/Tag:Form an LLC

What Every Small Business Should Know About 1099s

Every year when tax time rolls around, I field questions from business owners about whether or not they need to send 1099s to their vendors. As common as 1099 forms are, they remain one of the most misunderstood Internal Revenue Service (IRS) requirements.

To make sure you understand the circumstances under which the IRS requires issuing 1099-MISC forms to vendors, I’m going to provide some basic “must-know” information here.

What Is A Form 1099-MISC?

You must issue an IRS Form 1099-MISC to each person you’ve paid $600 or more in services (including parts and materials), prizes and awards, rents or other income payments. The 1099-MISC only applies to payments you made in doing business; it does not apply to payments made for personal purposes.

To Whom Do You Need To Send A Form 1099-MISC?

If your business paid more than $600 to a vendor or sub-contractor [individual, partnership, Limited Liability Company (LLC), Limited Partnership (LP), or estate], you are required to send a Form 1099-MISC to document what you paid them throughout the year. In general, anyone who worked for you—other than your employees—will need a 1099 from you.

Also, unless an exception applies to them, you need to issue a 1099 to your landlord if you are paying rent for business purposes. You must also issue a 1099-MISC to your attorney if you paid for legal services that amounted to more than $600 during the year.

Are There Any Exceptions?

There are. The list is rather long, but most commonly these types of vendors do not get 1099-MISC forms:

Also, you don’t have to send 1099-MISC forms to vendors to whom you made your payments via a credit card, debit card, gift card, or a payment network like PayPal. The onus to report vendor compensation is on those payment companies.

How Do You Figure Out If A Vendor Needs A 1099 From You?

I recommend before you request vendors to do any work for you, ask them for a completed W-9 form. The W-9 will give you all the information you need for filing taxes. It supplies a vendor’s mailing information, Tax ID numbers, and business structure (so you’ll know if the vendor is incorporated or not and does or does not need a 1099).

When Is the Deadline To Send 1099s?

By January 31, 2017, you must do two things to comply with your 2016 tax year 1099 obligations:

  • Submit Form 1099 to each vendor (reflecting what you paid that vendor in 2016).
  • Submit a copy of the Forms 1099 you sent to each vendor, along with a Form 1096 that discloses in total what you paid to all vendors who received 1099s from you.

Make sure you check on your state’s rules, too. Some states require they also receive your 1099s.

What Happens If You Miss The Deadline? 

Sending the required 1099-MISC forms late (or not at all) could cost you. The penalties vary depending on how far past the deadline you wait to issue the forms. If your business had gross receipts of $5 million or less, the amount you’re smacked with could range anywhere $50 to $260 per form (for tax years 2016 and 2017). If you’re caught intentionally not providing a payee with a correct statement for tax year 2016, you could face a fine of $520 for each form not submitted (that amount will increase to $530 for tax year 2017).

Where Can You Get 1099 Forms?

Unfortunately, you cannot download 1099 Forms from the IRS website. You can, however, order them from the IRS site and have them mailed to you, or you can pick them up at an IRS service center, post office, or another location that supplies them.

Eliminate Headaches—Do It Right From The Start!

Whether you’re in the early stages of launching a startup or already running a small business, I recommend you talk with a tax professional who can share more details about 1099s and the other aspects of filing your tax returns.

Starting a business or ready to change your current business structure? Contact us about making the registration process hassle-free and as fast as possible. We’re here to handle all of your legal document filing needs!

Should You Buy A Business Or Start One From Scratch?

Hope your New Year is off to a great start! As you’re looking to make 2017 a year of prosperity, have you set your sights on becoming a business owner? If so, you’re probably wondering whether buying an existing business or starting your own company will offer the best chances of success.

Both have their advantages and challenges, so how do you choose? I wish there were an easy answer, but I’m afraid you’ll need to do some research and put some serious thought into your decision. As you explore your options, consider the following pros and cons of starting a business from scratch and buying an established one.

Pros Of Starting From Scratch
• You begin with a squeaky clean slate, establishing and building your brand reputation from Day 1.
• You build your team fresh and new, selecting the right people for the right positions.
• You create your workflows to maximize productivity, without having any inefficient past processes to “fix.”
• You choose and develop the products, services, and packages you’ll offer to your customers.
• You establish your pricing to ensure profitability from the start.
• You choose your business’s legal structure to ensure the degree of liability protection you need and the most favorable tax situation.

