in the event that later on what you're doing grows when someone says, “Okay well what was your revenue last year for this product?” And you don't have to give them a bank statement that has like oh your trip to Vegas on there. May be some things you'd rather they didn't look at.
Michaela: Well and when it comes to filing your taxes, you wanna know what will business income, what was business expenses. And if you're mingling it all up you've got a you know… you're you know then in that kind of shoe box of receipts kind of nightmare scenario that a lot of people go through. They go to their tax preparer, and they hand them a whole bunch of stuff, and hope they can sort it out. And they probably can sort it out, but probably not going to do was a good job. You're going to probably miss out on since adoptions from your tax return that you could have taken so.
Samuel: And again if it's 500 bucks then you know… if you're not missing a whole lot and is it worth it to go to this trouble on the other hand. Anything over that really, the barrier is so low to do this. Like it's a more mental block of like oh business bank account that sounds like official informal; not really. Like once you've done it, it's just another thing you've… just like working with cold box or any of those sounds oh it's an official framework. Well not really. It's just a tool. It's like… it's no different than any other tool.
Michaela: And if you don't wanna open a business bank account just open a second personal account.
Samuel: sure
Michaela: That's another wager. At least then you go all the income and expenses separated out.
Samuel: absolutely
Michaela: And the same thing you know pick a separate credit card to use for business. So if you're buying a new iPad, or taking a client to lunch, whatever it is. If you keep that on a separate credit card, it makes it so much easier to track what's going on.
Samuel: absolutely
Michaela: So you mentioned you might need to get business insurance. What exactly would that entail?
Samuel: Some of it can vary by state. For example when I was in Pennsylvania for about two and a half years aside of Allentown, and my wife was in graduate school. And we had an employee who was also in Pennsylvania. And I learned that even though we are remote office, like probably a lot of freelancers are. We don't have like an actual corporate headquarters. People can work from wherever. The state of Pennsylvania requires all employees to have workers' compensation. So if you trip an fall over your printer cord while you're working for Inly then technically that's our fault somehow.
There's like… we're talking about like remote court cases where like this happened in academia one time. And so you know the risk again very, very low. But technically, you're supposed to have it. And you go to Pennsylvania which unlike Delaware is maybe not the friendliest of bureaucracies to navigate. And their workers' compensation categories, it's like a list from the 50s. There's like four types of Stevedore and nothing about computer programming on this. So you know that …
Michaela: Which type of Stevedore did you say you were?
Samuel: The best type.
Michaela: okay
Samuel: You know what? I did have to get it for me. But as a business owner all those labor laws that are to your advantage as an employee like overtime and health and safety. None of that stuff applies to you anymore. You can't collect unemployment usually sometimes you can. But so not talk about for your employees. But the other kind besides Worker's Comp which again I'd only matters if you have employees. The other kind that's pretty common and pretty easy to get is just general business liability insurance. Again not something we've ever had to actually use.
But it's usually anywhere from my 400, 800 bucks a year if you're very small. And that’s just if you write code for your client and the code breaks you know regardless of whose fault it is. Or may they take you to the cleaners and they win a judgment for 200,000 dollars then that's the insurance helps you out there. It's a way besides the limited liability shield regardless for the not you've set that up. So that they will pay for that stuff in the event that something goes horribly wrong. Again not something I think a lot of ColdFusion developers deal with on a regular basis and hopefully it will never happen anyone. But it's just easy to get and it lets you not worry about things at night.
Michaela: Yeah and the other two kinds of insurance that businesses sometimes get a Arizona mission. I don’t know if I got that.
Samuel: That's actually more relevant I think to developers; general liability. You're exactly right. Apologies actually, I was just producing our policy of the day. I should know this. General liability is like if you're at a client site and are there at your office and they trip and fall, or the window falls with them. Errors and omissions is more a disaster scenario for programmers.
