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 1:

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?)
Asset Protection and Business I.Q.

Question # 1: If you have two members in an LLC*, how will the LLC be taxed?

A) A limited partnership
B) An S corporation if you file Form 8832 and 2553
C) A disregarded entity
D) Federally only
E) All of the above
F) A and B
G) A, B and D * “Members in an LLC” is defined as the owner of the LLC. Costly Mistake Number 2: 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.) Asset Protection and Business I.Q.

Question # 2: What is a “real estate dealer”?

A) Someone who goes to real estate auctions
B) Someone who holds onto real estate for more than 12 months
C) Someone that will be subject to SE taxes on the sale of the property
D) Someone that will be subject to short term capital gains
E) Someone that flips properties in less than 12 months
F) B, D and E

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

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.

The Social Security wage base will remain $106,800 for 2010, the first time the index hasn’t budged since 1971. The tax rates will not change, either:
6.2% for FICA and 1.45% for Medicare. Self-employed taxpayers will pay 15.3%  on the first $106,800 of their net earnings and 2.9% on any amounts above that.

This is a great reason why not to operating as a sole proprietorship in 2010. When you incorporate as an LLC taxed as an S corporation or an S corporation it puts in you a position to have both earned income which is subject to self employment taxes and distributions which are NOT subject to self employment taxes!Make sure you pay yourself a reasonable salary according to the IRS.

Make sure to have a reasonable salary and don’t wait until January 2010 to incorporate! Do that in December or before and have the start date on the SS4 application for the EIN number to start on January 1, 2010 (unless you are starting now and doing business now).

Questions? Call NCP at 1-888-627-7007!