Pros Of Buying A Business
• You have customers and incoming revenue immediately.
• You have employees who already know how to do their jobs and don’t need training.
• You have built-in processes and systems to operate your business efficiently.
• Your services and products are already to market, and you have established sales channels to get them into customers’ hands.
• Your business is already registered and has the necessary permits and licenses to operate legally in your state.

Cons Of Starting From Scratch
• You do all the legwork, including researching the registration requirements to form an LLC or incorporate your business and filing your state, federal, and local paperwork to operate legally.
• You don’t know for certain that your business idea will be viable and sustainable.
• You have to develop and put into place all the internal systems and processes needed to operate your business.

Cons Of Buying A Business
• Existing employees may be resistant to accept your leadership.
• If you find processes aren’t working efficiently, it may be difficult to initiate change because everyone is used to doing things a certain way.
• You may discover the legal business structure the former owners selected isn’t ideal.
• You may find your brand’s reputation isn’t as positive as you’d like it to be—that might be difficult to turn around.

As you can see, there’s a lot to think about as you weigh the options of starting your own business or purchasing one that is already up and running. I advise you to do your homework before deciding which route to travel. And consider seeking the guidance of respected and reputable professionals (attorneys, accountants, business consultants, etc.) who can help you understand the financial and legal aspects of what’s involved.

Remember, whether you’re starting a business or opt to buy and run one that’s already established, CorpNet is here to assist you with all your business registration and compliance obligations. Contact us today to help you take care of your filings so you can take care of business!

 

 

How to get an LLC License

Here at CorpNet, we are often asked how to form an LLC, also referred to as a Limited Liability Company, when wanting to start a business.

To be clear, an LLC is not a business license; as one cannot obtain an LLC license.

A Limited Liability Company (LLC) is a legal entity that bears similarities to both corporations and partnerships. An LLC is formed under specific state statutes that provide for the creation and regulation of this special type of entity that has come to be commonly used and respected in business.

An LLC can be used to combine the limited liability features of a corporation with the flexibility and tax benefits of a partnership. Owners of an LLC are generally known as “members.” Management and control of the entity resides with the members, unless otherwise provided in the articles of organization of the LLC or within the LLC operating agreement.

An LLC provides the same personal asset protection with fewer hoops to jump through. You can also raise capital with an LLC. Additionally, with an LLC, you can:

● File your business LLC taxes on your personal tax return
● Allocate profit and loss to members of the LLC
● Avoid having to have an annual shareholders’ meeting (unlike a corporation)

New small business owners often assume that forming an LLC is a complicated thing. It’s not, actually, but it is one of the best things you can do to protect your personal assets and your business.

Here are 7 steps to follow as to how to register your new business by filing an LLC application within your state:

1. Choose a Name.
Your name will be the first thing people see or hear as it relates to your new business, so make it a good one! Next, you’ll want to make sure you’re the only one using that name. You can do that with a free corporate name search in your state.

2. Register the LLC and File Your Paperwork
If you’re doing the filing yourself, you’ll need to download your state’s Articles of Organization paperwork and fill it out. If you’re letting a document filing service like CorpNet handle it; you’ll just need to provide basic contact information and a few details about your company.

3. Get Your LLC’s Tax ID
Before you can start operating as an LLC, you need an Employer Identification Number. This is like a social security number for your business, and one you’ll need before opening a business bank account.

4. Create Your Operating Agreement
This document outlines the rights and obligations of the members of your LLC and lists the distribution of income of the Limited Liability Company to its members. Your LLC Operating Agreement won’t need to be filed with your state, but you will need to keep one on premises, signed, if you have other shareholders.

5. File Business Licenses and Permits
Additionally, you should apply for any business licenses or permits you’ll need to operate your business. It’s best to do this before you start operating your business to avoid potential fees or issues down the road.

6. Keep Your LLC Compliant
Once you’re operating as an LLC, your work isn’t done for good. Each year, you’ll need to file your annual report. The due date for this annual report depends on where you filed your LLC. For example, if you filed it in Michigan, Delaware, North Carolina, Georgia, Florida, or Texas, there’s a specific date that your annual report is due. In most other states, it’s due on the anniversary of when your LLC was filed.

7. Finally, Take Care of Loose Ends
Depending on where you’re based, you may need to publish your intent to form an LLC in a local newspaper. If you form an LLC in New York, for example, you’re required to run that intent in an approved newspaper for 6 consecutive weeks.

Many of our customers prefer the LLC over the S Corporation because they require fewer formalities and less paperwork than the corporation, while still providing that protection of your personal assets, as well as tax benefits. Contact CorpNet.com today and let us help you file your LLC application and make your business reams into a reality!

