Forming an LLC - Choose a Business Structure With Maximum Benefits

You will enjoy many business benefits when you form a limited liability company (LLC). This company model is one that many start-up and growing companies choose. An LLC helps you avoid double taxation issues encountered by corporations. It also protects you from unforeseen complications such as bankruptcy and lawsuits. If you want to form a company that lets you enjoy executive freedom, lesser taxes and legislative protection, then forming an LLC is right for you.

The Basics of a LLC

A limited liability company combines the traits of three other company models - sole proprietorship, partnership, and corporation. It takes the best characteristics of each and puts these together. This allows companies to maintain their small business structure while still enjoying the benefits of being a corporation.

There are no partners or shareholders in this type of company structure. Instead, participants go by the name of members. The members do not need to hold regular shareholder meetings or implement any corporation bylaws. You only have to create operating agreements, but that depends on whether or not your state requires it. This easy and flexible structure makes forming an LLC perfect for small and medium-sized businesses.

How to Form a Limited Liability Company

Location is the first thing you need to establish when forming your own LLC. This is important because states have different regulations regarding the formation and registration process. Make sure you are fine with the laws of a state before selecting to register your company.

Think of a name that complies with state regulations. It has to be unique and it must contain any of the three designators of a limited liability company. These are LLC, L.L.C., and Ltd. Liability Co. Ensure that the name you select does not violate any trademarks. Check with your selected state regarding forbidden words as well. Your chosen state may prohibit words like Bank, City or Insurance.

You can make the registration process easier by finding an LLC registered agent. This is especially useful if you want to register your company in a state different from yours. Your agent will be your representative and contact person throughout the entire registration process. All you need to do is to prepare all articles of organization and disclosure documents the state will require. Your agent will file these; you only have to pay the registration fee afterwards.

Benefits of Forming an LLC

The most obvious benefit of forming a limited liability company is in its name. You receive protection from unexpected circumstances and members only have limited liability. Sole proprietorship and partnership business models entail personal liability in case something like a lawsuit comes up. This leads to bankruptcy. This is not the case with an LLC. Your assets will be separate from the company's assets, and only your company will be answerable for any shortcomings and unexpected events.

You will also avoid double taxation problems. When you form a limited liability company, you can choose whether the government will treat you as a sole proprietorship or as a corporation. The government usually treats LLCs as a sole proprietorship. You can then choose whether the IRS will tax you as a corporate entity or as an individual. This leads to bigger savings and protection of your personal assets.


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Updating Your Will - There May Be More Reasons to Do So Than You Realize

Your Last Will and Testament is your only chance to decide what happens to your estate assets upon your death. It is the cornerstone of your estate plan -- the document from which all other estate planning tools flow. Once you have taken the time and effort to create your Will, don't make the mistake of failing to update it when necessary. Some reasons that a Will needs to be updated are obvious; however, consider the following, not so obvious, reasons as well when deciding if it's time to take another look at your Will.

Death: People think to update a Will when a parent, spouse or child dies, but the death of the person named as executor or guardian of your minor children can also prompt a review of your Will. The death of a business partner or even an in-law may also warrant a Will update.

Marriage or Divorce: Clearly, your own marriage or divorce calls for a revision of your Will; however, other marriages or divorces may also necessitate a change. The marriage or divorce of a parent, child or guardian, for example, can call for a review of your Will.

Birth: Although it is easy to rely on a generic term, such as "issue", to cover all of your children or grandchildren, it may be preferable to name each beneficiary by name in your Will to avoid any possible future confusion. As such, take the time to update your Will when there is a birth in the family.

Beneficiary Reaches the Age of Majority: Minors cannot inherit directly in your Will. As such, you likely named a trustee for any minor children when you made your Will. If a child has reached the age of majority, you will need to remove the trustee and provide for the direct transfer of those assets to the beneficiary in your Will.

Change in Assets: Although you may have a general provision in your Will for any asset not specifically named, if you acquire an asset worth a significant amount of money, or sell one, you may need to update your Will to address that asset for clarification.

Change in Location: In the confusion of a move, people typically don't think of how residency can affect a Will. State laws, however, can directly impact provisions in your Will, warranting a review and possible revision.

Change in State or Federal Laws: Laws change on a regular basis. Federal tax laws, for example, seem to continuously change. A significant change in either a state or federal law can result in the need to make a corresponding change to your Will.

You Reach the Age of Required Distributions: IRAs and 401(k)s typically require you to start taking distributions around the age of retirement. If you have significant funds in one of these accounts, the required distributions can change your asset structure enough to warrant a Will update.

