Netflix’s “Freedom and Responsibility Culture”

Netflix’s culture fascinates me.  Their “Freedom and Responsibility Culture” have some overlap with Amazon’s “leadership principles” but these are publicly shared and, in my opinion, better codified.

9 Core Values from the Netflix presentation

  • Judgment
    • You think strategically, and can articulate what you are, and are not, trying to do.
    • You smartly separate what must be done well now, and what can be improved later.
  • Communication
    • You listen well, instead of reacting fast, so you can better understand
    • You treat people with respect independent of their status or disagreement with you
  • Impact
    • You accomplish amazing amounts of important work
    • You focus on great results rather than on process
  • Curiosity
    • You learn rapidly and eagerly
    • You seek to understand our strategy, market, customers, and suppliers
  • Innovation
    • You re-conceptualize issues to discover practical solutions to hard problems
    • You challenge prevailing assumptions when warranted, and suggest better approaches
  • Courage
    • You take smart risks
    • You question actions inconsistent with our values
  • Passion
    • You inspire others with your thirst for excellence
    • You care intensely about Netflix‘s success
    • You celebrate wins
  • Honesty
    • You are known for candor and directness
    • You are quick to admit mistakes
  • Selflessness
    • You make time to help colleagues
    • You share information openly and proactively

Save mucho taxes in 2011 with the right taxable entity

Very few of my friends and former co-workers (especially those doing contract work) are taking advantage of the tax benefits available to them. This is a quick primer aimed to inspire these people to get their ducks in a row for 2011.

Requirement:

  • Have income from contract work, from a business, or have a hobby that you can quickly turn into a business by having a profit motive.

Potential Tax Benefits:

  • Deduct business-use expenses either partially or fully (e.g. computers, office supplies, business travel, meals, education)
  • Make massive contributions to a tax-deferred retirement plan: $16,500 + 20% of net income or salary (post-tax options available too)
  • Passive income can be paid to you as a distribution which is not subject to Medicare and Social Security taxes (15.3%)

Get Started Checklist:

  • Apply for an EIN online (Only required for an LLC or Corporation)
  • Apply online with your Secretary of State for a business license (Only for a LLC or Corporation) ($150 first year, $80 thereafter in WA)
  • Open a separate bank account for business use – use your EIN if you have one and use your LLC/Corp name if you have one
  • Open a separate credit card account for business use – use your LLC/Corp name if you have one
  • Open a Solo 401K account if you want to contribute to a retirement plan (I recommend Fidelity)
  • Keep at least two records for every business purchase – e.g. save the receipt + save your credit card statement
  • If the business purpose of an item is not obvious, write a short explanation on the receipt
  • Keep a strict separation between your personal accounts and business accounts (co-mingling = potential disqualification)
  • Keep all records for 7 years in case of an audit

There’s a confusing distinction between the legal entity type and the taxable entity type. For example, an LLC can elect to be taxed as a Sole Proprietor (default) or an S-Corp.

Legal Entity Type Sole Proprietor LLC LLC S-Corp
Taxable Entity Type Sole Proprietor Sole Proprietor S-Corp S-Corp
Paperwork and fees very little medium medium medium-high
Limited liability no yes yes yes
Can pay Distribution no no yes yes
Tax form 1040 Sched. C 1040 Sched. C 1120-S 1120-S

It’s probably a good idea to start as a Sole Proprietor unless you have significant passive income or would benefit from limited liability (e.g. you have an employee or hire contractors and they do an activity that can cause damage).

I’ve been in every category above over the years with StepMania, In The Groove, Pump It Up, and ChartPT.  The form-filing is generally worth the return on time-invested for me.