/Tag:company

Asset Protection 101: What is an LLC?

257_2701929In my previous post, I spoke of the potential risks involved in real estate investment – namely, the risk that your personal assets are vulnerable should you be sued by a tenant or property guest. There are measures you can take to prevent such a scenario from playing out. 

The LLC (Limited Liability Company) is a popular asset protection vehicle for real estate investors. It essentially forms a wall that shields individual owners from personal liability. In addition to this personal liability protection, the LLC can also offer tax advantages and other benefits.

So what is an LLC? It’s a hybrid of a partnership and corporation. It’s considered to be a “Separate Legal Entity.” In fact, a properly formed and maintained LLC will have both a state-certified filing date and an IRS-issued Tax ID Number (similar to an individual’s birth date and social security number).

The following example illustrates the LLC’s liability protection. Let’s say you have XYZ LLC that holds title to a vacation rental property. A guest falls from the balcony and the court awards a multi-million dollar judgment to the plaintiff. The defendant in this case is XYZ LLC, not you. And the judgment can be collected only from XYZ LLC’s assets, and not from your own personal assets. You may end up losing your investment in the property owned by XYZ LLC, but your other properties, your savings account, and any other investments are all safe.

Setting up an LLC is a relatively easy task. You can either contact your attorney or use a legal document filing service such as CorpNet.com(R) to file the necessary forms with your state’s Secretary of State. Continue reading “Asset Protection 101: What is an LLC?” »

Starting a Business to Suit Your Personality

 

158_3615911There are certain personality traits that are universal for every entrepreneur. Regardless of the business you’re planning to pursue, you have to be motivated and focused, able to go the distance to achieve your goals.

But aside from the standard qualities that we all need to make our businesses work, how else can your personality impact how you earn a living?

Your Personality in Your Business

It turns out that it can be pretty important. Certain personality types are better suited to certain types of businesses. Maybe more importantly, certain personality types are not suited to certain types of businesses. Continue reading “Starting a Business to Suit Your Personality” »

Why I LOVE What I Do as CEO/Founder of CorpNet…

Last September,  I turned 40 and in about 2 months i will be celbrating my 41st birthday…which once seemed like a pretty HUGE milestone…now its just another day for me. When I turned 40 and now that I’m about to turn another year older, i don’t get sad about gorowing older, don’t dread it, and I have no attempts to forget the day. I realized I’m not just at peace with myself and my age, but I’m actually happy. And granted I have my health and a fabulous family (including a 9 month old baby girl!), but another key thing is that I absolutely LOVE what I do. And that’s a good thing, because I’ve now done it twice and wanted to share this message with you today…seemed like a great day to share!!!

Let me explain. Shortly after law school, I launched a business with my husband. We provided online legal filing services to entrepreneurs, startups, and small businesses. Basically that means we helped companies incorporate, form LLCs, and start their businesses the right way without having to pay an arm and a leg in attorney fees.

In 2005, we had the good fortune to sell that company to Intuit. We now had plenty of capital. We had the freedom to travel, spend time with our children, and dream up other business ideas. I had a great time during this interim, don’t get me wrong. But, the other ventures just didn’t carry the same spark for me. So, in 2009, we started all over again with CorpNet.com, our latest (and last?) document filing service. And every day since, I’ve been so grateful we made that decision.

First and foremost, I love helping other entrepreneurs. I love the concept of the small business. And I love giving small business owners access to resources they might not be able to afford otherwise.  Because every business, no matter how small, should have the right legal protection to help them thrive. Over the course of my career, I’ve helped form more than 100,000 corporations and LLCs across the U.S. Continue reading “Why I LOVE What I Do as CEO/Founder of CorpNet…” »

Protecting Your Big Idea

440_3625174If you’ve ever seen a new product advertised and said, “I’ve thought of that very same thing! Why didn’t I pursue it?” you know the importance of protecting your ideas. No matter how terrific your idea is, if you don’t protect it and make it exclusively your own, someone else just might beat you to the market.