                               

CorpNet FAQs – Business Licenses

 

As an online legal document filing service that helps entrepreneurs with an array of startup needs, we get asked a ton of questions from our clients about various topics. We decided to start sourcing these questions and create a new blog post series for our readers, as some of you may be wondering the same thing but haven’t found the answer elsewhere.

Today we are launching our new FAQ series starting on the topic of business licenses. Here are some of our most frequently asked questions on the popular topic followed by answers from our CEO Nellie Akalp. Still have Questions? Feel free to post in the comments below and Nellie will be happy to provide additional insight!

Business Licenses

Q: What’s the difference between a business license and registering a business? If I already registered my LLC or corporation, do I still need a business license? 

A: Registering your business and getting your business license are two different things – and you most likely will need to do both. Registering a new business with the state (either by forming an LLC, corporation, or filing a DBA) provides a legal foundation for your business. Then, the business license(s) gives you the right to operate your business…similar to how a driver’s license lets you drive a car.

Q: How do I know what kind of business licenses I need? 

A: The specific license and permit requirements vary based on your type of business and your location. As expected, a home contractor or restaurant will have more permit requirements than a web designer. Find your business type on our Business Licenses page to check the specific requirements for your business. If you don’t see your specific business listed, give us a call at 1.888.449.2638 and we’ll help you out.

Q: What are the penalties if I don’t have the right licenses for my business? 

A: You can face fines, and even have your business shut down if you are caught operating without the right licenses/permit paperwork in place.

Q: How much does it cost to get a business license or permit? 

A: Exact costs depend on the license type and your location. Find your business type on our Business Licenses page to view the pricing for your particular business license and location.

Q: What if my business is involved in more than one type of activity or has multiple locations?

A:  Each business location and each business type is subject to licensing requirements, so you most likely will need to get the proper permits/licenses for each location and business activity.

Q: How long does a business license last? 

A: Typically speaking, a business license will last one year (although some locales give you the opportunity to apply for a three-year license). If you sign up for our free B.I.Z. service, we’ll automatically notify you when any licenses are coming up for renewal.

Q. If I change my legal structure, can I keep my old business license? 

A. No. Any change of legal entity (e.g. if you change from a sole proprietorship to an LLC or corporation) requires a new business license. If you change your legal structure, you will need to apply for a new business license for the new entity.

Q. Can I transfer my business license to a new owner? 

A. Typically speaking, you cannot transfer a business license from one owner to another. The new owner of the business will need to apply for their own business and specialty licenses.

Do you need help setting up a business license or have a question about another aspect of starting a business? Call the CorpNet.com team today for a free business consultation at: 888.449.2638

Image: Adobe Stock

 

 

                               

Why Customers Love Us – CorpNet Reviews

Screen Shot 2016-05-12 at 2.43.23 PMWe’re back with another month of fantastic 5-star reviews of CorpNet.com services! The summer days are getting hotter, but we have the AC cranked up and we’re working hard ensuring happy customers across the board.

Here’s a look back at some fantastic 5-star reviews of our services these past few weeks. Do you need to incorporateform an LLC or file a DBA? Check out all of our reviews on TrustPilot and reach out anytime for a free business consultation at 888.449.2638.

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By | July 14th, 2016|CorpNet Reviews|0 Comments

5 Avoidable Mistakes Real Estate Investors Make With Their LLCs

Silver house key lying on a contract for house sale, lease, insurance or mortgage in a real estate concept, viewed low angle with focus to the tip.

With any investment property, liabilities come with the territory—faulty electrical wiring, broken stairway railings, black mold, and other possible flaws are all inherent threats. It’s no wonder savvy real estate investors decide to form LLCs (Limited Liability Companies) to protect themselves. The LLC legal business structure shields investors’ personal assets from liability associated with their investment properties. So with an LLC, your personal assets won’t be vulnerable if a tenant or visitor to your property sues you.

While forming an LLC can be done rather quickly and without any great degree of complexity, I’ve seen otherwise smart real estate investors make some serious mistakes that could put their benefits of being an LLC at risk. Here are some of the common errors you should avoid:

1. Not transferring the property deed to your LLC: Although this may seem like I’m stating the obvious, some real estate investors have forgotten this step! After you’ve formed an LLC, you need to sign a deed transferring the property to your LLC. You also need to record the deed with the county where your property is located. If you don’t take care of this, you personally will still be considered the owner of the property—and would therefore be the defendant in any lawsuit associated with it. Note that if your LLC purchases the property directly, you won’t have to worry about transferring the property deed.