Change in Guardian: This is a big, yet often forgotten, reason to update your Will. Regardless of the reason why you wish to change the named guardian for your minor children, if you wish to do so you must make it official by revising your Will.


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How to Write a Promissory Note

When writing a promissory note, be sure that the date the money is borrowed is prominently indicated. Write a promissory note, identifying the borrower and terms of the loan, with advice from a certified family mediator in this free video on legal self-help

How Does A Promissory Note Work?

A promissory note is a legal document that allows companies and also individuals to get financing from a source other than a bank. Thankfully, here in the U.S. banks don't have a monopoly on lending, you can legally loan some one money with a promissory note. Any one can become a lender.

Promissory notes are debt instruments that are like a legal IOU. Terms are drawn up and agreed upon by both the lender and the recipient. The recipient signs the document and is from there on legally binded to uphold his/her end of the bargain. Money owed from a debtor who refuses to pay can be easily collected in small claims court, or a general civil suit. The terms agreed upon can include things like interest rate, a repayment schedule, and the consequences of default (failure to uphold obligations).

Promissory notes are often times used by companies to create additional corporate credit when they can no longer get additional lending through a bank. Lenders who issue these notes can even turn around and sell them to another buyer. Investors can even have these notes reviewed by the Securities and Exchange Commission to ensure the company is able to repay its debt.

Another popular use for promissory notes is to get a loan for a home when there is no credit or not enough credit available to them from a bank. This is used mainly by people who are self-employed with a widely varying income from month to month. Creditors tend to discriminate against these types of people. If your income has dropped creditors will definitely discriminate against you no matter how much income you've saved. For those who have these conditions then they have no other choice.

When creating a promissory note, it is a good idea to get it notarized so that the obligation is publicly recorded and legal. This will make all the terms and conditions legally binding, and any violation will not be tolerated in court.


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How to Become an Emancipated Minor

Achieve emancipation as a minor with these practical tips.

Overlooking a Health Care Power of Attorney Can Be Costly

A very important estate planning tool that is not given the same attention as a Durable General Power of Attorney is the Health Care Power of Attorney (HCPOA). A HCPOA is a document that gives someone you trust the ability to make your medical decisions for you when you are unable to do so yourself. Once drafted, signed and witnessed, the patient advocate (person appointed) appointed is essentially filling the shoes of the principal (person signing the document) with respect to all health care decisions; thus, physicians are expected to respect and abide by their decisions as if they were being made by the principal individual himself.

Appointing someone to act as your HCPOA plays a significant role for not just the principal, but also for the patient advocate. Without a properly drafted HCPOA, and in the event you have a loved one (e.g. spouse) in the unfortunate situation of being admitted into the hospital, you would have no authority to make medical decisions on your spouse's behalf. The proper procedure would be to file a petition with the court and be appointed as their Guardian/Conservator. This process can be time consuming and even costly.

When drafting your personal HCPOA document there is a particular section that deserves close attention. In the event you are in a persistent vegetative state or an irreversible coma, you will have to select who it is that you want to weigh the burden of your treatment versus the benefit. The three choices are: (1) Allowing your patient advocate to decide whether the burden of treatment outweighs the benefit; and based on that decision, your patient advocate has the authority to stop further treatment; (2) Allow the doctor to reasonably conclude that the burden of treatment outweighs the benefit; and based on the doctor's decision, the doctor will decide whether to stop further treatment; and (3) Allow you to live as long as possible regardless of the burden and cost of treatment.

These are three important choices that need to be carefully addressed. By making such a decision it allows your patient advocate to know beforehand that they are responsible for your medical treatment. Through careful planning and by appointing a trustworthy patient advocate, it can bring significant ease to your personal estate. It is advised to appoint someone who is close to you and who knows your wishes, whether religious or personal, as that person can then make the proper decisions with your specific intent in mind.

Rather than going through the stress of probate, a HCPOA is the simple document that can protect your wishes as the principal and provide your patient advocate with the convenience that they would not otherwise have.


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LLC, Corporation, or Sole Proprietorship?

What type of business is best for you: LLC, corporation, or sole proprietorship? This article takes a closer look at several factors and how they relate to each of these entity types so that you can make the best decision for your situation.

Startup costs

Filing fees always depend on the location, but in general, filing fees are going to be higher for corporations and LLCs than for sole proprietorships.

Sole proprietorships will generally file with the county in which they are located, though in some locations filing is done at the state level (and in just a few locations, at the city level). Filing fees could be as low as $5 or as high as $120, depending on your location.

Corporations and LLCs, on the other hand, could have a filing fee that's anywhere from $30 to $300, depending on location. Nonprofit corporations typically have a reduced filing fee.

