If you are a small business owner already or just starting out, you may be considering forming a limited liability company.  While there are many benefits there are also requirements that need to be met when it comes to LLC formation.  There are many advantages of forming an LLC, but you need to make sure you follow the right steps in order to receive those benefits.

If you have not yet started your business you have a clean slate in choosing your business name.  It is a good idea to perform a name availability search within the state you plan to incorporate in. For example, if you planned to incorporate in Nevada, you would need to perform a Nevada Secretary of State business search and determine if your name is available.

Once you’ve conducted a preliminary search, if the name you want to use for your business is already in use or too similar you will need to come up with a back-up name.  This could present a problem if you have already been operating your business under a certain name that is already incorporated in your state. 

Another requirement is stating your business purpose.  There are two types of business purpose clauses; general and specific.  Depending on which state you want to incorporate in some states accept a general-purpose clause.  Other states require more detailed description of what your limited liability company will provide. 

In order to form a limited liability company you will need a resident agent in your state of incorporation.  There are several requirements of a resident agent.  For example a resident agent must have a physical address and be available during normal business hours.  Laughlin Associates provides resident agent service for a very low annual cost. This is especially convenient if you are incorporated out of state. 

Setting up an LLC properly demands that you have a management structure.  Your LLC can be managed by owners or a manager.  It is important to outline in your Articles of Organization if your company will be operated by a member or a manager. 

Requirements to form an LLC vary from state to state.  It can get confusing and you may have questions along the way.  Laughlin Associates provides one-on-one service to our clients to ensure their companies are set up properly.  We are there every step of the way to provide personalized service.  We are available to answer questions and provide you will real answers.  We pride ourselves on providing quality customer service and maintaining a personal relationship with you to help you get the most out of running your small business. 

Have questions about forming an LLC? Call me at 1-800-648-0966 or drop me a line at mstein@laughlinusa.com.

Operating your own small business can be exciting and sometimes confusing.  There are many decisions to be made in the beginning stages, including which corporate structure to operate your business from.  Whether you are just starting out with your own company or have partners you plan to work with, there are several factors you want to consider.

If you are currently operating your business as a sole proprietor or as a general partnership, you are completely exposing yourself to lawsuits and may be missing out on several tax deductions. If you have made the decision to incorporate your business, you can limit your personal liability to lawsuits and in many cases, gain considerable tax advantages.

What type of corporation is best for your company?

All Corporations are formed at the State level and are considered separate entities from their shareholders and officers. As separate entities they are able to shield their shareholders and officers from judgments against the corporation. 

What are your options when it comes to taxation of the Corporation?

Corporations may choose how its profits will be taxed.  If your goal is to take advantage of all the pre-tax expenses allowed by the IRS through employee benefit packages, etc, the Corporation will pay its officers and employees a wage and any remaining profits will be taxed at the corporate level (commonly called a “C” corporation). After the profits have been taxed and if the Board of Directors decide to issue a dividend to the shareholders, that dividend will be reported on the shareholder’s tax return as income. This is an example of “double taxation”.

Shareholders may choose “Subchapter S” with the IRS for their Corporation as a way to avoid double taxation.  Simply put, the taxation on the corporation’s profits are not taxed at the corporate level but are “passed through” to the individual shareholders per their percentage of ownership and reflected on the shareholder’s personal tax return. The downside to the “S” Corporation is they are not allowed as many pre-tax deductions when the employee/officer is also a shareholder. Also, there are restrictions on who may be a shareholder and how many may own the stock of the “S” Corporation. 

There are key differences between the two types of taxation the Corporation may elect.  If you aren’t sure how to proceed or are unclear about which structure is best for you, please give me a call and I’ll help you decide the best plan of attack for your particular company.

At Laughlin Associates we provide a customized 1-on-1 approach to help you set up your business with the proper corporate structure.  It is important to Laughlin Associates that we provide you with personalized service through every step of the process.  If you have questions about choosing the right entity for your business drop me a line at mstein@laughlinusa.com or 1-800-648-0966 and ask for me, Mike Stein.

After you make the decision to incorporate your business, one of the next big decisions you will have to make is deciding which state to incorporate in.

