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

Fast Business Start up

“The Top 20 Mistakes Before And After” is designed not as a static report, but as an interactive tool for you to use to understand your options, analyze your strategic business design and spot areas of vulnerability, building as you go to create a comprehensive “map” to use in your corporate formation planning. So close your office door for a short time, pour yourself your favorite beverage, and settle back with pencil in hand. You’re about to spend perhaps the most valuable 20 minutes of your business career.

There are three steps in using this material:

Step 1: Read each Costly Mistake (divided into 10 “Befores” and 10 “Afters”) and answer the question that applies to each issue.

Step 2: Tally up your results, then assess your Asset Protection and Business I.Q. Knowledge. Take a moment to fully absorb the insight you’ve gained, and the advantages of having an experienced, “birds-eye view” of your business strategies.

Step 3: Build your strategic plan, and enjoy the confidence of knowing you’re protecting your business and assets.

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

1. Look for a company that will ask questions AND provide REAL answers to determine the best entity for your situation BEFORE quoting you a price. Not doing this would be like a doctor writing you a prescription without first giving you an exam! This should involve several questions, not just a “cookie-cutter” approach. Remember, if you want to do what is easiest you will get the results that come with such minimal effort — often even worse!  Click here for typical questions that should be asked: http://www.nvinc.com/what_factors_affect.htm

They should answer your questions BEFORE you form your entity. A disturbing trend in the industry is to “get the money now” and promise answers down the road. If a company is unable to answer your questions BEFORE you give them your business, they won’t be able to answer them AFTER no matter how many books, tapes, or seminars they offer. The true measure of a company’s customer service record lies in the reports of current and past clients. Ask for current testimonials (many companies offer quotes from clients dating back several years) and check the complaint history listed with the Better Business Bureau (assuming they even qualify for listing).

2. Look for a company that will tell you ALL the fees associated with the formation of your entity. These should include expedited state fees for filing, record book; including seal and all appropriate records with both written and audio instructions, resident agent services, obtaining the EIN number, business licenses, checking names for availability in ALL states of operation, completing the foreign registration paperwork, members only support via phone and web site with critical information after formation, supplemental support materials, foreign registration fees… plus information on state tax rates for the entity, annual reports and tips on what to do after formation and finally a support service for any strategic questions throughout the year!

This will not be $99!  Don’t be misled by low front end fees and end up with surprises on the back end with more fees!
3. Look for a company that understands the multi-state taxation rules. These rules will affect in which state(s) your entity will have to register to do business. If you have a partner or plan to do business outside the state, this is critical.

Beware of companies that tout tax savings in a tax-free state when you live and operate your day-to-day business in another state. States like Nevada do have powerful benefits, tax savings are typically not one of them unless you live and work IN Nevada.

Click here for fines that may be charged to you if you chose a company that DID NOT understand the multi-state taxation rules.www.nvinc.com /will_your_nevada_corporation.htm (check on this URL)

4. Look for a company that can tell you the answers to these following questions:

A. Why most C-corporations, if audited, would pay 35% tax on any profits earned along with penalties and interest that may cripple their businesses!

B. Can they tell you the problems in the strategy of moving your profits to Nevada to reduce your state income taxes.

C. Ask them if they know the difference between a single member LLC and multiple member LLC and when which one makes the most sense in what situations.

D. When do you need an office, bank account and mail forwarding in Nevada (hint, it is rarely required)?

Does the company you are considering know the answers to these questions?

5. Look for a company that can weed through inaccurate information and sort out what will REALLY work for you. Typically, very successful individuals are able to recognize and take advantage of a golden opportunity that others miss. Look for a company that is willing to take the time to thoroughly analyze your situation and take advantage of the best opportunity.

6. Look for a company that can NOT only form the entity correctly and have tools to help your business get off to a fast start to profits™. You are either forming an entity to protect assets or to start a business most likely. If to start a business, the only purpose is to make a profit. 95% of all businesses fail within 5 years. Find a company that has MASSIVE TOOLS AFTER FORMATION to you’re your business make a profit fast! Plus a 10 year track record is a must.

As you know only about 4% of companies that make it past five years make it past 10 years.

About the Author:

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

Even though many professionals tell you that you’re protected by insurance, you can still spend a lot of money defending a lawsuit without ever having a claim against your insurance policy.