Limited liability protection for owners

An LLC (which stands for Limited Liability Company) and a corporation both provide limited liability protection to its owners; if the business defaults on a loan, provided the company has obeyed all local, state, and federal rules and regulations and acted properly, the owners are not financially responsible for the debts or obligations of the business, and those owners' corporate assets cannot be seized by the courts to pay for them.

A sole proprietorship, on the other hand, does not provide this type of protection. There is no legal separation between the business and the person; if the business defaults on a loan, since it is really the sole proprietor him- or herself whose name is on the loan paperwork, it's that individual that is responsible to pay it back.

Tax structure

An sole proprietorship must pay a self-employment tax of 13.3% (reduced in 2010 from 15.3%); a portion of this tax goes toward Social Security, and a lesser portion goes toward Medicare. Only the first $106,800 of your income must pay the Social Security tax.

LLCs and corporations, however, are not required to pay a self-employment tax. Each of these business structures have a decision to make. There are two different tax structures for a corporation: C corporation, and S corporation, and LLCs similarly have tax structure choices to make (though for LLCs, the options depend on whether the business is a multiple- or single-owner LLC).

The tax responsibilities are extremely important to understand, as choosing the wrong organizational structure for your business can negatively impact your bottom line. It's always best to discuss your business choices with an attorney or legal advisor.

What should I do?

At the end of the day, it's important to weigh all of these options carefully before making a decision. It's easy to look superficially at the filing fee involved and go from there, but since this isn't your only true business expense, acting on filing fee alone is only looking at part of the picture.

As with every business decision, it's best to consult with your legal advisor before making any rash decision so that you know you're weighing all of the factors.

Good luck!

Article Source: http://EzineArticles.com/6888637

5 Reasons to Have a Power of Attorney

A Power of Attorney is a legal instrument which allows a nominated person to make legal and financial decisions on behalf of someone else. You can imagine the problems that occur with administering the financial affairs of an ageing parent, who suffers from the onset of dementia. They are incapable of making rational decisions and are in danger of losing assets with a simple signature on a document they no longer have the ability to understand.

You can avoid the added problems which can arise as one grows older, especially in cases like dementia, by granting a power of attorney to a trusted family member. It is not just a matter of common sense, it can be vitally important for the peace of mind of the family, and can bring some rationality to an otherwise trying period of life.

But before going any further let's list the major reasons for having a Power of Attorney in the first place.

• Loss of Mental Capacity. As outlined above, dementia in old age is a common occurrence and one that should be planned for far in advance. Having a Power of Attorney in place can circumvent the problems that arise and safeguard the assets of the affected person. When a family sits down and discusses all the ramifications it is easy to come to an agreement as to how a Power of Attorney can be set up to satisfy everyone's concerns.
• Ramifications when there is no Power of Attorney. In the event of loss of mental acuity in old age for example, if a person is deemed to be incapable of making rational decisions then control of that person's assets will have to be determined by a court of law. In such cases, where there is no Power of Attorney instrument to rely upon, the court may appoint a government department to administer the person's affairs. This can place hardship on other family members and cause great distress and delays in day to day of management issues.
• Financial and Legal Matters. A Power of Attorney not only covers the control of financial matters but also any other legal issues that may arise. This can involve the signing of contracts or assigning beneficiaries to a superannuation fund payout or other such matters. A Power of Attorney is a flexible instrument that makes everyday life as easy as it should be.
• Timing Matters. An enduring Power of Attorney can only be signed, when a person is of sound mind and health. After the onset of a mental disability, a Power of Attorney can no longer be signed, so it is important that you make the decision as early as possible, to avoid these difficulties.
• Another important benefit is that the power to sign documents can be granted by people of sound mind, when they are unavailable to do so themselves. For example, having someone empowered to sign mortgage documents, whilst you are unavailable overseas.

By granting a Power of Attorney, a person does not lose control over their assets, rather they just ease the process of decision-making in the event of later mental illness or incapacity. The benefits that accrue far outweigh any other concerns and your solicitor will explain everything to you, so that there is no misunderstanding. That way you can live with the peace of mind that comes from knowing your affairs will always be under control.

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The Probate Process in California - What to Expect!

Probate Process in California?

The probate process in California begins with a legal request or petition that opens the estate and names a PR or personal representative who takes care of the deceased's property. An official Notice for Creditors is published in newspaper and a notice of same is sent to all the involved parties. Creditors are then given a set amount of time to file their claims depending upon the estimated time published in the notice. The PR then clears all the debts and dues remained in the name of deceased person and distribute the remaining estate to his close relative. Finally, the petition for discharge is filed and the estate is closed.

