Costly Mistake Number 3:

Forming an LLC and having it managed by members instead of managers* (A sure way to lose flexibility and control)

Asset Protection and Business I.Q.

Question # 3: What is/are the benefit(s) of having your LLC managed by managers?

A) Many times you do not need to disclose the owners (members) in annual state reports
B) Managers have more authority than members
C) Members added in the future will not necessarily have a say in management
D) It looks more like a limited partnership
E) An operating agreement is not required
F) There are more tax advantages
G) All the above
H) A and B
I) A, C and D
J) C and E

* “Managers of an LLC” is defined as the person or entity that manages the day to day operations of the LLC.

Costly Mistake Number 4:
Forming an S corporation and NOT knowing the shareholder rules (Imagine discovering years later that you’ve violated an S corporation shareholder rule — and that you now owe years of expensive C corporation back taxes.) Asset Protection and Business I.Q.
Question # 4: Who can be a shareholder of an S corporation?

A) A U.S. citizen

B) Another S corporation
C) C corporations
D) All LLCs
E) A living trust
F) All of the above
G) A, B and D
H) A, B and E

Costly Mistake Number 5:
Forming an S corporation when your company anticipates future value (There must be a better approach, and indeed, there is!)

Asset Protection and Business I.Q.

Question # 5: When is an S corporation NOT your best choice?

A) When you are considering investors for your business
B) When you are considering foreign partners
C) When the company will develop a great asset value
D) When you are going public
E) When you live in California
F) All of the above
G) A, B and C
H) A, B, C and D

www.nvinc.com For more information call 1- 877- 515 – 0505 (local 702-367-7373) today!

Scott Letourneau is the founder and CEO of Nevada Corporate Planners, Inc. Over the past 13 years NCP has assisted more than 5,000 business owners form LLCs and corporations to get their business off to a fast start to profits™! Questions? Call NCP at 1-888-627-7007. www.nvinc.com

I wanted to give you more detail to help you make an informed strategic decision about how to protect your business. There are several points to keep in mind which will help us determine the best plan for you as we help you form an entity (or entities*) to protect your business:

1. If you want to form a separate legal entity for your business to avoid as much personal liability as possible, incorporate in Nevada and foreign register.
2. If you’re concerned about losing control of the stock ownership of your business due to an unrelated, personal lawsuit, operate with an LLC. (Just make sure it’s taxed correctly for your situation.)
3. Be sure to form your entity before:
   1. Signing a contract or lease;
   2. Hiring employees;
   3. Advertising your business;
   4. Opening a bank account;
   5. Obtaining your business license.
4. Avoid as many personal guarantees to your vendors as possible. The less you tie up your personal assets in your business, the better!

Zeroing in on your unique situation will help us determine your best approach together, from both a tax and an asset protection standpoint.  There are several more issues that will come into play as well as you develop your business, all of which we can expand upon when we talk again.  NCP’s ultimate goal is to help you avoid the costly mistakes we see made time and time again by sadly misinformed people.

Armed with this information, the next step is simple! Call us today at 1-888-627-7007, and together we can tailor-fit the perfect solutions for your situation and continue your incorporating process, moving you toward the future of your new business/entity and help your business get off to a fast start to profits!

Every day we speak to entrepreneurs just like you who call our office after forming an entity on their own or online.  They are hoping we have an “inexpensive fix it program” after realizing they did NOT know the questions that needed to be addressed before forming that new entity to protect their assets and business.

There are at least seven choices for your new business structure:

• C corporation
• S corporation
• Limited Partnership
• LLC taxed as an C Corporation
• LLC taxed as an S Corporation
• LLC taxed as a Partnership
• LLC disregarded for tax purposes

You have an 86% Chance of Making a Wrong and Very Costly Selection!

After 12 years of research with some of the best law firms, tax firms and financial planners in the country, below is a summary of the key questions you need to address before establishing the foundation of your business.  As you can image each question, some more than others, have critical long term affects on your business from both a tax and liability point of view:

1. Are you looking for Investors for your company? (Most unknowingly prevent investors from coming on board because of the wrong entity structure!)

1. What do you expect your Gross Sales to be in the first year? Year 2?

2.  What do you expect your net profits to be in the first year? Year 2?

3.  Do you have a partner for your business (this affects your options for choice of entity)?

4.  What is your personal income level (aside from this new business)?

5.  Do you sell a service or product? (If you form a C corporation you must get this one right!)

6.  Will your business develop a net worth? Meaning, will it develop systems and have a net value over time? Or is it based upon your efforts so that the day you stop working your company stops generating revenue?

7.  Is your goal to sell the business soon? (Important if you’re considering a C-corporation.)

8.  Will the entity keep profits as retained earnings for future growth and expansion? (Important if you’re considering a C-corporation.)

9.  Are you or your partners US citizens or Resident Aliens? Do you plan to bring in any non-US residents?

If you would like to receive the complete list of questions BEFORE you form an entity and to read a case study that puts these questions into play, you can go to www.nvinc.com and download our 96 page FREE report that covers a very complex situation and gives extra tips to help protect your assets and business!

Questions? Still looking to form your entity and get your business off to a fast start to profits in 2010 and beyond? Need help to separate your personal and business credit? Looking for tax and bookkeeping support? Looking for resources to help you with the best way to market and grow your business?