Some things to keep in mind here are:

• The state in which your business is located is referred to as your home state.
• The state the corporation or LLC is formed in is called the “Domestic” state.
• All other states that you plan on doing business in other than the “Domestic” state are known as “Foreign.”  It is important to understand that when you incorporate in another state, you still have to register to conduct business in your home state.  You will be required to file a “foreign qualification” to conduct business in each. This will require you to pay additional state fees on top of the fees you are paying to the state you “domestically” formed in. 

When going through this process, which can be confusing, it is important to work with an incorporation service provider that can guide you through the process.  The advantage of working with a team like ours is that Laughlin Associates can provide you with one-on-one customer service.  It is important that you are walked through every step of the incorporation process and we’ll help you do just that.  We will answer your questions and help ensure your corporation or LLC is set up correctly. When it comes to incorporating your company with us, there will literally be no stone left unturned.

Preferred States

There may be advantages when it comes to incorporating in “foreign” states over forming the entity in your home state.  Some states are “pro-business” and draft their corporate and tax laws to attract more companies to their state.  These are called “Preferred States” as they are preferred for their business advantages.  Three states that appeal to small business to incorporate in are:  Nevada, Wyoming, and Delaware.  These three states offer unique advantages that may work in your business’ favor. 

Some advantages to incorporating your business in a preferred state are:

• No state corporate income tax
• No minimum capitalization requirements
• Privacy structuring is obtainable with proper implementation
• Nevada and Wyoming have no franchise tax (initial and annual statement fees and business license fees apply)
• Nevada offers “charging order protection” on Corporations, LLCs, and LPs

There are always advantages and disadvantages when it comes to Corporation/LLC formation and the structuring of your business entity.  The key is to find the correct and trustworthy answers and to know how to properly implement them into your business structure.  To further explore how to incorporate in your home state or whether a preferred state offers enough advantages for you to pursue, contact Laughlin Associates to answer any questions you have. 

You can call me anytime between 8 a.m. and 5 p.m. PST—just call 1-800-648-0966 or drop me a line at rhaines@laughlinusa.com.

Doing business in other states is also called foreign qualification.  Foreign doesn’t refer to international business, it means operating within the United States but outside the state in which your business is incorporated. 

If you incorporate in Nevada, your limited liability company is considered domestic only in Nevada and considered a foreign LLC in other states. 

You may need to foreign qualify if you are considering incorporating in a state other than your home state. Different states have different criteria and many factors are used to determine the need to foreign qualify.  Ask yourself these questions:  does your company have a physical presence in the state?  Have employees in the state?  Accept orders in the state?  Have a bank account in the state?

If the answer is yes to any of those statements it is likely you will need to foreign qualify.  If you have any questions about conducting business and whether or not you need to foreign qualify your business, contact me and I’ll help you navigate these sometimes complicated waters. You can reach me at 1-800-648-0966 or mstein@laughlinusa.com.

In order to conduct business in a state other than your ‘domestic state’ you need to register for a Certificate of Authority.  If you will do business in more than one state you need to do the same for every state.  Your business will be required to continue to pay state fees and be subject to on going reporting requirements.

There are consequences that could be very severe if you fail to foreign qualify.  Your business could face penalties and back taxes for the time you were operating without being foreign qualified.  Although there are additional costs to becoming foreign qualified in other states the process is necessary. 

If you are considering incorporating in a state other than your home state Laughlin Associates can help you.  We offer personalized services and are with you every step of the way.  When you have questions you can call and speak with a business consultant.  We understand that when you own your own business things may come up to cause you to have concerns. That’s why we offer incorporation services for whatever part of the process you are in.  Let us work with you one on one to help you to properly incorporate your business.

You can contact me at 1-800-648-0966 or at mstein@laughlinusa.com.

This article is from our friends at Funding Roadmap, your complete cloud-based business planning and funding solution. Join us for a webinar on this topic on Tuesday, July 12 from 1 to 1:45 p.m. PST. Go to www.laughlinwebinars.com now to secure your space.

