Incorporation - Is It Right For My Business?

The process to form your incorporation is relatively easy, and the legal concept of incorporation is recognized all over the world. A Certificate of Incorporation is the evidence of incorporation and registration of the legal entity with the authorities of a particular state or an offshore jurisdiction. A primary advantage of incorporation is the limited liability the corporate entity affords its shareholders, and in many cases, favorable tax treatment. For anyone starting up his or her own business, an understanding of business incorporation is a must before taking that step.

Incorporation is a system of registration which gives a business certain legal advantages in return for accepting specific legal responsibilities and is an option that many businesses each year decide to take advantage of. However, prior to filing with the state, you should have your attorney and accountant advise you as to whether or not incorporation is the right step for your business, both from a legal standpoint and from a tax perspective. If the corporation is a closely held corporation and does business primarily within a single state, local incorporation is usually preferable. Incorporation is a state process, and therefore the process and specific benefits may differ from state to state, as well as registration costs, resident agent fees, etc.

What type of incorporation is best for my business? A "C" Corporation, an "S" Corporation or a Limited Liability Company (LLC)? In addition to those choices, you then need to decide where to incorporate. Not only does each state offer certain benefits, but costs to file and maintain the corporate status are different. Additionally, if your business purpose is rather simple and straight forward, you may be able to use an online incorporation service to incorporate, at substantial savings. Remember, when in doubt, or if any questions or issues need addressed, seek professional advice...it usually is cheaper in the long run!

There are certain states that offer important incorporation benefits to the directors and shareholders. You need to make a comparison of these benefits, as well as the filing costs, to determine if incorporation in that state is warranted. Another consideration for incorporation in a state other than where your business is located, is that you may be required to register as a foreign corporation in your resident state. This will usually entail annual filing fees equal to or greater than that for a domestic corporation. Again, prepare a checklist and weigh all benefits as well as additional costs, etc. before the incorporation process begins. Rather than incorporating in another state, you may also benefit by an offshore incorporation. Check it out carefully.

Gust A. Lenglet is an accomplished author and financial advisor and has written many articles in the fields of investments, law, education, as well as taxation. He is President and CEO of HBS Financial Group, Ltd. and offers online tax filing as well as timely advice on tax planning and investments.

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Pros and Cons to Consider When You Form a Limited Liability Company

A Limited Liability Company (LLC) is one of the newest types of business organization structure that combines the characteristics of other business types. It is often referred to as the hybrid of sole proprietorship, partnership, and corporation. Due to its newness, there may be various issues that can arise when businesses in form a LLC.

When a business decides to form a LLC, its pros and cons should be considered first. This is to ensure that the owner understand what the implications this move brings. The organizational structure of the company as well as its operational processes would definitely be affected by this choice of business type.

Consider these factors when putting up a LLC:

Pros:

A LLC is very famous for its flexibility. With this type of structure, one member or more can establish the business easily. It can be formed online, at the office, or at home. Also, this allows full management or control of the business with an operating agreement made by the owner and other members.The free control over the operating agreement enables the company to establish its own rules and protective provisions for all its members.

Another benefit when a business chooses to form a LLC is the informal or less complicated business process. Unlike a corporation, a LLC can operate in an informal manner. This spares the members from attending annual meetings. Also, certain documentation are not strictly required. However, it is still advisable to keep records of business transactions for audit purposes or for any other future need.

Protection of assets is one of the most important advantages of a LLC. In this type of business, the owners of the company are not individually liable for any of the company's financial obligations. Passed through taxation is also automatic and therefore lessens the amount of taxes paid by the company.

Cons:

Businesses that opt to form LLC may also face some limitations. Even if this business type is very flexible, there are also restrictions to its membership and operation. First, if the LLC reaches more than 20 members, there is a definite need for a manager. A manager is needed to oversee the progress of the business and to keep it organized. Hiring a manager for the LLC presents additional expenses to the business. Also, the LLC may be dissolved if one member quits. However, there are provisions in the state laws which can address this problem.