In business, ideas are often property. They are the seeds for inventions, which require knowledge, time, money and effort to create. And transforming an invention into an innovation, a new product accepted by the marketplace, takes a great deal of effort – and a bit of luck.

Every year, hundreds of thousands of inventors and innovators file for protection under U.S. patent, trademark, and copyright laws.

The three entities are defined as follows:

Patent. The exclusive right granted by a government to an inventor to manufacture, use, or sell an invention for a certain number of years.

Trademark. Any name, symbol, figure, letter, word, or mark adopted and used by a manufacturer or merchant in order to designate his or her goods and to distinguish them from those manufactured or sold by others.

Copyright. The exclusive right to make copies, license, and otherwise exploit a literary, musical, or artistic work, whether printed, audio, video, etc.

Continue reading “Protecting Your Big Idea” »

Top 4 Startup Mistakes When Incorporating a Business

 

775_3958571During the initial months of the year, savvy entrepreneurs rush to incorporate their businesses or form a Limited Liability Company (LLC). And with good reason, a corporation or LLC is essential to protecting one’s personal assets from any liability of the company. After all, if you’re sued as a sole proprietor or partnership, you’re sued personally – and that puts your personal savings and investments at risk.    

Incorporating a business or forming an LLC is a relatively quick and painless process. However, while it may seem straightforward, there are some common mistakes that business owners make that can have a significant impact on their business:   

1. Choosing the Wrong Business Entity

Your choice in business entities will shape the amount of taxes you pay and paperwork you contend with. It’s an important decision, one worth some research. The three most common types in the U.S. are the LLC (Limited Liability Company), S Corporation, and C Corporation. Here are a few things to keep in mind:

  • The LLC is great for startups that want the liability protection, but prefer minimal formality and paperwork.
  • The S Corporation is a pass-through entity for federal taxes (like the LLC). It should be used by startups that will make a profit soon after incorporation…and that profit will be distributed to the shareholders.
  • The C Corporation files its own tax report. It should be selected by those startups who plan to reinvest profits back into the company or seek funding from a VC.

2. Incorporating in Delaware or Nevada

Delaware and Nevada are hot states for incorporation, and for good reason. Delaware offers some of the most developed, flexible, and pro-business statutes in the country. And Nevada is increasingly becoming a popular choice for businesses due to its low filing fees, as well as the lack of state corporate income, franchise, and personal income taxes.

However, if your startup has less than five shareholders, it’s best to incorporate in the state where your business has a physical presence (i.e., where you live). Otherwise, you won’t actually reap any of the benefits, and you’ll be dealing with added hassles and costs of operating “out of state” A including: difficulties opening a business bank account, having to appoint a registered agent, and fees for operating as a ‘foreign entity’ in your own state.

3. Hiring a Lawyer to File the Forms

You don’t actually need to hire a lawyer to form an LLC or Corporation. If you’ve got a straightforward investment situation, you can use a legal document filing service to represent yourself to create a business entity. In the eyes of the law and IRS, your LLC or Corp will be just as valid than if a high-priced attorney sent in the documents for you.

4. Not Staying Compliant

Too many business owners think that their legal obligations are finished once their LLC or Corporation is formed. But, it’s critical that you keep your LLC or Corporation in compliance. If a plaintiff shows that you have not maintained your LLC/corporation to the letter of the law, he or she can seek recovery against your personal assets. In short, the corporation’s shield that protects your personal assets is pierced.

So, how do you make sure your corporation stays compliant? Keep your personal funds separate from those of the business (no commingling: this means keeping a separate bank account and credit card). Remember to send in your Annual Statement/Annual Report (if required by your state). And obviously, do not engage in any form of fraud.

By avoiding these common missteps, you can better protect your personal assets and minimize your personal liability; Of course, the biggest mistake of all is never forming an LLC or Corporation. So even if you’re putting 80-hour weeks to find new clients or launch a new website, make some time this year to incorporate. By getting your legal ducks in a row early on, you’ll be able to scale far more smoothly in years to come.