2. Not creating a separate LLC for each of your properties: Do you have multiple investment properties? If yes, then you should establish an individual LLC for each property. That’s the way to get the optimal liability protection for each investment. For example, if someone sues Property 1, the only assets at risk are those belonging to LLC 1. Along with your personal assets being protected, so will be the assets from Property 2 (which is set up under LLC 2), and Property 3 (which is set up under LLC 3).

3. Not insuring the property under your LLC: To protect your property from liability and damage, you should buy a comprehensive landlord’s property insurance policy. Be sure to maintain written proof showing your LLC’s name is the one insured, so your insurance company won’t have a reason to deny coverage if you make a claim. If you have multiple properties/LLCs, obtain separate coverage for each one.

4. Not keeping your LLC in compliance: If you don’t maintain your LLC as legally required and a plaintiff proves that, your personal assets will be at risk in a lawsuit. Noncompliance pokes a hole through your LLC’s protective shield and makes your personal assets vulnerable. Different states have different requirements, so make sure you’re aware of them. Regardless of where your LLC is located, keep your personal funds separate from those of your LLC. Never commingle finances (i.e. keep separate bank accounts and credit cards for your personal self and your LLC).

5. Squandering money on an expensive lawyer to form your LLC: If you have a straightforward investment situation, you may not need a lawyer at all to form your LLC. A reputable legal document filing service can represent you and take care of all the paperwork and filings. That will save you money—money you can use toward your next real estate investment!

Forming an LLC is a powerful way to protect your assets and minimize your liability when purchasing investment properties. By avoiding the five mistakes I mentioned, you’ll have a much better chance of getting full benefit from the protection the LLC structure offers small business owners.

Do you need to form an LLC for your real estate investment properties?  Call CorpNet anytime for a free business consultation at 888.449.2638. We would love to help you incorporate a businessform an LLCfile a DBA and more across all 50 United States!

Image: Adobe Stock

                               

Why Customers Love Us – CorpNet Reviews

Screen Shot 2016-04-08 at 12.42.22 PMOne thing we strive for here at CorpNet.com is stellar customer service. We go above and beyond with every order to ensure our customers are happy, and if they are not, we make it right!

Summer is in full swing and many people are planning their annual vacation to relax, unplug and unwind. But there are still many individuals hard at work making their business dreams a reality and we’re thrilled we can help them along the way while exceeding their expectations for a document filing service. Some customers even left amazing CorpNet.com reviews!

Here’s a look back at some of these amazing 5-star reviews of our services these past few weeks. Do you need to incorporateform an LLC or file a DBA? Check out all of our reviews on TrustPilot and reach out anytime for a free business consultation at 888.449.2638.

 

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By | June 21st, 2016|CorpNet Reviews|0 Comments

Nellie in the News – May 2016

nellie in the newsIt’s officially summer time here in Westlake Village, CA where the CorpNet offices are located. Many of us hit up the beach this past weekend and had our first ocean swim of the season!

We had a great month helping entrepreneurs incorporate a business, form an LLC, file a DBA and more across all 50 states.

Our CEO Nellie Akalp also had another great month sharing her expert tips and advice across many podcasts and blogs. Check out some press highlights below!

Want Nellie to speak at your next event or share her tips on your podcast? Contact her today

Upcoming Speaking Appearances

Bixel Exchange

Nellie will be the guest speaker for Bixel Exchange, the emerging tech center at the Los Angeles area Chamber of Commerce, sharing the best advice she got when she started her business! Join Nellie for this event on June 22nd and follow her on Twitter for more information!

Interviews & press Mentions

Eventual Millionaire – Business and Family Success with Nellie Akalp http://bit.ly/1SyPLih

Small Business Trends – 10 Tips to Help your Business Become More Profitable http://bit.ly/1YigcZX

Business Mistakes Podcast – This is How Overspending on Google Ads will Hurt your Business with Nellie Akalp http://bit.ly/1U7KuuE

ConvertKit – Top Advice for New Bloggers http://bit.ly/1TKrqH0

AMEX OPEN Forum – Inspiration Strikes: 7 Ways to Help Make Time for Creative Insights http://amex.co/1Vi9t3E

Business Breakthrough Podcast – Lessons from a Serial Entrepreneur http://bit.ly/1TA1oIj

Expert Contributed Posts

Intuit – When is the Best Time to Incorporate Your Business? http://intuit.me/23jiOIq

Freshbooks – How to Decide What Business Structure is Best for Your Business http://bit.ly/21xRF5h

Huffington Post – 5 Ways Your Family Can Fuel Your Business Success http://huff.to/1TRBrRd

