Has anyone started a business?

disneyjoe7

Well not really a business, but a corporation. I have been working on this for some time now. Have great support to bring to market. I need to stay asset protected, and I like to stay business privacy by not listing my home address out to the world.

So what I'm confused on is this a quote from Legal Zoom "foreign corporation" in each state where they do business. "Doing business" means more than just selling products or making passive investments in that state. It usually requires occupying an office or otherwise having an active business presence.

Ok so if I incorporated in X but sold it to someone in every state, do I need to be listed as a "Foreign Corporation" in every state?

Here a link of what I'm working on / will be soon in market.

http://bellsouthpwp.net/g/o/goofy8/

mantis

Funny how you bring this up.

Personally I have been kicking around opening my own custom Install shop.Bringing in gear I feel has proven itself in the marketplace.

I would like to be more personal with my clients and owning my own bussiness I feel and do just that.

I also enjoy system design.Some of our salesman are good at it but I feel I can take it to the next level or 3.

The fustrating part is knowing that the system can be a whole lot better if planned better.The room is always a major factor..

Thinking alot,
Dan

dlew308

You may want to look into LLC instead. I don't know what the fees in Florida are, but in Calif it's a min. $800yr for either LLC/Corp. Open your business in what state you're based in is the easiest way to go. You can file with your home address but then use a PO Box or different address as the business address. Same with the phone number. You don't have to do anything to sell to other states. Once you have your seller's permit and city business license, you're ready to sell. You charge tax to customers in the state you're selling in.
Check out your state's board of equalization website or call them with questions. Good luck.

Shizelbs

Once finals are over I have plans to work on getting mine up and running. I hope to have things in motion and have an official company name sometime in June. Its exciting! Damn school is getting in the way though.

disneyjoe7

Well I like to do this company in C or S corporation, I see that some people are doing the LLC business. I am reading a book that LLC are not a corporation, so I am thinking C or S corporation.

Also I thinking that Delaware is corporation nice place, so do I need to do foreign corporation in Florida?

I will be doing this business, but will be working for another company also. (I will not quitting where I work now) So with money coming in I don't really need this money from this business, so I don't want to screw me with taxes at the end of the year.

Demiurge

Originally posted by mantis
Funny how you bring this up.

Personally I have been kicking around opening my own custom Install shop.Bringing in gear I feel has proven itself in the marketplace.

I would like to be more personal with my clients and owning my own bussiness I feel and do just that.

I also enjoy system design.Some of our salesman are good at it but I feel I can take it to the next level or 3.

The fustrating part is knowing that the system can be a whole lot better if planned better.The room is always a major factor..

Thinking alot,
Dan

Dan-

Go for it. All good businesses start off as a small idea or some guy working for another company and thinking he can do it better. 9 times out of 10 they can. I'd study as much about the place you're at now and figure out how they do it, their costs and how to cut them, if at all. If not you need a new paradigm. I have no doubt in my mind that a custom install guy could make a hell of a buck if he already has a good grasp of the trade.

F1nut

If you want to use the State of Delaware for their business friendly tax shelters then you must have a physical place of business in the state.

PolkWannabie

IMHO ... S Corps in Delaware are the way to go for a variety of tax and other reasons I won't go into here and you will not need to have a foreign corp elsewhere. I have in the past set these up and run them for several years.

However, before you get too far into this I would talk to a qualified CPA that can point out the potential problsm before you run into them.

F1nut

PW,

Don't you have to have an actual business presence in Delaware or am I mistaken?

disneyjoe7

Well I don't think so, have you ever been there is nothing. With all the companies there you think that place was HUGE. It's NOT.

I think must are using another company to do everything you need there for you, just a little $.

I have this www to look at.

http://www.incnow.com/faq.shtml

Originally posted by F1nut
PW,

Don't you have to have an actual business presence in Delaware or am I mistaken?

F1nut

LOL.....yeah, been there alot. It's the next state over.

PolkWannabie

No Delaware presence necessary ...

The reason for Delaware is there are no state corporate taxes. This is more of an issue for C corps than S corps which is why lots of C corps do there incorporation there.

S corps are all pass through to the owners via K-1's. This has advantages and disadvantages but does offer the same types of protection for the owners that a C type incorporation has with a lot fewer headaches. LLC's & LLP's are also worth looking into and although I have a passive stake in several LLC's, I can't say that I know a lot about the pluses and minuses. The differences between C/S corps and/or LLC/P are subtle but far reaching. I don't pretend to know them all and as I suggested it's a good idea for someone about to go down this road to have an in depth conversation with like a good CPA to determine the best choice for anyones particular situation before that choice is made. It's much more difficult to "fix" it later.

disneyjoe7

I'll be looking for one of them next, excellent suggestion.

