Incorporating Out of Your Home State

This is a recurring question from people calling to our offices: Does it really matter where I incorporate my business? or Where should I incorporate my business? and this answer is yes. It does really matter.

First of all, you should incorporate in the State where your office is physically located. If you incorporate in another state such as Delaware, Nevada or Wyoming, you may need to submit an application to qualify as a foreign corporation or LLC in the State where you are located. This tends to be more trouble than it is worth for a small busines.

Through our life, we have seen entrepreneurs making big mistakes, thinking that they would save money in taxes by filing in "tax heavens" like Delaware, Nevada or Wyoming. Later, when they  realized about their mistake, they ended dissolving the foreign company or filing foreign qualification documents in their home states. In both cases, their errors turned out to be good business for us.

A number of years ago, there were some pretty motivating reasons why you might want to incorporate in States like Delaware and Nevada. However, times change and so do State laws. For companies that are privately owned (closely held), there are no substantive differences anymore between the corporate laws of States. If you incorporate for the purpose of owning and operating a business, the general rule is that you should incorporate in the state where your main business office is located.

For large corporations the answer is different. Nearly half of the corporations listed on the New York Stock Exchange are Delaware corporations. Many of these corporations conduct business throughout the US and abroad. They must, of course, conform to the laws of any jurisdiction they enter, but they have no problem to file foreign qualification documents in each state where they operate.

Active Filings can assist you in qualifying your corporation or LLC in any state of  your choice. Our foreign qualification service will provide you more information about how to expand your business.

When should you have a DBA? (and what the heck is a DBA?)

If the name used by a business differs from the one registered with the state, or your personal name, or the name of your partners, or LLC, a fictitious business name must be filed.

Some states use different terminology for a fictitious business name. Many refer to a “DBA” (Doing Business As), but a “trade name” or “assumed business name” have the same meaning.

However, having a DBA does not provide any extra protection from financial liability. Forming a corporation or LLC is the only way to legally protect different businesses or individuals from liability in the event of a bankruptcy or other financial debt.

Many new corporations may look to expand by opening several divisions or locations, and sometimes use different names. This is also a good idea to test a product or service without having to invest on the business formation (if the product or service starts to pick up, you can always form a legal entity to manage the new business).

In some states you register your assumed name with the Secretary of State, but in most of the cases , registration is handled at the county level, and each county may have different forms and fees for registering a name. Beyond the fact that counties and cities are not very efficient handling these filings, to register a DBA filings represent less hassle than to form a corporation or LLC.

Keep that in mind and start thinking about your next DBA, assumed name, trade name or simply, a fictitious name.

From Laid-off to Entrepreneur

 The economy isn’t what it used to be but maybe that isn’t all bad.  We’ve heard for far too many years now that the opportunities that Americans once had are either overseas or in the hands of computers and robots but that isn’t entirely true.

Generation Y, the current younger workforce who have suffered the lion’s share of the effects from the 2008 and 2009 economic collapse, may have lost their jobs in large numbers but that has created a need breed of entrepreneur that has stopped looking for jobs and instead, created their own.

They’ve learned that relying on somebody else for their income isn’t as safe as it used to be so they’ve taken to entrepreneurship. The economy is relying on this new breed of business owners!

If you’re considering becoming an entrepreneur but don’t know where to start, think about your talents. What did you do at your old job before getting laid off? Do you have hobbies that could turn in to a business? Maybe you’re a good with repairing electronics, writing, or carpentry. Maybe you have a knack for decorating or you’re great with kids. If you find what you really love to do, that’s probably where most of your talent lies and chances are, you can turn that in to a business if you’re willing to work hard.

With new technology, starting a business can be very inexpensive. Freelancers can often start service oriented businesses with basic office equipment, an internet connection, and some contacts within the community. It’s best to register your business as an LLC or S Corporation with your state and obtain mandatory county permits but after that, concentrate on building your business.

Entrepreneurship isn’t for everybody. Some people enjoy the structure of a traditional work environment but for those who have always wanted to start their own business, a recent layoff may be the perfect reason to dive in and follow your dreams.