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.

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.

Laughlin Associates, Inc. (Laughlin) is pleased to announce a new strategic partnership with H&R Block (NYSE: HRB) – one of the world’s largest tax services providers. 

As part of this relationship, H&R Block has partnered with Laughlin Associates to introduce their new online tax applications to the small business market. These applications will help small business owners find local H&R Block locations, gain access to Ask a Tax Question, as well as find out about tax issues in the news. In the ever changing world of business tax rules and laws, the H&R Block applications make getting the critical answers business owners need easily and directly from www.laughlinusa.com.

Additionally, as part of the relationship,  H&R Block offices will be able to provide clients with entity filing and formation in all 50 states as well as corporate record book management services. 

The online H&R Block applications include features such as:

- Current tax news and important information provided by The Tax Institute at H&R Block

- Answers to the most common tax questions through the Ask a Tax Question section

- Office locator providing a phone number and directions to the H&R Block office of choice, and a Products & Services feature that explains which tax services are offered at each office

Adding these applications to the Laughlin Associates web site is part of a continuing effort to connect Laughlin clients with H&R Block tax services and clients with Laughlin’s suite of foundational corporate services.   

About Laughlin Associates

Laughlin Associates is the foremost leader in corporate formation and business management services. With almost forty years providing U.S. corporations, LLCs and trusts with expert advice, Laughlin has been the trusted resource in providing strategic consulting, accredited training programs and technical resources for more than 80, 000 companies. 

About H&R Block

H&R Block Inc. (NYSE: HRB) is one of the world’s largest tax services providers, having prepared more than 550 million tax returns worldwide since 1955. In fiscal 2010, H&R Block had annual revenues of $3.9 billion and prepared more than 23 million tax returns worldwide, utilizing more than 100,000 highly trained tax professionals. The Company provides tax return preparation services in person, through H&R Block At Home™ online and desktop software products, and through other channels.

Now that the Obama Administration has finally prevailed in turning its Health Care Reform initiative in to law, it is time to focus on what this really means to small business owners. And here it is…YOU’RE GONNA NEED TO MAKE MORE MONEY!

Regardless of which side of the debate you were on a couple weeks ago, the reality is that changes are coming and those will include increased taxes for businesses and many business owners. Not only are your taxes going to increase, but so is the level of tax enforcement by federal and state governments. In President Obama’s Fiscal Year 2010 budget delivered last May, it was noted that the IRS stood to receive an overall increase in funding of $764 million, including a $400 million increase in tax enforcement funds. This represented a 13 percent increase for IRS enforcement activities. Among the primary targets of this increased wave of audits will be sole proprietors, single member LLCs, and other closely held businesses. I have personally talked with a number of people who are terrified to take common deductions such as those associated with:+++++++++

They have reason to be fearful. All of these are red flags to the IRS and can trigger an audit. While the thought of an audit is scary, the only thing to really fear is being unprepared for an audit. If you don’t have your records in order then you will have a miserable and expensive experience. If you do have your records in order, odds are that you will zip through the process. I want to be clear about what these records include. In addition to your financial records, receipts, mileage log and so on, in a business audit you must have your corporate record book up to date. If you are a corporation or LLC and your record book does not show that you have been respecting the corporate veil, I guarantee you that the IRS auditor will not respect it either. Every year we hear stories of valuable corporate deductions being disallowed because the corporate record book did not indicate that the shareholder was treating the business like a separate entity. Instead of enjoying the tax deductions and protections afforded by a corporation or LLC, the business formalities were ignored and the shareholder managed the business like it was a sole proprietorship. These are expensive mistakes and hard lessons to learn.

As you navigate in this increasingly challenging environment, you will need every possible advantage you can employ. As a business owner, one of the most obvious and trusted protective shields available is a corporate entity. Using such a shield can keep you and your family safe from all kinds of attacks. But if you don’t take care of your armor as you should, you will find it rusted and worthless when it comes time to go to battle. There is no reason that this should ever happen.

The ride is about to get more turbulent for many small business owners as the government doubles its efforts to exact funds from our bruised and shrinking private sector. Those of us that are committed to being in business for ourselves will have to deal with working more days each year for Uncle Sam. However, the number of days that each one of us works for him will differ based on our thoughtful preparation and targeted plan of action. It’s all up to you.

Laughlin Associates, provides consultation, education and hands on help to thousands of business owners every day to ensure that their corporate records are in order and ready when they need them most.

Author Aaron Young maintains his own blog at http://www.smallbusiness411.com