CorpNet.com can help right from the beginning, with a Starting a Business Checklist that lists everything you need to know in order to get your company up and running. Our Free Corporate Name Search lets you be sure that the name you’ve chosen for your company is available, and we can help you to reserve the name for your own use.  CorpNet.com’s Free Incorporation Guide or Free LLC Guide to get all the details about the distinctions between the two structures. You’ll learn that overall, an LLC is the less formal entity. Of course, details may vary based on your specific circumstances, so take some time to educate yourself on these two business structures.

CorpNet.com can provide filing services in all 50 states. Our staff is professional, courteous and reliable, and all services are fully guaranteed.

Contact CorpNet.com today, and cross all of those business filings right off your list.

We look forward to incorporating your business for you and getting your business off the ground!

Good luck!

A portion of this original content by Nellie Akalp was written and published on StartUpNation.com.

 Image: PhotoSpin

 

You Don’t Need a Lawyer to Incorporate

500_4575840Not all that long ago, you wouldn’t have considered using a cell phone for anything other than making or receiving a telephone call. You wouldn’t have considered the possibility of reading a book in any format other than hardcover or paperback.  And you certainly wouldn’t have considered purchasing a home,

Continue reading “You Don’t Need a Lawyer to Incorporate” »

5 Key Benefits of the Collaborative Economy

436_3062172Most of us were raised to be competitive, beginning at a young age in school and sports, and then right on through to the business world. However, at least in business we’re seeing a shift toward companies that play well with others. Both business owners and consumers are looking for better, more sustainable alternatives to “business as usual.”

And small businesses that embrace the collaborative spirit find themselves in a better position to compete with their larger counterparts.

We may have social media to thank for this new surge in collaboration. After all, social media is radically changing the way we communicate and interact, both as consumers and as businesses. It’s also changing how consumers decide with whom to do business. Today, countless businesses are placing renewed emphasis on corporate philanthropy, social responsibility and community relations. Social tools also give businesses, particularly small ones, an unprecedented opportunity to connect with others and collaborate.

Continue reading “5 Key Benefits of the Collaborative Economy” »

The 5 best things about self-employment

430_3152435I’ve been self-employed full-time for over a year, and I love it. Deciding to start a business, for me, has literally been a dream come true – every day I wake up and I sometimes feel like pinching myself. Even after 12 months, I still feel kind of amazed that this is really my career, and that I’m succeeding at it. I always tell people, “I can’t believe I’m getting away with this!”

So what do I love about self-employment?

  1. The Freedom. As a self-employed person, whether you’re a sole proprietor or incorporated as an LLC, every day of your life is truly your own. Ever since I started working for myself, I haven’t watched the clock once. I’m never truly bored, and when things are slow, I get up from my desk and go for a walk outside.
  2. The Schedule. No more waking up early to get to work on time, no more whiling away the hours on a beautiful summer afternoon. If I need to sleep in late, or take the afternoon off, I can do it. If I feel productive late at night and I need to burn the midnight oil, I can do that too. As a self-employed person I can relax when I really need to, and be productive when I really want to be. (Most of the time, I want to be productive!)
  3. The Money. I make more money being self-employed than I’ve ever made at a traditional job. And although money wasn’t my primary motivation in choosing this line of work, it sure doesn’t hurt. As a self-employed person, there are no limits to how much you can earn (although there is one drawback: small business taxes are a bit more complicated). The only limit is your own choice of which goals to pursue, and how to use your time.
  4. The Challenge. Being self-employed is a learning experience like nothing else. Every day I’m learning new things, meeting new people, adapting to new demands, and pushing myself in new directions. Not many traditional jobs could give me this kind of variety and constant growth. As a solo entrepreneur, I need to wear many hats. I have to be my own marketing strategist, CEO, CFO, customer service team and collections agency. I need to motivate myself to get the work done and reach my goals. Every day, I need to make something happen and figure out what I’m going to do next. Sometimes it’s really tough. Some days I don’t feel like working very hard. But the constant process of taking that first step, digging deep into your internal resources, and finding that extra level of energy, is deeply important and fulfilling.
  5. The Relationships. As part of my work being self-employed, I’ve been fortunate to get to know dozens of really amazing people all over the world. I’ve worked on projects with people from London, Tokyo, Australia, Germany, Denmark, France, Panama, Canada and all over the U.S. I’ve gotten connected to an exciting network of entrepreneurs and innovators in my local community who are doing really great work.  Being self-employed has opened up a whole new world to me. There’s a certain kind of person who starts a business – they’re trying to create something new, do something that has never been done, and make an impact on the world. It’s exciting to be around people with that kind of mindset and positive energy.