Michaela: And then the other kind that sometimes business owners get is they get an umbrella policy. So typically your homeowner's policy will give you some kind of coverage. But you can get a policy for a few hundred dollars a year that like goes up from a million dollars coverage to several million kicks in if the old insurance doesn't cover it. So that's the other kind that sometimes people look at. So now you mentioned just now you know if you have employees, you've gotta start dealing with payroll taxes, and workers’ calm, and various other things. So maybe someone here is thinking, “Okay, well I'm just not gonna have employees. I'll make use of contractors.” Is that a legitimate way to go, or is there other problems with doing that?
Samuel: The answer is in most questions. Like that is it depends. We did not have employees until 2012 so… you know I guess I was ten years we didn't. We just used contractors and we didn't use many of them either. There's a couple things that might force your hand. It depends how people work for you. If they I.R.S. actually has a publication that says if you work this way. Like if the manager dictates the hours and like how you work; depending on how much control they have, then they might have to be an employee. Typically in our line of work that's not usually the case. You're like here's the job, have it done by Tuesday, and that's fine. You don’t really care how it happens. But there are some advantages to having employees and we actually came out it through the tax routes.
In that whether or not you're a sole proprietor or an L.L.C. every… You are paying personal taxes and what's called self-employment taxes on every dollar your company makes as. This… but it's on your personal tax return. You can separate from the state level entity that you might form for liability or organizational reasons. You can make a federal election for what is called an S. corporation. And what that does is it means you pretty much have to have payroll. But once you do, you stop paying… You don't pay the self-employment taxes anymore. You pay payroll taxes on your salaries, and then you don't pay any business taxes. Just regular… sorry you don't pay a Social Security or Medicare taxes on anything over your salary so long as you pay yourself reasonable salary.
This is not a tax dodge, this is not a way to pay yourself a salary of five dollars and then avoid paying tax or anything over that. Yeah is very clever about catching those things. But in order to do that, you have to have payroll so that you can go to the I.R.S. and say, “Here's what I pay myself, here's what I pay my programmers. It's a prevailing wage in this market, and that's how that I set this up.” But a lot of like small law firms like dentist office, schools will use this because it lets them have a salary which also helps your life so you still have regular income. Like it makes your job more like a regular job and predictable. And then if your company does really well, that you basically get a fat bonus that you can turn around and invest in hiring someone or not; whatever you wanna do.
So we came about it through that way. But back to your original question. You are exactly right. Payroll is the big like terrifying thing. Going from zero to one. Having that commitment of this is not just me, but now someone else is livelihood. I'm responsible for that. That is something that probably takes the most mental acclimation and it might be the case that you know for life. For me, I'm very conservative. I don't hire someone unless I can pay them for a year even if my business stops tomorrow. That's… I don't go around asking other people what they do. But that's… I feel like that's very conservative and it probably has limited our growth.
Because I should just be able to say, “Hey, I’ll hire, and hopefully you'll produce some money in the next few months so that I can keep paying you. But the way I am I don't know.” So I want to put developers and into that position without where they feel like they don't have security. So that is that is a legitimately tough choice but it's also like you get a little older you're particular if you want a family or you wanna do something other than like working and answering emails at 11:00 pm.
You're gonna need some help. And contractors are great when you just need product, when you just see code written. But they don't… there's no incentive for them to be loyal to you. Like they’re their job has a beginning a middle and an end and an employee is a different matter. And also feeds into some of the rewards and perks that you can get things like health care and like retirement. And any decent vendor for those things wants to know that you have at least one employee other than yourself.
Michaela: So how do you… what are the mental hurdles you had to overcome when you hired your first employee? You mentioned being a… you know knowing you pay them for a year. What else?
Samuel: I mean that's really just to use cases like the mental hurdle and that you go through all the stuff with setting up an entity to shield you from liability. You say for example my company and me. These are in these clients. This is in leagues revenue. If we just lost all of our business tomorrow from a legal and technical standpoint, like that's not my personal failure. It's the just the business going out of business and what you know what's that's a statistics. Like 70 percent of small businesses go under. So that's there's nothing extraordinary about a business collapsing. You set up a new one and there are serial entrepreneurs that do this all the time. This is gonna come down to your personality.