But what if a claim is made?  Insurance may provide some level of protection – but worst case, that protection may be only as good as the legal representation you can afford.  (I can’t tell you how many clients have found that their insurance companies weren’t nearly as friendly when they filed a claim as they were when they first signed up!)

True, you can get Errors and Omissions insurance (or “E&O”), business liability, and even officers’ and directors’ insurance — and again, a good policy should provide some protection.  But NONE of those will help you protect the corporate veil (a hugely important benefit that we’ll talk about more later.)  In fact, there is NO insurance policy in existence that can do that.

If you have a smaller insurance claim of, say, $10,000, your insurance company will usually pay it.  However, if you have a claim for $900,000… put the coffee on, because you can expect a visit from your insurance company’s attorneys.  Why?  To find a loophole in your policy so they don’t have to cover you.  And of course, even if they do cover you, your rates will skyrocket – if your policy isn’t cancelled!

Don’t Expect Sympathy from the Courts, Either

Are you a landlord now, or do you have plans to own real estate in the future?  If you’re ever sued, remember that juries are made up mostly of tenants… jealous tenants who don’t own a house – and yet you have several.  This is their chance to get even with every landlord who ever hit them with a late rent charge or made them get rid of that pet.  It’s pay-back time! Is it fair?  No – but it’s human nature.

And consider this:  Most judges earn less than you do. How sympathetic could they possibly be? You might as well just hand over your checkbook and the title to one of your houses – unless you know NCP’s asset protection strategies.

The bottom line?  Win or lose, even with insurance, you could become financially paralyzed by being a sole proprietor.

Does it make sense to leave yourself exposed?  Of course not, especially when the solution is not complicated, sophisticated, or reserved for the AT&T’s of the world. The solution is to incorporate!  Creating a legal entity separates you from your business so that any legal action will not affect you personally.

www.nvinc.com Call within 72 hours of downloading this free guide at 1-877-515-0505 and

receive a Bonus GUIDE, a $47 value, The Top 20 Costly Mistakes BEFORE And AFTER Incorporating! and a 30 minute free consultation, a $200 value plus a special one time offer after you call!

The KEY QUESTION: “ARE THESE PROFITS SUBJECT TO SELF EMPLOYMENT TAXES?”

According to an IRS official and a national issue specialist in its Examination Specialization Program, until the Service issues further guidance, it will not challenge limited liability company (LLC) members on self-employment (SE) tax if the member and the LLC conform to the most recent (1997) proposed regulations (REG-209824-96). These regulations, however, need clarification now on the definition of limited partner (LP).

General Rules

Under Prop. Regs. Sec. 1.1402(a. 2(h)(5), if substantially all of a partnership’s trade or business activities involving the performance of services (i.e., consulting), any individual who provide such services as part of that trade C business will be a general partner (gross income for self employment tax purposes).

In a “non-service” partnership, Prop Regs. Sec. 1.1402(a)-2(h)(2) treats partner as a Limited Partner for self employment tax purposes unless he or she:

1. Has personal liability for the partnership’s debts by reason of being a partner;

2. Has the authority to contract on the partnership’s behalf-, or

3. Participates in the partnership’s business for more than 500 hours during the entity’s tax year.

Even if a member does not meet the hours test or is not personally liable for a partnership’s debts, an individual serving as a manager in a member-managed LLC would be subject to self employment (SE) tax. If the LLC agreement does not precisely give the managing rights to a specific individual, all members would be subject to SE tax.

Exceptions and Clarifications

In general, under Sec. 1402(a),”net earnings from” self employment include the gross income derived from any trade or business carried on by an individual, less any allowable deductions attributable to such trade or business, plus his or her distributive share of income or loss from any trade or business carried on by a partnership of which he or she is a member.

Under Regs. Sec. 1.1402(a)-2(f), a “partnership” includes a syndicate, group, pool, joint venture or other unincorporated organization that carries on a trade or business, but is not a trust, estate or corporation.

For this purpose, gross income includes payments received by a partner from the partnership for services rendered to the partnership or for the use of capital by the partnership.

www.nvinc.com Call within 72 hours of downloading this free guide at 1-877-515-0505 and

receive a Bonus GUIDE, a $47 value, The Top 20 Costly Mistakes BEFORE And AFTER Incorporating! and a 30 minute free consultation, a $200 value plus a special one time offer after you call!