Continue reading “The 5 best things about self-employment” »

Incorporating a Business 101

434_2999903Yes, I know. The majority (if not all) of you did not start a business because you love tax law and legal fine print. And in the flurry of supporting your current customers, working on adding to your client base, taking care of your home and family, and finding some down time for yourself (remember down time?), it’s all too easy to put off the question of incorporating your business.

But as a business owner, the day will come when you inevitably will have to address the legal aspects of your business – and the sooner the better. And, fortunately, the process can be relatively painless and hassle-free.

But let’s back up a bit. Why incorporate in the first place? I talk to countless small business owners and freelancers who consider themselves too small to worry about incorporation. After all, you don’t have mazes of cubicles…you may not even have any employees. However, incorporation can still be a smart idea even for the self-employed graphic designer or wedding planner. And here are the benefits of incorporating a business:

  • It protects your personal assets: Once your business is incorporated, it exists as a separate legal entity. This means that the corporation (and not you, the owner) is responsible for all of its debts and liabilities. Of course, most entrepreneurs don’t start their business expecting to anger clients or default on payments. And most likely, you won’t encounter such problems…however what if a copywriter unintentionally plagiarizes while working on a client’s website? What if your major client fails to pay, making it impossible for you to meet your own obligations? Without incorporation, you, as the owner, can be personally liable in these situations, and this puts your own personal savings, retirement, child’s college fund all at risk.
  • It can offer tax benefits: For some individuals and businesses, incorporating can help lower the tax burden. For example, through incorporation, a self-employed contractor could reduce her federal and/or state income taxes by avoiding self-employment taxes. And corporations may be entitled to additional deductions not available to individuals. Of course, specific circumstances vary, and you should consult with a CPA on your particular tax situation.
  •  It can change your outlook: You’d be amazed at how much adding three little letters (Inc or LLC) after your company name can change the way you approach and perceive your business. And when you’re working from home, you need all the reminders you can get that you’re actually running a business. And, marketing studies have shown that adding Incorporated or LLC provides a sense of credibility and trust with current customers and potential customers.

Continue reading “Incorporating a Business 101” »

Top 5 Reasons for Incorporating Your Business

718_4395293Many small businesses consider themselves ‘too small’ to worry about incorporation.  However, whetherowever, you’re a self-employed social media consultant or a landscaper, incorporating or forming an LLC (Limited Liability Company) can be a smart idea. Here’s why:

1–Liability protection: First and foremost, the LLC and the Corporation (C Corporation or S Corporation) protect the owner’s personal assets from any liability of the company. That is, if your company happens to be sued, your personal assets (i.e. property, savings accounts) are shielded from any judgment. Of course, lawsuits are worst-case scenarios and there’s a slim chance you’ll ever run into legal problems. However, if you’re sued as a sole proprietor, you’ll be sued personally. And that means everything  – from your children’s college fund to your retirement savings – is at risk. Also keep in mind that creditor judgments can last up to 22 years, so you need to worry not only about protecting the assets you have today, but the assets you’ll have tomorrow.

2–Taxes: Federal income tax rates can be lower for corporations than for individuals. And as a corporation, you may be entitled to additional deductions.

3–Credibility: Adding ‘LLC’ or ‘Inc.’ after your company name boosts your credibility in the eyes of some customers and partners.

4–Business credit/capital: As a corporation or LLC, it can be easier for you to access a line of business credit. And forming a C Corporation will be essential if you plan to seek Venture Capital funding.

5–Added layer of privacy: With an LLC or a corporation, the company’s ‘registered agent’ goes on public record, and not your home or business address (in most cases). Continue reading “Top 5 Reasons for Incorporating Your Business” »