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Corporations For Dummies

Discussion in 'Business & Tax Advice' started by Uptownbulker, Sep 28, 2008.

  1. Uptownbulker

    Uptownbulker BANNED BANNED

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    Lots of questions about corporations and the use of corporations, so I put together this file for you.

    I put it on Rapidshare which place is a pain in the ass but "Oh, well!"::p

    http://rapidshare.com/files/148981706/CORPSTUFF2.rar

    MediaFire here:

    http://www.mediafire.com/?bclw2e3febm

    Feel free to hit me up if you have questions!
     
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    Last edited: Sep 28, 2008
  2. DeskCoder

    DeskCoder Regular Member

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    Any information in there about LLCs, I am leaning that way ...
     
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  3. patrick6411

    patrick6411 Regular Member

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    Why an LLC? Any particular reason? With an LLC you still have liability in the corp.

    Thank you Uptown I will have a look.
     
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  4. Uptownbulker

    Uptownbulker BANNED BANNED

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    Yeah, lemmee work on that for you but the last two days have been tough and I am pooped.

    I much prefer corporations to LLCs because of the anonymity factor but I will put something together and get it up.

    Thank you for your inquiry!

    Uptown.

    (John)
     
  5. Uptownbulker

    Uptownbulker BANNED BANNED

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    Liability is a much smaller deal than people make of it.

    If you go out and do intentional torts; that is to say, if you go out and screw people, you are going to get nailed, corp or not.

    Privacy is paramount and that is the real advantage of a corp if it is set up properly.

    Thank you for your reply.

    Uptown.

    (John).
     
  6. ximscreamingx

    ximscreamingx Power Member

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    Thanks for this Uptown, top notch as usual ; )
     
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  7. groverinri

    groverinri Registered Member

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    I've heard you should only look to incorporate is when you have any liability. If you have some income from you're business and you stay sched c, sole proprietor, can't they then go after personal assets?
     
  8. cassycan

    cassycan Newbie

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    Hi Guys:

    Since I am new here and can answer this one I thought I would add my 2 cents. A little long but here it is from one of my source books.....

    AN LLC is:
    * is not a corporation or a partnership

    * may be called a limited liability corporation, the correct terminology is limited liability company

    * owners are called members not partners or shareholders

    * number of members are unlimited and may be individuals, corporations, or other LLC's

    Advantages of Limited Liability Company

    Limited Liability: Owners of a LLC have the liability protection of a corporation. A LLC exists as a separate entity much like a corporation. Members cannot be held personally liable for debts unless they have signed a personal guarantee.

    Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.

    No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.

    Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Generally, this will be a tax advantage, but circumstances can favor a corporate tax structure.

    Disadvantages of Limited Liability Company

    Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.

    Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.

    Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.

    Setting-up a Limited Liability Company

    All 50 states now allow the formation of LLC`s. Forming your own LLC may not be as simple as a sole-proprietorship, however, the process is much less than a corporation. There are two main actions:

    1. Articles of Organization: If you plan to set up a limited liability company, you will have to file articles of organization with the Secretary of State and pay the required fees. Articles may be prepared by a lawyer or filed yourself.

    2. Operating Agreement: Although it is not required in many states to draft an operating agreement, it is advisable. Much like corporate by-laws or partnership agreements, the operating agreement can help define your company profit sharing, ownership, responsibilities, and ownership changes.

    Each state has different rules governing the formation of a limited liability company. For instance, in North Dakota, a foreign LLC is not allowed for banking or farming. Some states will want a publication notice with the local newspaper that a company has been formed. Check with your local state office for further details.

    Now with all that crap here is the bottom line. It doesn't have corporate taxes. It is as if you had a side business and is added as personal income (or partnership income) It does protect you... And if you are a seller of goods and your place catches fire or a customer doesn't pay or any of a thousand "what if's" and you cant pay your supplier, he cant take your car, house, stereo or any other personal item. This ain't legal advice but I can explain any questions.
     
  9. Uptownbulker

    Uptownbulker BANNED BANNED

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    I do not get it why everyone is so concerned about liability?

    Libaility is not the issue!

    What are you going to do that they will come after you?
     
  10. Uptownbulker

    Uptownbulker BANNED BANNED

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    Exactly and thank you for your post!

    LLCs= Not good.

    Corps = Good.

    Basically for the purposes with which we who earn on the net are concerned, LLCs suck Cum Laude!
     
  11. Uptownbulker

    Uptownbulker BANNED BANNED

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    This is not about liability but rather maintainence of personal anonymity on the net.

    Liability as an issue is over-rated.
     
  12. delmages

    delmages Jr. VIP Jr. VIP Premium Member

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    Thanks for this wonderfully useful and helpful guide, UB. I believe that this will serve to clarify many of the misconceptions that exist regarding corporations.

    As far as the questions regarding liability are concerned, you don't have the same level of legal responsibility in IM as you do when running a bricks and mortar company. For example, if you run a chain of stores, and one of your customers fell on your property and was seriously injured, you would want to be incorporated in order to avoid the loss of personal property and assets from a potential lawsuit. In IM however, you may wish to incorporate, but the reasons for doing so should be entirely different. While anything is possible, you don't really run the risk of being sued on the same level as conventional business owners. Like UB stated, incorporating an online business provides a sense of anonymity by protecting your personal identity from your online ventures.
     