I know that I do feel very personally invested. Not that our business is like super critical to anyone's life unless you happen to work directly with us. But that will be very difficult for me. So I knew that I wanted to offer security even if I couldn't offer tons and tons of money. But your mileage may vary and again that probably limits me as an entrepreneur because I'm not willing to go out and like borrow a million dollars from people I've never met and then spend it on hiring people that I might only work with for two months.
But that is how a lot of the business goes and that distinction between your stuff and your business stuff; whether it's a bank account, or a corporate entity is there for a very good reason. It's there to keep you sane and to go. You know what? That's this venture and the venture is different for me. And I just still haven't learned that lesson after all this time.
Michaela: Now you mentioned some benefits to having employees. What are the downsides to hiring employees?
Samuel: Well other than the commitment, right. Like you have to go and interview and hire them and when necessary unhire them. The downsides… There are some paperwork issues you have to like you said you payroll, payroll taxes. Perhaps a certain point you're probably doing that for yourself anyway. So once your business is really your bread and butter and you're planning on doing it for a while, payroll is something you should look into for yourself so that when you do wanna hire your first person you're just pushing out an add person button and you're not having to go through all this trouble just for someone else's benefit.
But there is… it is the tax situation. There's a lot of little surprise government forms like even here in Texas which is a fairly low burden state as far as regulatory paperwork stuff is concerned. Like we have to do go to the Texas Workforce Commission like Office of Child Support and you have to report any time you hire or fire someone just in case that person has child support. And like it makes sense when you think about what their job is. They have to you know… if they have to [inaudible] [27:51] somebodies wages okay I guess not it's not hard it takes two minutes.
But in less you know to do that you know you can go to your chamber of commerce, you can go to all these seminars, you can learn it. But that's the type of stuff you have to worry about and you have to send out posters and notifications. Like are you covered by workers compensation? If not, you have to let everyone know every year if they fall over at their desk, it's their fault. That type of thing. There's a lot more like managerial H.R. I mean that's why companies have H.R. right. It's because there's all this stuff you have to do totally unrelated to writing code and earning money.
Michaela: Yes, it can be tight quite a time drain when you add up all the different things. And that's why people often pay a payroll company to deal with that stuff.
Samuel: oh yes
Michaela: Or it may be your bookkeeping software has an option to take care of it.
Samuel: We… our plugers I talk about this in my session. But we switch from using Intuit products in Quick Books which is not super expensive to start up; start anymore called zero Xero. It does both accounting and payroll and it's really, really easy to use. And you basically press a button and they fill out all your tax forms for you, they do… I think most states now for a while it was just a few.
But that's exactly the type of tool when I talk about tool sets in entrepreneurship where you make a little bit investment you know for a small company it's like 20 bucks a month for both accounting and payroll; it's nothing. And they will take care of your taxes filing as your federal filings, they’ll run all your reports, and it's a lifesaver. Like we couldn't do this with a handful of people 100 years ago not that there was that much ColdFusion to be written 100 years ago.
Michaela: It was pretty rare 100 years ago.
Samuel: Petty rare, yes. Just first like the first version maybe.
Michaela: Yeah the 0.1 version maybe.
Samuel: They had CF Query and that was it.
Michaela: Yeah that… yeah it's kind of limiting. So the other fun issue of using a payroll service is if they screw up and they put the wrong numbers in, it's their responsibility pay all the fines and deal with those agencies. So I think that’s another benefit. I've done it both ways. You know doing it myself using a thing like zero to do it. And I definitely recommend paying the money to have someone else deal with it.
Samuel: Yeah, not a lot of money at all.
Michaela: yeah
Samuel: You're braver than I am. That's one thing I've never attempted to do myself. I do my own taxes. I'll do… 11, 20 aspect, but I won't do payroll by hand.
Michaela: It’s basically the same. Is just lots of forms, lots of silly rules, and you just have to be very organized and careful, and follow the… You know they have a lot of deadlines when you're supposed to say… that's the other thing to watch out for. You've got to send the money to the government on a regular schedule. And if you don't meet that, they get very upset so.