Call NCP at 1-888-627-7007 and we will share with you all the resources you will have access to when you become a client!

I wanted to make sure you avoid the top costly mistakes before you incorporate or form an LLC at the end of the year.

These blunders expose all of your assets, both business and personal, to costly liability.  Below is an invaluable summary of the most injurious mistakes we have consistently seen in our 12 years of helping companies just like yours, and what to do about them.

It amazes me to this day how so many continue to take short cuts, oblivious to these damaging missteps.  In times like these, it’s more important then ever to guard your assets and start your business on the right foot. Protection against dramatically increasing lawsuits, identity theft (the newest and biggest financial nightmare in legal history), and plain old procedural mishaps is quickly becoming “de rigueur” for every business owner.

Here are the Top Costly Mistakes to Avoid:

Forming an LLC and NOT knowing how it’s taxed (Are you a single or multi-member LLC?  Will you be disregarded for tax purposes, taxed as a partnership, a C-,or an S-corporation?)

Forming an LLC for real estate and NOT knowing how it should be taxed when you have dealer and/or investor property (Make the wrong choice, and be doomed to a life of unnecessary taxes.)

Forming an S corporation and NOT knowing the shareholder rules (Imagine discovering years later that you’ve violated an S corporation shareholder rule — and that you now owe years of expensive C corporation back taxes.)

Forming a C corporation to take advantage of fringe benefits when your business doesn’t fit the C corporation model (Can you spell nightmare?)

Forming an entity in Nevada and NOT knowing when — or why — you should foreign register (“Can’t you just get a mailbox?”)

NOT properly capitalizing the entity, and especially not being crystal clear with partners about your capitalization (A disaster waiting to happen!)

Forming an LLC taxed as an S corporation, and using the wrong operating agreement (A subtle, but effective nuance that must be handled properly)

AND MUCH, MUCH MORE!

If you would like to receive our FULL free report or have questions about your situation please give us a call at 1-888-627-7007.

Our free report, “Test Your Asset Protection And Business I.Q.” will alert you to exactly what those top 20 costly mistakes BEFORE and AFTER incorporating are, and what you can do to bullet proof yourself before they ever appear on your business horizon.

We’re standing by to make sure that you’re fully prepared for anything the fates can throw at you in the years ahead.

If you’re ready to form an LLC in California, the best course of action is to hire a professional who specializes in the formation of Limited Liability Companies and corporations. If you make rookie mistakes, it could have a huge impact on your business. You’ll also want to take some steps to develop a plan for establishing business credit.

The first course of action is to complete the necessary paperwork to form your company. There are 7 steps to this process:

1. Choose a company name. You’ll need to research the availability of your chosen name. If another company has the name you’ve chosen, you’ll have to modify your choice to create a separate identity. You’ll also have to include the words, “Limited Liability Company” or the abbreviation “LLC” in your name.

2. File the necessary paperwork with California’s Secretary of State Office. Complete the “Articles of Organization” and submit them.

3. Pay the required fees. Submit the correct fee with your paperwork. Make sure you contact the California Franchise Tax Board and you understand when the $800 franchise tax fee is due and for what entities.

4. Pay the State Taxes. Each entity in California has different tax rates. The LLC taxed as a partnership has the franchise tax fee of $800 per year and a world-wide gross receipts tax which is a table based upon gross revenue. The S corporation is taxed at 1.5% of net profits and the C Corporation at 8.84% of net profits. As you can imagine, selecting the best entity for your business will help you save taxes at both the federal and state level!

5. Create an “Operating Agreement.” All LLCs must have an agreed upon Operating Agreement. Conduct an organizational meeting to adopt your agreement. Keep in mind the operating agreement will be different based upon how many members and how the LLC is taxed. You have six options: a single member LLC disregarded, and taxed as an S or C corporation. A multimember LLC taxed as a partnership, and taxed as an S or C corporation.

6. Apply for an Employer Identification Number (EIN). You can apply online at the Internal Revenue Service’s website. Make sure you know what you are doing because the IRS will ask very important questions about the EIN number for the new entity and you may answer a few questions that may come back to haunt you a few years down the road, especially when applying for an EIN for an LLC because there are multiple ways it may be taxed. Keep in mind the IRS’s federal default rules are as follows: If you have one member if the LLC it will be disregarded for tax purposes. If you have two members it will be taxed as a partnership for tax purposes. In either case you must make the proper selections and elections to have the LLC taxed as an S or C corporation.

7. Open a company bank account. Once you have your EIN, you can open a corporate bank account. If you had a DBA (doing business as) name prior to your new entity and you want to continue that name, make sure you “re-link” the DBA to the new entity not you. Once you have a bank account set up, you should consider applying for a business credit card in the name of the LLC or corporation to help separate your business charges from your personal credit charges to protect your personal revolving debt rations that affect your personal credit score.

8. Obtain the necessary county or state business license. Once you’ve completed this step, you’re officially in business! It is recommended, especially in California to touch base with a local CPA for other requirements when it comes to payroll, hiring outside employees and other state or local tax requirements.

Forming a Limited Liability Company in California isn’t difficult but to prevent mistakes that could hurt your business, hire a business consultant who will make the process as seamless as possible and show you how to plan for a successful, lucrative venture.