Thanks.

You may have just save my shirt.

Originally posted by PolkWannabie
No Delaware presence necessary ...

I suggested it's a good idea for someone about to go down this road to have an in depth conversation with like a good CPA to determine the best choice for anyones particular situation before that choice is made. It's much more difficult to "fix" it later.

gacole2000

You do not have to file in other states, you may however subject yourself to Nexus. States are being very aggressive in seeking revenue throught nexus. They can have quite nasty penalties.

Nexus is when you do business is another state (other than where you file), you may be subjecting yourself to their sales tax.

I also agree that a S / LLC is the way to go.

You may want to look at NV also.

Good luck! Greg

Tour2ma

PW,

I know Delaware has long been a haven for incorporation, but seems like I recently read about a western state that is now very favorable as well. I want to say Colorado, but not sure...

Is Delaware still THE place to incorporate?

disneyjoe7

Tour,

It's Delaware, Nevada, or Wyoming State. Works well for a new Corporations. IMHOb

Maurice

Disney,

I am actually in the business of setting up corporations. Without getting too technical, if asset protection is your goal, you should go with a domestic for-profit corporation in your home state, and have a Nevada coporation in the background for protection. With the two in operation, I can show you how to work wonders!! If you would like to talk further about it email me. cbcinc1@msn.com Also, an S corp can be deceptive. The lure is ability to pass your salary through the corp tax free, but when you make the transition from C to S status, it requires FULL disclosure which defeats your purpose of protection. When set up correctly, two C corps can give you all the tax benefits of an S (and more) plus keep your protection in place.

PolkWannabie

Maurice,

I can't say I've ever heard of anyone transitioning a C corp to an S corp unless what they should have chosen to begin with was an S corp or am I not understanding what you are saying ?

Usually the transition is from S to C when the company has gotten large or needs to have more than a few stockholders etc.

Tour,

For all practical purposes which state for S corps really makes no difference as net profits one way or another are passed through to the stockholders, so home state is as good as anywhere. C corps however are a different ballgame, but unless one is incorporating with a lot and I mean a LOT of assets or a LOT of stockholders there is no reason I can think of to do the incorporation as a C corp.

Maurice

Every "privately held" corp starts off as a C. Once formed you can then apply for S staus. When it comes to asset protection, you must understand the ins & outs of stock ownership. The best case scenario is NOT to own stock in a corporation that does business with the public. When it comes to privately held corps, stock=ownership=liability. The whole purpose of incorporating is to seperate business from personal, and that CANNOT be accomplished if you own stock. For example, if you own XYZ, Inc. and all of its stock, and the company gets sued and has a judgement against it, if the insurance you have in place does not cover the amount, they can come after the stockholders personal assets. This is why Nevada corps are so popular, Officers & Directors are not required to own stock, thus giving you TRUE seperation between business and personal. When done correctly, the corp that does business with the public (home state) wont own anything, thus there is nothing to sue for. The Nevada corp should lease all assets to the domestic (home state) corporation.

To simplify it, If you lease a car from GMAC and have an accident where someone is killed (God Forbid) and you are liable, sued and a huge judgement is levied, the opposition can come after your personal assets, correct. But one thing they cant take is that car, because you dont own it. You can set up business the exact same way!!!!

PolkWannabie

When you start talkin about people bringing lawsuits and the lawyers behind them, they'll go after everyone and anyone they can ... The company itself, the officers and directors, any parent companies and their officers and directors, owners or stockholders etc. although the stockholders are less likely to be a target, unless of course they are also the officers and directors, than the rest.

As lawyers say ... EVERYTHING is negotiable ... The corporate umbrella provides a nice saftey shield whether that be from an S or C corp which is likely to hold up unless someone can prove neglect or other misuse of power by a officer or director.

Look at the relatively recent events of Global Crossing, Enron or a bunch of others ... The stockholders got beat up but in a different way i.e. the drop in stock price ... It's the officers and directors that'll be doing time or paying back if anyone is.

Maurice

Those are publicly traded corps which are a totally different animal. But, you are correct in respect to lawyers going after any and everyone. So like the example I gave with GMAC lease, if that scenario were true, the lawyers could not go after GMAC because of a wreck caused by one of their lessee's. The leasing company is held blameless. Thats why you place all assets you wish to protect under the NV corp. Since it wont do business with the public, it cant be sued. It stays in the background as a leasing/holding corp only. The corp that does interact with the public is ALWAYS a target, thats why it should own nothing.