The LLC can also restrict the flow of the business profits and stocks. The LLC is not authorized to split the overall profit and loss to its members. Aside from that, raising capital in a limited liability business is difficult. This limitation results in the investors' preference for a corporation instead of a LLC. Additionally, the members cannot sell and issue stock certificates.

Lastly, the LLC may pose some fee and taxation issues. This involves payment of taxes for the limited liability benefit of a LLC business. Also, the annual fee of LLC in some states is higher compared to other structures of business.

If you are looking for information on Tennessee limited liability company, click on the link. Or you can visit http://www.ezonlinefiling.com/.

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Advantages of an LLC | What is an LLC?

Are you wondering what the advantages of an LLC are? Wondering what is an LLC, an S-Corp, Partnership or Sole Proprietorship? Learn why you might consider the advantages of an LLC as your choice for choosing the entity of your company structure.

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Things to Keep in Mind When Running an LLC Business

Running an LLC business is not a bed of roses. You have to stay on top of things. Aside from hands-on management, you also have to look outward into what your customers want. You have to be proactive in the way your products are designed or formulated. This is the only way through which you can stay in business. In managing your operations, keep the following in mind:

- Be committed

An LLC business is bound to fail if its owner is not committed enough to its business goals. This is one of the most common reasons why people with LLC businesses close shop. Successful entrepreneurs are committed to their business goals and have a clear plan on how they can make their goals possible.

- Be frugal

Having your own business is not an excuse to splurge on yourself because you expect a sizeable profit at the end of the month. That is still tentative. Revenues earned by an LLC business should be managed and spent wisely. Be frugal in your spending and limit your allocation only to those matters that are deemed important in running the company.

- Set goals

You cannot simply set-up your LLC business without having a goal in mind. This should be as detailed as how you envision your company to be in the next five years. Or perhaps you could set a target revenue within a reasonable period of time. You can measure your performance based on how near or far you are from achieving your goal. The way you spend your budget will have to depend on what your goals are. When you have a clear goal in mind, you are less likely to splurge your revenues as you earn them. Every expense item or spending requirement should be aligned with your business goals.

- Learn to manage risks

Being in business is risky, not just but everywhere at any time of the year. The only way to survive in the business world is to learn to manage these risks. Identifying and analyzing risks beforehand is a good exercise to help you prepare for these risks. Effective risk management comes with foresight and early preparation. When contingency plans are in place, these risks can become more manageable.

While running an LLC business is not exactly that easy, having the right mindset and being prepared for any eventualities allow business owners to be on their feet so that they can spot opportunities and manage the risks more effectively.

If you are looking for information on LLC business in Tennessee, click on the link. Or you can visit http://www.ezonlinefiling.com/.

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7 Important Reasons to Form a Corporation or LLC for Your Business

Are you operating your business as a real business or as a hobby? It's time to make your business OFFICIAL before the summer push for business!

Let me ask you two important questions:

1. Are you operating your business under your own name, a DBA or fictitious firm name, basically as a sole proprietorship or maybe as a general partnership? AND/OR
2. Are you or your family at risk because of business or personal assets that are unprotected from unexpected losses or legal issues?

If you answered YES to either question please read on for important news about why NOW is the time to form an corporation or LLC for your business.

1. Make it Official. Operating as a sole proprietorship or general partnership sends a message that you are still "testing" your business, or that you're not sure you'll really make it. Perhaps your accountant told you that incorporating is an unnecessary expense or that it won't help you save on taxes due to an expectation of low profits. This is the WORST marketing message you can send when you want to attract new clients and partners to your business, who want assurance that you're about your business and here to stay.


2. The Law of Attraction. You get what you focus on. Testing, hoping and "seeing if things work out or not" BEFORE you decide to step-up and make your business official by incorporating broadcasts a clear message to the universe that you're not really serious about your business or committed to a positive outcome. The Law of Attraction states that the universe returns not what you wish for, but what you program into your deepest belief system through your dominant thoughts, actions and feelings. Making your business official and really stepping up says, "I am ready to receive!".


