Did you go to your CPA and get one answer on the best entity for your new business? Perhaps you spoke to another CPA and received another view of point? Add to the frustration if you visited an attorney and may have received a third approach to your new business.

Imagine what would have happened if you would have visited your financial planner also at the start of your business. Did you go directly to your banker to open a business checking account? I hope not. Perhaps you started with a business license. Did you spend hours searching online for the answers you needed?  What about a merchant account…

No wonder 95% of business owners fail within 5 years. There is no business start up store. It has not been invented (yet). Keep in mind that each professional you go to will have a certain niche of advice. In marketing, the deeper the niche you serve the better, with professionals it works the same. The problem is no can explain to you why your attorney gave you one opinion and your CPA another (other than one was legal advice and one tax advice).

Many times the advice from one will hurt you in another area. The common approach is for your CPA to hear that you are just starting so keep it “simple” just be a sole proprietorship and when you make money incorporate. That of course is directly opposite for your ability to receive any type of business credit, especially with the banks. If you self finance your business as most small business owners do (with personal credit cards) that will hurt your ability to open a business credit card in the name of a corporation or LLC under the tax id number. Yes, it is personally guaranteed but the debt does NOT appear in your personal credit bureaus. But that advice has nothing to do with taxes.

Solution? I would recommend working with someone who has invested a lot of money to break down all these factors into a formula to break down what may be best for you.  Work with these professionals to handle your transition from start up to success. Problem? Most of you still may not recognize good information or systems if they were right in front of you. Remember, if you write the check you get to ask questions. That goes for your doctor, attorney, CPA, financial planners or any other service provider. Most people sort by “authority” and do not ask enough questions.

Once you find someone who is knowledgeable and can help, don’t be cheap when it comes to paying for great information and solutions. Odds are you are only hitting the tip of the iceberg and if someone is strong on the front end they are probably just as strong on the back end. If they are clueless on the front end…time to move on.

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.

For years, Delaware has been considered to be the prime state to incorporate and still holds the number one position for registered corporations. However, what you may not know is that Nevada is becoming the choice of many business owners who want to form a corporation and has been closing the gap to number of filings with Delaware in recent years. Before considering your options, you should know the advantages you’ll gain if you start a business and incorporate in Nevada.

You may wonder if incorporation is the choice for your business. Even if you’re a one-man operation, incorporating (or forming an LLC) may be the best business entity for you. The major reason to incorporate is that it protects your personal assets from business debts, helps keep the IRS off your back (because a sole proprietorship is more likely to be audited), a better marketing advantages (which sounds better as you introduce yourself, the owner operator or the CEO of your company) and helps you get more access to cash and capital!

If you’re looking for a state that allows more protection and levels of “hoops” to jump through for those looking to get access to your money, the small investment to start in Nevada and foreign register (or qualify) to your home state may be very much worth the extra investment. Keep in mind, that many may tell you to keep it simple, which of course is inversely related to asset protection!

Here are the advantages that you can benefit from if you incorporate in Nevada:

It’s Extremely Difficult for Anyone to Pierce Your Corporate Veil

First, what exactly does “piercing the corporate veil” mean? When you form a corporation you must follow certain corporate formalities. If your corporation does not comply with all relevant corporate rules and regulations, keep accurate records of meetings by minutes, or if the corporation commingles funds, your board of directors, officers and shareholders could be held personally liable in the event of a lawsuit. “Piercing the corporate veil” refers to having personal assets exposed in a corporate lawsuit.

How does Nevada feel about this? Nevada has a very tough attitude about piercing the corporate veil, which is why major corporations domicile in Nevada. Essentially, Nevada says that unless they can prove fraud, your corporate veil will not be pierced! That provides an awesome degree of protection for your personal assets.
Your Officers and Directors Can Be Indemnified!

In 1987, the Nevada Legislature passed a revolutionary law that permits corporations to place provisions in their articles of incorporation that eliminate the personal liability of officers and directors to the stockholders of Nevada Corporations.

Nevada Corporation Code allows for the indemnification of all officers, directors, employees, stockholders, or agents of a corporation for all actions that they take on behalf of the corporation that they had reasonable cause to believe was legal. This indemnification can include any and all civil, criminal and administrative action. These two laws can provide you with complete protection for the officers and directors of your Nevada Corporation, as long as they act prudently in their roles.

Delaware and a few other states soon adopted lesser versions of this law, but Nevada’s law remains among the most thorough and comprehensive in the country.

Always do your research to determine your best course of action. For many people, however, Nevada offers a great mix of protection and flexibility when it comes to protecting your assets in today’s difficult economic environment.