PolkWannabie

Originally posted by Maurice
The corp that does interact with the public is ALWAYS a target, thats why it should own nothing.

Again this is an oversimplification ... In the particular case you've stated I would agree that no one will be going after GMAC as if the fault lies anywhere it's with the vehicles operator unless of course there was something wrong with the vehicle itself in which case you can bet GMAC and/or GM itself will be targets.

But in a more straight forward situation where company A develops a product and passes it through or sells it to company B who in turn sells is to the world company A will be held just as liable as company B when the product blows up.

Regardless of where one puts oneself in the chain, the lawyers have good reasons to find out where the money is and that's where they'll attack if they can and they'll dream up reasons to get there.

This why for the most part if you get sued you've lost. This is especially true for small companies and their officers and directors. You lose in legal fees, you lose in lost productivity to give depositions or appear in court, you may even lose in terms of reputation and the ability to do business after the fact.

Maurice

Again you are stating different scenarios that dont pertain to the subject. When done correctly, the NV corp is not connected in any way to the home corp. If you develope a product, it should be manufactured and sold by the SAME corp (home corp), with all of its assets being owned by a leasing company (NV) that is not connected to this corp. Then if all hell breaks loose, the NV corp can reposses all assets via a previously filed UCC1 which is inforceable before, during and even after BK. If that happens, you BK the home corp, reposses all assets to NV, then set up another home corp and re-issue (lease) those assets to the newly filed home corp and your right back in business.

This technique is used all the time, even by government. Why do you think people like Wayne Newton could file Chapter 7 BK, and still be rich? His assets are owned by a NV corp, and since he is not required to own stock in that corp, there was no way to attach any of the assets he wanted to protect. Another good example is O.J.. In spite of a $34 mil. jugdgement against him, he still has over $18k per month income, why, its paid to his NV corp.
Thats why everytime you see him he's playing golf instead of begging for a job. It's all about knowing the intricate details and operations. I dont mean to argue at all, but I do this as a business and have set up over 30 NV corps, not including nearly a dozen CA corps.

:cool:

PolkWannabie

And I've been doing it for 30 years ... let's agree to disagree ...

Maurice

Wannabe,

Have you specialized in forming NV corps. I'm just wondering if you are familiar with them. Its obvious you know something about incorporating, but maybe not utilizing NV corps to the fullest.

I love a good business debate though.;)

wallstreet

I agree with Polkwannabe. Piercing the corporate shield is different than owning stock. If the corporate bylaws and rules of law are followed, then owning stock does not add or remove any liability to the person owning that stock. At least in Texas that is.

Maurice

Each state has its own corporate guidelines. At one time Delaware was excellent, but a few years ago they changed their laws and now are very close to California (not good). Basically, the reason NV has such loose regulations is because of Gaming. Its so flexible, you dont even have to use your real name on the officers list. You can actually use an alias or a.k.a. on all corporate paper work. Check out NV Sec. of State website @ www.secretaryofstate.biz. Click Commercial Recordings, then Why Incorporate in Nevada. There is a basic outline of the advantages posted. Just trying to help.

wallstreet

Is there a franchise tax in NV? In Texas, you're exempt under 150K. After that you start paying.

Spoonman

I would take legal, tax and business advice received off the internet with a grain of salt. While the internet provides for a cornucopia of information it also provides for kindas, maybes and I think particularly when asking for opinions. This thread is a perfect example. There is a lot of misinformation here from people who mean well but really don't know what they are talking about. One example: A "S" corp is a "C" corp. A "S" corp is purely a tax distinction. From a legal standpoint they are both the same. Also any advice for tax purposes that one is better than the other is suspect at best. One cannot make that decision without way more information then you have provided for here.

However, before you get too far into this I would talk to a qualified CPA that can point out the potential problem before you run into them.

If you are truly serious about starting a business the above is the best piece of advice you have received on this thread. Good luck to you!

PolkWannabie

Presactly ... Which is why I made that suggestion ... Not to offend anyones sensibilities or professional capabilities but for one who is starting a business one should make accounting and legal friends close to home where they can be easily gotten to when needed.

Maybe NV is the best thing since sliced bread for setting up corporations these days, but nothing in the legal world is bullet proof ... ask any lawyer.

disneyjoe7

Thanks all for the Excellent input on this new adventure I will be taken on

Off to find a CPA / and or a Lawyer.