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  13. Uptownbulker

    Uptownbulker BANNED BANNED

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    I am working on "Corps For Dummies: The Sequel", which will be much more extensive in its scope and will get that up soon.
     
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  14. cassycan

    cassycan Newbie

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    Again most states only list the RA (resident agent) not the members of the LLC. I always use a nominee for the RA and general member.
     
  15. Uptownbulker

    Uptownbulker BANNED BANNED

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    That's nice.

    RAs can be anyone you want and have nothing to do with running either the corporation or an LLC; the RA only receives official mail.

    As far as Nevada LLCs go:

    "
    Recently, formation companies in the State of Nevada have been mounting an advertising campaign to drive businesses into the desert, touting the State's minimum regulation. What is missing from Nevada, however, is a fair, competent and predictable legal environment. In fact, in 2006 Nevada ranked worst among the States in terms of creating a fair and reasonable legal environment while ranking 37th overall. Additionally, according to several magazine publications, venture capitalists and angel investors they will all routinely throw away business plans they receive from companies incorporated in Nevada. What this means, of course, is that if you are a legitimate business you could get inappropriately labeled as unsavory simply because you have incorporated in Nevada.

    Additionally, many, if not most of the Nevada companies who help individuals set up companies, tout the fact that when you file a Nevada LLC the owners of the LLC can remain anonymous. To some, such anonymity may be helpful, but the Nevada promise is misleading at best and completely disingenuous at worst. While you can anonymously create a Nevada LLC, the company must provide the Secretary of State with the names and addresses of each manager or managing members on or before the last day of the first month after the filing of the Nevada LLC. See Nevada Revised Statutes 86.263. Therefore, the promise of anonymity in Nevada can be a hollow promise."


    As far as Kansas goes:

    "Advantages and Disadvantages of a Kansas LLC

    Individual Owner Kansas LLC: The IRS treats one member LLCs as sole proprietorships for tax purposes. This means that the LLC itself does not pay taxes and does not have to file a return with the IRS. As the sole owner of your Kansas LLC, you must report all profits or losses of the Kansas LLC on Schedule C, and submit it with your 1040 tax return. If you leave money in the company's bank account at the end of the year, to cover future expenses or expand the business you must pay taxes on that money.

    Multi-Owner LLC:The IRS treats co owned LLCs as partnerships for tax purposes. Co owned LLCs themselves do not pay taxes on business income; instead, the LLC owners each pay taxes on their lawful share of the profits on their personal income tax returns, with Schedule E. Each LLC member's share of profits and losses, which is called a distributive share, is set out in the companies' operating agreement.

    Most operating agreements provide that a member's distributive share is in proportion to his percentage interest in the business. For example, if Donna owns 60% of the LLC, and Tony owns the remaining 40%, Donna will be entitled to 60% of the LLC's profits and losses, and Tony will be entitled to 40%. If you'd like to split up profits and losses in a way that is not proportionate to the members' percentage interests in the business, this is called a "Special-Allocation," and you must follow IRS rules. However the distributive shares are divided up, the IRS treats each LLC member as though she receives her entire distributive share each year. This means that each LLC member must pay taxes on their distributive share whether or not the LLC actually distributes the money to her. The practical significance of this IRS rule is that even if LLC members need to leave profits in the LLC -- for example, to buy products or expand the business each LLC member is liable for income tax on their share of that money. "

    The unique method which we use to set up our corps and allow you to work through them makes your anonymity virtually bullet-proof unless you engage in some sort of fraudulent activity, in which case you would be done up anyway.
     
  16. PauloPT

    PauloPT Jr. VIP Jr. VIP Premium Member

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    So much good and free information. Anyone wanting to incorporate should definetely check Up's services.
     
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  17. crazymoneyfool

    crazymoneyfool Registered Member

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    I have a few questions.

    1. At what point would you guys suggestion incorporation? I'm thinking of getting myself into this to see if it is for me and if I can make money at it either full time or serious part time I will decide next year what to do. I figure if I do this full time incorporation is a given because of the insurance benefits.

    2. I plan to use one corporation for many years. Would it be better to incorporate in my home state, IL? Get a business address across the river in IA? Or look at incorporation in a state such as Kansas.

    3. If I incorporate out of state such as Kansas is it worth using a service like uptown's? Seems like people on here for the most part are pleased with it but it seems that it is designed for out of the US customers. Is it worth it for an in country customer like myself. Also what are the yearly fees? And what all is included in the service.

    Like I said I am not doing anything this year because I don't have the upfront money and I am not sure where this will take me. But next year I may consider it.

    Any help here would be appreciated.
     
  18. Dev-Gank

    Dev-Gank Regular Member

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    I would also be interested in the answer to these questions ^^

    I am in the US but am thinking about incorporating as well with uptown in the future.

    I assume I would have to re apply to all the CPA companies and cease using my personal accounts correct?
     
  19. leber026

    leber026 Newbie

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    Im also curious about crazymoneyfools questions but would like to add one.

    If I start and llc now how hard is to convert to a S-Corp later?
     
  20. caretaker2007

    caretaker2007 Power Member

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    Dev, leber, I sent crazy a PM since he and I are from the same state and I have already looked up all the info he would need. I sent you a copy of that PM.
     
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