Entries Tagged 'Incorporating' ↓

Beware of the
“Top 20 Costly Incorporating Mistakes”

Even One Could Cost You Your Business (and have the IRS contacting you)!!
 

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The Limited Liability Company (LLC) is a powerful entity that originally started in Wyoming in 1977 and became more popular in the late 1990’s.

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You don’t need to the folllowing in place until the last week of January or later…

1. A business checking account to accept money into your new entity in the name of the LLC or corporation (meaning you are content to operating a schedule C for the first month).

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This is the time of the year when we see financial stress multiplied, and it can be avoided.

If you are looking to form an LLC (most popular) or corporation in the month of December or by the start of the year (a big mistake to start at that time), keep the following points in mind:

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1. Blowing Your One Chance at Setting up a U.S. Merchant Account! Most banks or merchant account providers will
NOT open up a U.S. Merchant Account for a U.S. company that is 100% foreign owned. Why? No recourse. Some
banks may set it up but they require a large hold-back of your sales to keep as a safety net. If you attempt to set up
your merchant account and fail, it will show up as a bad mark in the merchant account data base. When you go to
get it done right, you may have blown your only chance because the next merchant account company will know you
already failed to set up a merchant account.
2. Inconsistency in Your U.S. Company Set Up! This happens when someone will set up a corporation in one state,
a bank account in another state and a mail forwarding program only with a virtual U.S. phone number. You may get
your bank account set up, but this will back fi re when it comes to developing trust in the U.S. market. Only having a
U.S. P.O. Box as your U.S. address sends a strong message to the U.S. consumer that you are a fl ake or you are
attempting to hide something. Trust is the name of the game…don’t get cheap to save a few dollars and lose out on
sales and joint ventures because of it!
3. Costly Tax Mistakes with the U.S. Internal Revenue Service (IRS). There are many pitfalls and hidden land mines
that can cause you a lot of damage with your U.S. company if you do not have all the facts up front. You must know
which entity is best and the U.S. tax ramifi cations if the entity is taxed as a C corporation vs. an LLC. Both have very
different U.S. tax structures. You must have an ITIN number and an EIN number. You must fi le the proper tax returns
the following year. Setting up your company in the wrong state may cause you to pay an extra 5-8% of unnecessary
state taxes. An LLC can be taxed in different methods; one will result in a fl at 30% withholding tax on all profi ts before
they fl ow back to you in your home country. If you are planning to expense out profi ts to your home country, you must be familiar with IRS form 5472 with the IRS! Having the IRS auditing your U.S. company can be a fast way to go out of business with penalties and interest!
CAUTION: Online companies may make this appear to be simple. Meaning, very few steps for a low price. You do
not want surprises, especially when you are not based in the United States. NCP’s goal is to remove surprises and
provide the support you need!