Small Business Trends – It Might Be Time to Restructure Your Sole Proprietorship http://bit.ly/1ZN2O0z

Entrepreneur – Are Small Businesses Spending Too Much Time on Social Media? http://entm.ag/1Op3rMT

Small Business Trends – 5 Lessons that Show How to Grow Your Business http://bit.ly/1YW8vZL

GoDaddy – Sole Proprietorship? LLC? Know Your Best Entity Options http://bit.ly/1OPHIIS

Showcasing Women – 5 Tips to Leave Work Behind While You’re on Vacation http://bit.ly/25kh7xe

By | May 31st, 2016|Nellie in the News|0 Comments

Business Name Registration Or Trademark: Which Is Best?

Key to brand cloud shape

One of the most valuable assets your business will ever have is its name. Your business name is more than what your company is called—it represents your brand’s identity and it’s a way for you to distinguish yourself from your competition. With your business name carrying that much weight, it makes sense to protect it.

As you start your business, consider these two approaches to prevent other companies from using your name and confusing your customers:

Business Name Registration 

If you form an LLC or apply to incorporate a business in a state, your business name is automatically protected in that state after the state has approved your application. No other LLC or corporation will have the right to register their company under that name within the state. Just how different a name must be from another business name varies from one state to the next. For instance, one state may deem it perfectly fine to register “Linda’s Spa and Salon, LLC” when there’s an existing business registered as “Lynda’s Spa and Salon, LLC.” Another state might consider the name “Linda’s Spa and Salon” deceptively similar to the other business’s name.

Note that there are some limitations to state protection. Sole proprietorships and partnerships in that state can still use your name if they so desire; they just wouldn’t be able to form a corporation or LLC using your name. Also, just because you register your business name with the state doesn’t mean a business in another state can’t use the same name. In fact, they could even incorporate or form an LLC using your name, provided they do it in a state or states other than those where you’ve registered your name.

To decide if brand protection at the state level will be enough, I suggest you consider your type of business and business model. If you are opening a local retail store or restaurant, for example, it might not matter to you if another business uses the same name in a different state. How likely would customers be to confuse the two? Probably not at all.

On the other hand, if you have ideas of expanding your business nationally, or are planning to sell your products/services across the country, or have concerns that a partnership or sole proprietorship might use your name, then you might consider protecting your name with a federal trademark.

Federal Trademark Protection

The United States Patent and Trademark Office (USPTO) grants trademarks, which identify the source of products or services. A trademark can be a word, phrase, design, or symbol (or a combination of any of them) that distinguishes a company from its competitors. The USPTO can grant trademarks on distinctive names, logos, and slogans. As the owner of a trademark, you have exclusive rights to the mark. No one else may use it at either the state or federal level.

Expect to pay a little more for a trademark than you would for registering your name with the state. The base rate is $325 per class and it will cost more if you hire a professional to prepare the paperwork for you. It may take from six to 12 months for the USPTO to process your request. Although the process is more involved than registering a business name with the state, a trademark provides you with exclusive rights to your name in all 50 states—and trademarks have an unlimited lifespan, provided you comply with renewal requirements.

If you’re thinking about filing for a trademark, I suggest you do some initial homework so you don’t apply for a name that’s already in use. Don’t risk having your application rejected and losing the application fee you submitted.

First step: Conduct a free basic search to see if anyone has a pending application with the USPTO for your proposed trademark or anything similar to it.

Second step: Do a comprehensive name search to see if anyone is using your proposed name at the state or local level.

Isn’t Your Brand Worth Protecting?

Whether your business will have sufficient protection by registering your name with the state or you’ll require exclusive rights in every state, your business name and the brand it represents is worth securing. Consider talking with a legal expert who can help you decide which option is best for your business. And if the paperwork and process of registering your business name or filing for a trademark intimidates you, remember that CorpNet is here to help. Call anytime for a free business consultation at 888.449.2638!

Image: Adobe Stock

Why Customers Love Us – CorpNet Reviews

Screen Shot 2016-05-12 at 2.43.23 PMAnother month, another great set of 5-star CorpNet reviews to showcase our stellar customer service.

Our team has been hard at work helping all kinds of clients with their business startup needs. From assisting someone who accidentally selected the wrong entity to helping an oversees entrepreneur, our team gets the job done so you can focus on what you do best – running your business.

Here is a look at why customers love using CorpNet.com to incorporate, form an LLC, file a DBA and more! Check out all of our reviews on TrustPilot. Are you ready to get your business off the ground? Reach out anytime for a free business consultation.

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