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

Asset Protection and Business I.Q.

Question # 6: Which are reasons NOT to form a C corporation?

A) C corporations have lower tax brackets than individuals
B) Double taxation
C) Too much profit to reinvest
D) When a flow through entity may make more sense
E) Focusing on business expenses may be more important than fringe benefits
F) All the above
G) A and B
H) B, C, D and E

Costly Mistake Number 7:

Forming an entity in Nevada and NOT knowing when to foreign register, and for what reasons. (“Can’t you just get a mailbox?”)

Asset Protection and Business I.Q. Question # 7: Which are common reason(s) that would cause an entity to need to foreign register (or qualify) to do business in another state?
A) An employee in another state
B) An office located in another state
C) Equipment located in another state
D) An independent contract in another state
E) All of the above
F) A, B, and C

Costly Mistake Number 8:

Forming an entity and hiring independent contactors and employees WITHOUT knowing the rules. (It makes a difference as to which states you’ll need to foreign register.)

Asset Protection and Business I.Q. Question # 8: Which statement is false concerning employees?

A) They create less liability than independent contractors for your business
B) Employees create nexus for your company in the state they are doing the work
C) Your company will pay half of the 15.3% payroll taxes on each employee
D) The IRS is mostly attempting to convert employees to independent contractors

Costly Mistake Number 9:
Forming an LLC taxed as a partnership WITHOUT having an”official” partner. (Maybe the IRS won’t notice.)

Asset Protection and Business I.Q. Question # 9: What entity or person (assuming you are one of the partners) will qualify as a partner for an LLC taxed as a partnership?

A) A single member LLC owned by you
B) An S corporation owned by you
C) A C corporation owned by you
D) A foreigner
E) All of the above
F) B, C and D

Costly Mistake Number 10:

Selecting an inexperienced or disreputable company to help you form your entity. (There’s no excuse for not checking references with the BBB, local professional organizations and testimonials.)

Asset Protection and Business I.Q.
Question # 10: Which characteristics should be considered when choosing an entity formation company?

A) A company that has been in business for at least five years
B) A company that has a national known attorney
C) A company that has research and invests in internal training
D) A company that provides other business development services
E) A company that is recommended by top local organizations
F) All of the above

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

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

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!

If you want to form a Limited Liability Company that will be taxed as an S Corporation, you’ll want to know some basic information before you start a business. Many people choose to form their companies as an LLC but with the S Corporation taxation election. Why?

There are two parts involved, taxes and liability advantages. There is a tax advantage in most cases because having an entity taxed as an S corporation allows the owners to save on self-employment taxes (which are 15.3% up to $106,800 of earned income in 2009) on distributions of profits. It is very important to take a reasonable salary when you have either an S corporation or an LLC taxed as an S corporation.

The IRS does not like an owner of an S corporation to take only distributions that are not subject to SE taxes. A reasonable salary is the key. Second, point is that an LLC taxed as an S corporation has an extra layer of liability protection vs. just an S corporation. That is called the “charging order” protection.

These are the two main reasons it may be to your benefit to start a business and form an LLC, yet tax it as an S Corporation. Key point: make sure you file form 2553 federally with the IRS to make the S election in a timely manor (plus some states require a state form to be filed also).

Because the owner of the LLC is self-employed, 15.3% of all earnings up to $106,800 in 2009 are subject to self-employment taxes. For instance, let’s say that you earned $60,000 last year in your LLC. You would pay $9,180 in self-employment tax. That money will go toward your Social Security and Medicaid payments. However, there is a way to earn a lucrative salary without taking a hit on all of the profits.

Let’s say that you formed an LLC taxed as an S Corporation. You earn the same amount of money but pay yourself a salary of $40,000. You’ll pay only $6,120 in self-employment tax. That’s a tax savings of $3,060. S Corporations can elect to pay the remaining $20,000 in earnings as a distribution from the company. As an LLC, you can also elect to split the profits in this manner, as long as you follow IRS guidelines. That’s where the tax savings comes into play.

If you want to form an LLC but want the tax advantages of an S Corporation, you’ll have to get permission from the IRS by filing Form 2553. Timing is crucial, however. This form is due by the 15th day of the third month of the tax year. If you formed your company in May, you’ll have until August 15 to file. Miss that deadline, and you will not be able to take advantage of S Corporation tax savings.

Keep in mind that an LLC taxed as an S corporation may not be beneficial to everyone. For example, in California a licensed professional cannot form an LLC so their best option may be a corporation. Because you have three months to file for S Corporation tax status, make it a priority to seek professional assistance before making the final decision. For many small business owners, however, the ease of management that a Limited Liability Company offers combined with the lower taxes of an S Corporation make this decision an easy one to make.