Samuel: They do it yes. Always to be avoided.
Michaela: Yes and that's true also even if you don't have employees and you're just doing side jobs know you can use it so after to make estimated tax payments if you're making a lot of money on the side.
Samuel: One of the first unpleasant lessons every freelancer learns is like; what I pay taxes four times a year? What!
Michaela: Yeah, it's a little whatever. Now some of the other things people often do is when they you know incorporate… whether or not you incorporate though it's so easy to have an L.L.C. You might as well. Is you get to write off some expenses. So tell us about that, and what that means.
Samuel: So that's very good a little bit into the tax advice department where I try to be very careful not to presume to advise anyone ever. But I mean in simple terms like we… you mentioned infrastructure before. These days and or does is going to talk a lot about this into the box. I'm sure nowadays it's all docker and containers. But back in the day and we… embarrassed to say we still do this work. We're on in the midst of moving to docker and all that stuff. But we still have physical servers from a hosting provider that we use for our clients. We have three of them and we've had them for years, and we get new ones every so often. But that's an expense that is completely attributable to our business. Like I get no personal edification from having servers in Phoenix Arizona for any other reason.
So that's that type of cost is a business expense. And therefore, if I earn 1,000 dollars and my server cost me 200 dollars, I'm paying taxes on 800 dollars. Like that sounds really simple. It gets more complicated in terms of like if you have a home office, and you're buying a phone, and it's 50 percent use for this and 50 percent use for that you do have to worry about those things a little bit. And again buying some time from a C.P.A. or a tax attorney like right up front will get you in good habits. I can say that I have never had a physical like shoe box of receipts to go through. I do keep digital copies of everything that I've never, never gotten in any trouble yet.
But you… as an individual, there's a certain incentive where like you're just one person and maybe if you don't report this or like you can kind of just probably you won't get noticed. Like the likelihood is low that any one of the I.R.S. is ever going to come after you unless you're earning a whole buckets of money. As a business, it's a different story.
You've gotta be careful. It's never worth it to like try and squirrel something away as like oh yeah I'm a software developer and this S.U.V. is totally necessary to my business that I run out of my home and never live. Like people do it. You can do it, but it gets into the realm of like what do I… what is necessary for my business, and what's a personal perk. So it's definitely talk to oppression about that one. But there is definite… there's a lot of stuff you can write off. You can save some money that way, but…
Michaela: Yeah, you might be writing off the cost of your internet connection, your phone, your cell phone, the software you buy, the laptop, travel if you go travel to a conference like into the box. The passport cost, the travel cost, hotel. All of that would be deductible. So you wouldn't end up paying tax on those amounts you deduct.
Samuel: What are the harder lessons to learn for me as a business person was actually… not that you can’t deduct those things, but that you should have those expenses. Like when you work for a big company or like well of course I mean to go into the box, I'm gonna go to CF Summit, I'm gonna go to CF United or whatever these conferences are that you wanna do. As an entrepreneur like releasing this 400 dollars. That's a lot of money.
All of a sudden you feel like you're penny pinching because that 400 dollars is going into your pocket if you're not gonna spend it. But at the end of the day is an investment that you're making in your business and you've got to take yourself and you've got to take the people you work with to these conferences to keep them current. Because otherwise who's gonna want to work for you, who's gonna work with you.
Michaela: Well I think that's a good thing to do. You're an enlightened entrepreneur. It's also the case that you may learn useful stuff yourself, and you may meet people who can help you out solving problems, or you can hire them, or they may refer clients to you. You never know.
Samuel: absolutely
Michaela: Now you mentioned infrastructure. What exactly do you mean by that? Is that just the laptop you have, or something else or?
Samuel: No, I wouldn’t… I mean your personal tools like your ID and whatever you develop on. I don't call that infrastructure. Infrastructure to me is like the bones of your operation. So for us it would be our servers. Like our database server, our web servers, and also what we use to… any type of pipeline in our business. Whether it's Jenkins, whether it's likely your pay got last in shop. We use confluence for documentation. We use [inaudible] [35:29] for task management. All that stuff is like the systems in place to help our business going smoothly. In the beginning, I set up an email address. And if you needed support, or you had a question, you sent us an e-mail, and we replied to that email, and that was that.