This is the normal process of probate in California. The process involves many smaller steps which had to taken care of during the whole legal process. In many cases when the property balance is more than speculated or has some tax liability to it then a tax consultant or a CPA is to be hired who estimates the overall pricing of the estate.

Below we show you how the legal procedure of Probate in California runs:

Probate - First Phase
- Original Will and Codicils are filed
- Legal Notice of Petition is published to the Administer Estate
- Notice of Petition is filed and published in the local newspaper
- Proof of Will and Codicils are filed for further enquiry
- A letter is issued to all interested parties.

Probate - Second Phase
- Application for Employer Identification Number
- Income tax return and other legal taxes are filed
- Opening estate bank account and arrange for tax returns
- A mail with legal notice is sent to debtors and claims are cleared
- Approval or refusal of claims are made
- Property is listed for sale
- A petition is filed for Confirmation of Property Sale
- Court hearings are made and any final federal taxes are cleared

Probate Third Phase
- Final petition is filed for distribution
- A notice is sent to heirs and beneficiaries
- Proof of mail is filed with court
- Final order of petition is filed
- Transfer of assets and properties is cleared

If in case there are any living spouse or relatives of the deceased the property is distributed in a legal way among them without giving benefit to a single person. The California state law has the rules according to which the reaming estate is distributed. The court has the final verdict on the sale or distribution of property. If a bid is overbid by any person during the hearing then the property is transferred to the highest bidder.

This is a simple explanation of probate process in California.


Article Source: http://EzineArticles.com/1229505

LLC vs Corporation: What Entity Is The Right One For You?

Choosing the right entity

You finally decided to form your own legal entity. However, how would you know which one is the best choice for you particular needs?

To make this choice wisely it is important to understand the basic differences between various types of legal entities. This article focuses on comparison between LLC (limited liability company), one of the most popular business entities today, and various forms of corporation, namely C- and S-Corporation.

C-Corporation vs. S-Corporation

All corporations start as C-Corporations and are required to pay income tax on taxable income generated by the corporation. An C-Corporation becomes a S-Corporation by completing and filing federal form 2553 with the IRS.

1. Taxation: An S-Corporation's net income or loss is "passed-through" to the shareholders and are included in their personal tax returns. Because income is NOT taxed at the corporate level, there is no double taxation as with C corporations.
2. Difference in income allocation: Subchapter S-Corporations, as they are also called, are restricted to having no more than 100 shareholders, and cannot be owned by C-Corporations, other S-Corporations, many trusts, LLCs, partnerships, or non-resident aliens.

LLC vs. C-Corporation

There are three principle differences between LLC and C-Corporation:

1. The entities are taxed differently: An LLC is a pass-through tax entity, meaning that the income is not taxed at the company level (however, LLC is still required to complete a tax return). The income or loss as shown on this return is "passed through" the business entity to the individual shareholders or interest holders, and is reported on their individual tax returns. C-Corporation is a separately taxable entity, and pays tax on the income prior to any dividend distributions to shareholders. If and when corporate earnings are distributed to shareholders in the form of dividends, the corporation does not receive the reasonable business expense deduction, and dividend income is taxed as regular income to the shareholders.
2. The entities differ in their structure: LLCs are less rigid in their structure than corporations, so you have more flexibility in adapting the LLC to your unique business. The Operating Agreement of an LLC can be structured in a limitless amount of ways.
3. Formality: A corporation is a formal entity with officers and directors (at least one of each) required. An LLC, on the other hand, can be "member managed" and run in a less formal way. For small, start-up businesses, less formality means you can focus on making money rather than administrative work.

LLC vs. C-Corporation

Even though LLC and S-Corporation have a lot in common, those two types of entities differ on the following:

1. Difference in income allocation: While S-Corporation special tax status eliminates double taxation, it lacks the flexibility of an LLC in allocating income to the owners. An LLC may offer several classes of membership interests, while an S-Corporation may only have one class of stock.
2. Ownership restrictions: Any number of individuals or entities may own interests in an LLC. However, ownership interest in an S-Corporation is limited to no more than 100 shareholders, and S-Corporations cannot be owned by C-Corporations, other S-Corporations, many trusts, LLCs, partnerships, or non-resident aliens. Also, LLCs are allowed to have subsidiaries without restriction.

Those are just the principle differences between the three most popular entities. However, when choosing to organize a business one should consider other less popular types of legal entities, as those might answer to particular needs of the business. Consider discussing your situation with a licensed attorney or a CPA, familiar with your situation and whatever requirements your state might have for forming various business entities.


Article Source: http://EzineArticles.com/5218992