******************************************************************* 

The Problem

In states struck by natural disasters, tens of thousands of small businesses have been damaged or gone in an instant! This has caused unprecedented challenges to the public and private mechanisms designed to address small business access to capital and community recovery.

Nothing but the shirt on their backs: Affected business owners are too often left without the necessary documentation or information for FEMA/SBA to process their claims and applications after a disaster. The longer it takes for a small business person to painstakingly re-construct their documentation, the more likely it is that they will give up and the JOBS they created and their tax revenues will be lost forever.

Look at the facts: SBA and the Department of Labor statistics indicate over 40% of businesses that experience a major fire or natural disaster never reopen and over 50% that do fail within two years.

Preemptive Disaster Planning tools for a FEMA/SBA loan need to be accessible on websites such as http://www.preparemybusiness.org/ and http://www.ready.gov/ to provide a way for small business people to be prepared for an SBA Disaster Loan, as opposed to downloadable PDF list.

Why we need to solve this problem now

Mitigate the economic impact: Responsive and prepared government agencies can mitigate the economic impact of disasters. Businesses that reopen quickly after a disaster realize increased business revenue, can put people back to work, create new jobs, and provide much needed sales, property and payroll tax for the impacted communities. Early successes are also critical to boosting morale during recovery efforts and can have a substantial positive effect on the community rebuilding effort.

The technology solution

Make it easy, make it available: We have the technology to solve this problem now and increase the success rate of rebuilding American small businesses and towns long before they may need it. It’s called the http://fundingroadmap.com , a standardized private label licensed cloud-based SBA and GAAP compliant, transparent multiple choice business plan and due diligence reporting system and repository, where all information required by the SBA for a disaster loan is included and can be retrieved from anywhere at any time. See the list here: https://disasterloan.sba.gov/ela/InfoNeeded.aspx as required by the SBA.

Cloud-based: Fundingroadmap technology can instantly play a very important role in preparing entrepreneurs and small business owners ahead of time so they can compile and protect financial documents and information in an SBA compliant standardized reporting system that is ready in an emergency for the process of applying for FEMA/ SBA small business loans and other necessary capital. Completing a Funding Roadmap document enables a business to look ahead, allocate resources, take key steps, meet challenges, solve problems, and embrace opportunities. It provides a place to compile facts, upload and store securely online all of the answers to the mandatory questions and the documents lenders and investors require during the review process for capital.

Keep moving forward: We all recognize the importance of a plan for startups. Less obvious is the need for established companies to maintain long term effective plans that are flexible enough to adjust to changing challenges and goals and can be made instantly available for review by FEMA/ SBA online should an emergency strike.

Improve staff efficiency

Go virtual: Instant access to this critical information will allow FEMA counselors to assist the recovery efforts of those FEMA staff on the ground in the disaster states, remotely and quickly helping determine the current and future status of a company.

Go mobile: This information is accessible on mobile devices and provides instant access for review by investors, lenders, SBA/FEMA or insurance companies, helping small businesses back to productivity much more quickly than current methods. Fundingroadmap helps claims processors to quickly and accurately determine resources to be distributed to claimants after a disaster with complete security and transparency. You can learn and see more on this short webinar July 12, 2011 from 1 to 1:45 p.m. PST. Join at www.laughlinwebinars.com to secure your space.

The participants’ journey

Keep everyone calm, make the process smoother: Post-disaster processing staff, instead of commiserating with victims and giving them a nearly impossible to-do list of required documents, could instead be receiving applicants armed with everything they need. Claims and loans could be processed in hours, days or weeks, instead of months, years or never.

Bring back jobs: Providing a faster more efficient and successful process for small business owners desperately trying to access capital, to quickly recover after a disaster strikes, rebuilds a community faster, bringing back jobs, community morale and tax revenues.

By implementing a new technologically advanced standardized reporting system, governments can reach victims faster and farther away, engage more easily, and deliver a more successful experience while creating quantifiable results.

This holistic, integrated approach to data management empowers everyone involved and will revolutionize the government’s ability to preserve the businesses of the hard working entrepreneurs who have built this great nation.

By adopting the Fundingroadmap, government can solve the problems as outlined above quickly, and systemically ensure better results.