Over time that became very [inaudible] where it's like what did you say like eight months ago or can I find all the emails related to this subject. It very quickly doesn't scale. And particularly nowadays, it's so easy to set up something like whether in the cloud or just on your own little server. Like we have a development server in a closet. All that stuff is absolutely necessary because on the one hand you are your own source of free labor. So you can spend time doing things that you don't have to pay other people to do. On the other hand, you're the only source of free labor and you need to implement these things so that you're not like… so that your time is actually spent developing and putting out fires and not organizing a giant inbox of stuff.
Michaela: So why is it important that you have these tools for supporting your clients from a business point of view? I know from the technical point of view people get excited about setting up things like that. But what’s the business?
Samuel: There's two I would say whether one is practical which is just one week … Like for example now that there's a few of us that in league and have been for several years. When we get an e-mail that comes in it… Jared takes it and it routes it's all the developers and we can very quickly assign it to someone, and the right people get tagged, and it gets a due date. Like there's lots of tools out there that can do this. There is hardly the only one. If you don't have that stuff, you're saving yourself a little bit of time and not making the investment to learn how [inaudible] your works.
But you have no mechanism for routing supporting email. And if it's… if you only have one client and they only call you twice a year that's fine. But very quickly you need something to handle this with. The second reason is legitimacy. Your clients presumably when you're small, they're gonna be a little nervous about hiring you on to develop mission critical applications when they pull up their web cam and it's like you know as it was with me earlier just me see here with my cat in my lap. They're like who is this guy? What's going on?
They wanna know that you have infrastructure. They wanna know that you have systems in place to handle these things, so that they don't have to. That's why they're paying you gobs of money I hope. So there is a sense of like well everyone else is doing this. Like there's a reason everyone else is doing this. You can't… there's a lot of stuff you can do yourself. But you need the right tools and the right infrastructure that says you take your client seriously, you take the work seriously.
Michaela: Well that makes a lot of sense. Now you mention tool sets earlier. Why does that matter when you’re starting a business? Can’t you just use whatever you wanna use or?
Samuel: Well to a certain extent. As a developer, I mean everyone's opinionated, right. Like if you go and you ask someone Microsoft S.Q.L. versus My S.Q.L. or you ask them Adobe ColdFusion versus Lucee? Like it's take you five seconds to find someone who has an opinion on the subject. As a developer, you’re fundamentally agnostic and that you are required to have an opinion. You can be open minded and just do whatever. You get this job wants you to learn framework one that's fine. This job wants you learn cold box, that's fine. Like there's great… it's a wonderful position to be in. As an entrepreneur, you kind of have to make an investment. You have to find some religion on these subjects eventually, not right away.
Because you don't have time to like learn a whole new thing after you've got a couple clients up and running. There's only one of you. I mean yeah, if you can raise a whole bunch of money and buy… We actually had to do this once. We started… I wouldn’t name the products as is was totally our oversight and not a problem with the technology. We chose a particular technology for a new venture that we were doing. And we hired someone who's very, very good at it. And about two months in really actually we need to switch frameworks is going to thousands of dollars. This was my personal oversight.
Is like I should have realized why we had to do this because not because the technology we chosen hadn't worked, but because the entire rest of our business uses this other technology that does the same thing but slightly differently. And the mental costs of maintaining both sets of things going forward I mean and I'm used to doing this is still it's just really hard. I mean I guess I have a whole different career in the performing arts. I'm very good at compartmentalizing my brain and I couldn't do it. So you find religion to keep yourself sane not because you're interested in like which one is better.
Michaela: That makes sense. So let's just switch topics briefly and tell us why you are proud to use ColdFusion because you've been using it for a long time now.