3. Limited Personal Liability. You may be thinking "I already lost everything in the market collapse from 2008" and still recovering. If you're one of the few that managed to survive and grow your assets since then, but are still holding them in your own name, you're playing a VERY RISKY game (similar to those with assets in unstable European banks). Even if you don't have any assets right now, a lawsuit or judgment will destroy any credit you are looking to build in the future PLUS you may be looking over your shoulder for years waiting for someone to come after you when you finally do start to turn things around. That's no way to live your life. One lawsuit from an unprotected business can ruin your chances of getting a personal auto loan or refinancing your home. Good people who "play by the rules" can still be sued for the most unexpected reasons. You may be thinking "my business insurance will help me out" but are you really covered? Even if your business is never sued, what if you're unable to pay a vendor and they come after you? Do you want to be personally liable? Put a halt to greedy people looking to take what you have worked for! This is the best time to form an LLC or corporation to limit your personal liability.


4. Reduce Your Taxes. The bottom line is that operating as a sole proprietorship will cost you the most in employment taxes (up to 15.3% on earned income up to $113,700 in 2013). That means that your income will be taxed as the HIGHEST possible TAX RATE as a sole proprietorship. By the way, filing a Schedule C (the form filed for earned income from a sole proprietorship) also means that your business is among those MOST LIKELY TO BE AUDITED. Why? The IRS has a $300 BILLION tax gap and they believe the biggest tax cheats are the little business owner like you. Why? Their stats show them that sole proprietorship are MOST likely to UNDER report their income and OVER report their expenses (two big no-no's with the IRS). Operating as an S corporation or LLC taxed as an S corporation in many situations is a much better approach for two reasons. You will have part of your profits as distributions which are NOT subject to the 15.3% employment taxes AND move that profit to schedule E, not schedule C which is more likely to be audited!


5. Access More Funding Options. Operating as a sole proprietorship or general partnership limits you when it comes to funding options. You are also DAMAGING YOUR PERSONAL CREDIT SCORE by operating this way. How do you finance your business as a sole proprietorship? You use your PERSONAL CREDIT cards which will drive up your revolving debt which will in turn DRIVE DOWN your personal credit score! When you form a corporation or an LLC you will SEPARATE your PERSONAL and BUSINESS CREDIT. Yes, any type of cash funding with a personal guarantee will come into play, but that DEBT does NOT show up in the personal credit bureau which is HUGE for future funding! As you form a new LLC or corporation NCP will help (if you choose) to build your business credit scores quickly and get your business in a position to secure funding to grow. But the first step is to form a separate legal entity.


6. Simply Your Life. Yes, in fact operating as a sole proprietorship will complicate your life, not the opposite. Separating your business and personal life will make it much easier for you to navigate both from a financial and legal point of view. Now you will have each in its own compartment where it belongs to protect your overall success.


7. Asset Protection. Forming an LLC for your safe assets like investments (those outside a retirement plan) will help you sleep better at night knowing you don't have all your "eggs" in one basket. If you are using a LIVING TRUST to protect your assets that will NOT work and everything in your trust may be vulnerable. Do you own other businesses that really should be operating through a separate bank account in a separate entity? Do you own real estate in your own name that may be sending a message that you are rich and have assets worth taking? Have you been in business for years or are you operating more than one business in one entity? Are you doing some business with a new partner and making the big mistake of running that revenue through your current business? Avoid these costly mistakes and form a separate company for that separate business.

Do you need support in forming a corporation or LLC? Not sure what entity or state is best? Call Nevada Corporate Planners, Inc. at 1-888-627-7007, the company I founded. We incorporate in all 50 states and have amazing support and turn key packages to help you also with building business credit and helping keep the IRS off your back!

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