Samuel: I have. Like a lot of people, I started out because that we have the semesters of computer science I took as an undergraduate. Only one of them was in practical application development with I'll never forget a T.A.A. who pronounced the word attributes as attributes. But he was a… for I don't know how or why. But he was a ColdFusion developer and that was the first thing we learned and we all really liked it and we found it very easy to ramp up and that's probably why they chose it for the class. And then when I… my very first job; my only real job in my whole life. I was working for the university and they used it is still somewhat common in academia. The reasons why we still use it are some of the same ones. I mean everyone says rapid deployment.
It's still just… it's easy to go from zero to stuff. Obviously like if you're choosing a programming language to learn for the very, very first time, you have a lot of contenders. There's a lot of great stuff out there. But ColdFusion still in my mind as much as anything else maybe not more than anything else is just lets you get an application together really quickly. Particularly if you are know to go and look up a group like [inaudible] [41:28] and take advantage of the community that's there and look at forge box and look at all these modules that will solve all these problems, so you're not reinventing the wheel.
We really like having the community that's out there until we found the C.F.M.L. slack a couple of years ago. We were starting to get really depressed because it was just like a handful of forums we were looking at. We didn't… and then all of a sudden we just found it one day and it's it was like a light bulb went on. It's really made us confident and in sticking with it over the years. And also the just I'm a big believer in competitive environments I think it's a great thing to have an open source project like Lucy, and a big company like Adobe still taking kind of different avenues to things. And I think that's healthy for everybody.
Michaela: It is and so you know sometimes people have said that ColdFusion is dying. But as a title of this podcast – C.F. alive. I think it's actually really alive and growing. And when I've talked to the product manager at Adobe, they shared the sales they have of ColdFusion licenses is increased year on year. But what would it take to make ColdFusion even more alive this year in your opinion?
Samuel: I think the most exciting thing for us is probably the move to containers and docker. There were several different kind of disjointed sessions on this at CF Summit last year. Like people were coming out from different angles that all clearly had not by coordinated in advance which was great. Because they all kind of organically arrived in different conclusions on like I prefer Amazon, I prefer digital Ocean. Here’s how we use it. We like the command box image. Here's what Adobe's doing for their official image.
It's the biggest sea change I think in my professional career certainly and by far just it does something that I think can't be overstated. It lowers barriers to entry. You don't need to go find a big hosting company give them 1,000 dollars. You spin up something like that. It doesn't matter where you are if you're on a beach in the Caribbean. I mean you can get command box something running and that's anything that invites people into our world and lets them see how quickly we can make things happen is very exciting to us.
Michaela: Great! So you're speaking into the box on this topic. What are you looking forward to at the conference this year Samuel?
Samuel: You know it's actually my first into the box. I have attended several orders workshops prior to C.F. summit. But before so I'm used to learning something from all the box guys and I'm looking for doing that again. But I'm also… you know we’re in Austin, so I'm excited to have a conference that's more or less local a couple hours drive away. But I… and again I hate to repeat myself. But anything having to do with containers I'm there.
Like I have a lot to learn. I'm still you know… all of our stuff is like IISI frontend and Microsoft S.Q.L. and you know if you really if you're going containers you're going when x and you can price still have Microsoft S.Q.L. We have lots of things to get over. Know we're local file storage. All these different things and but it's a problem that's worth having and it's exciting to be able to anticipate having them show us how to solve it because they have solved a lot of it already.
Michaela: Great! Well it was a great conference last year and I saw a lot of exciting speakers you included. So I'm sure will be great this year. If people wanna find you online, what are the best ways to do that?
Samuel: The easiest way is through our company website inleague.org which is nothing terribly special given that our work has tends to be fairly custom in fairly specific markets. But the other way would be you can find me personally on Twitter through my Twitter handle which is [inaudible] [45:11]. It's a long story, don't ask. It's two words more than [inaudible] glom together and you'll get a wink up there. I'm not a terribly active social media person, but maybe that'll change now that I'm going into the box.
Michaela: Well put both those links in the show notes along with some of the other things we've mentioned today. And we'll put the transcript in there too. So thanks so much for coming on the show today, Samuel.
Samuel: Thank you very much. Is my pleasure.
