Anatomy of State Filing Fees

Incorporation fees vary widely depending upon in which state you file, but you should only pay the state fee that is requested by the state. For example, one website lists Massachusetts incorporation state filing fee as $390, while a quick check shows that in reality, the state fee for incorporating a business in that state is $275.

It's a good idea if you do plan to hire a firm to handle the bureaucratic red tape, that you either find a reputable company or go online and check out the fee for yourself. Every state lists their fees, so it's an easy thing to verify. Access to the Secretary of State (or Department of State of all 50 states is available at ActiveFilings.com - SOS Access Gateway

If you plan to hire a company to file for you, it might be a good idea to request the state receipt. The last thing you want to do is pay hundreds of dollars more than you need to when starting a new business. Find a reputable company to do your filing and be sure to contact the Better Business Bureau before sending anyone a check.

Having a company incorporate your business is a good idea if you have any qualms about the legal aspects and the paperwork involved in the process. Most companies include various services, from basic services like checking corporation name availability to obtaining the entity's EIN. Again, fees for these services vary widely, so be sure you are comparing apples to apples when researching these businesses.

Why incorporate? Incorporating your business gives you limited liability should you have legal or financial difficulties down the road. It's a sort of insurance policy that will protect your personal wealth if your business suffers. If something does happen to your business, as long as you are incorporated, your business, and not you personally, is liable.

Other reasons to incorporate include the idea that if you are incorporated your business is more legitimate than one that is not. Incorporating gives your business credibility and a sense of permanence that customers look for when doing business.

Also, if you incorporate your business, it can continue after you retire and even if you die. The business can be transferred to your children or sold to another party. Incorporating can also lead to tax savings because corporations are taxed at a lower rate than individuals.

The bottom line is that incorporating your business is probably one of the best business moves you can make to protect both yourself and your business. But like anything, you need to do your homework and be careful who you trust to handle such an important legal matter as incorporating it.

8 Reasons to Register as an LLC

If you’re an existing business of any size, you’re probably required to register with your state’s filing agency. There’s little reason not to register. In most cases, the costs associated with registering are minor.

The toughest part might be figuring out the best business registration option to choose. Registering as a limited liability company or LLC is probably the best option for your business. Here are a few reasons why.

IT’S SIMPLE TO CREATE

In some states, forming an LLC is as simple as going to a website, answering a few simple questions, and paying a filing fee. In other states, the process isn’t quite as easy but if you need to hire a business registration company to help, don’t expect to get a large bill. Some companies will help you register your business for less than $50.00

IT LIMITS YOUR LIABILITY

As the name implies, when you register as an LLC, you are no longer personally liable for adverse events that take place in your company. If your company is sued or files for bankruptcy, the creditors cannot try to collect your personal assets.

While this is an advantage, there are plenty of exceptions. If your lender writes a clause into a contract or other situations exist, you could be liable but as long as you run your LLC correctly, your personal assets are safe.

PASS-THROUGH TAXATION

Your company will likely not pay taxes on its income. The tax is “passed through” to you. Other business entities are required to pay taxes at the business level. As the owner, you would pay business taxes and personal income taxes once you paid yourself. An LLC avoids double taxation.

LESS PAPERWORK

LLCs require very little state-imposed paperwork. Often, business owners pay an annual fee, update their contact information, and answer a few questions. Of course, each state varies but what is consistent is that the paperwork for an LLC is much less than an S or C corporation.

SIMPLE MANAGEMENT STRUCTURE

Does it seem a little silly to have a board of directors for your startup? An LLC allows you to choose the management structure you would like. Some other registration types require you to have a board of directors, formalized meetings with minutes, and other formal practices not appropriate for small, one or two-person businesses.

OWNERS CAN BE ANYBODY

S corporations, for example, place restrictions on the amount of owners. With an LLC, there are very few restrictions (even foreign entities can own an LLC). Because states vary in requirements, your state may have stricter requirements than some.

SOMETIMES IT’S REQUIRED

Bidding on government contracts? It’s likely that you have to be a registered business in order to land the contract. Other companies may require it as well. You don’t have to be an LLC but you do have to be registered.

MORE CREDIBILITY

With unemployment still substantial, many people who are out of work are forming businesses. This has served to diminish the notoriety of being a business owner. Forming an LLC separates you from the people who aren’t committed enough to invest the time and money into being recognized by their state. A business that is registered has perceived professionalism, ethics, and longevity.

Forming an LLC isn’t right for every business. Go to our website for more information about how to form an LLC.

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.

Free Name Availability Search

Are you thinking about starting a business? Did you know that we offer a free name search of up to two business names in the state of your choice? Check out our free name availability search and get the results -most of the times- in a couple of hours.

Use Effective Delayed Dates to Avoid 2013 Taxes

New Year, new life. Many use the beginning of the year as a way to start something new. Maybe it’s losing weight, starting an exercise regimen, or fulfilling their lifelong dream of starting a business. If forming an LLC, Corporation or other business designation is one of your New Year’s resolutions, you’re not alone and you should read the rest of this article.

The state office charged with registering businesses is the Secretary of State’s (or Department of State) office and at the beginning of the year they’re inundated with people just like you who want to form their business.

Timing is everything when forming a business and because of that, you don’t want to be caught in the beginning of the year rush. When volume is high turnaround time rapidly increases. For those who need this process completed so they can start a business account at a bank or sign a lease as a company, the increased turnaround time can be a major issue.

Also during this time, mistakes are more rampant because states hire temporary workers who have little experience and don’t have the incentive to do their best job since they won’t be permanent employees.

The best way to avoid this situation is to file before the end of the year, that is NOW.

However, even if your company will not transact any business this year (the rest of 2013), at the beginning of 2014, you will have to pay annual fees to your state and file an annual report (and you will have to file a tax return too).

Most states have a process called an “effective delayed date” which is similar to postdating a check. This allows you to form an LLC or Corporation in November or December of 2013 but not officially open for business until the following year.

If your state doesn't allow effective delayed date filings, we can prepare your documents and hold them until January 2^nd of 2014. You can minimize the beginning of year rush since we guarantee that your documents will be on the state hands by the first week of January.

This is one of those money saving tricks that experienced business owners already know. Now, you can take advantage of the effective delayed date too.

Avoid the beginning of year rush and avoid paying the 2013 franchise tax (also called Annual Report). Visit ActiveFilings.com for more information.

List of the States Accepting Effective Delayed Dates

State	Corps *	LLCs *
AL	90	90
AK	10	10
AZ	NO	NO
AR	90	90
CA	NO	NO
CO	90	90
CT	NO	NO
DC	NO	90
DE	90	90
FL	90	90
GA	90	90
HI	NO	NO
ID	90	90
IL	NO	NO
IN	30	30
IA	90	90
KS	NO	NO
KY	90	90
LA	NO	NO
ME	NO	NO
MD	NO	NO
MA	30	30
MI	90	90
MN	NO	NO
MS	30	30
MO	90	90
MT	90	90
NE	80	90
NV	NO	NO
NH	90	90
NJ	80	90
NM	NO	NO
NY	90	90
NC	90	90
ND	90	90
OH	NO	NO
OK	90	90
OR	90	90
PA	90	90
RI	NO	NO
SC	90	90
SD	NO	90
TN	60	60
TX	90	90
UT	30	30
VT	30	30
VA	15	15
WA	90	90
WV	NO	NO
WI	90	90
WY	90	NO

* Effective Delayed Days

Time of Fake Compliance Requests

Several businesses have reported receiving a deceptive letter that would appear to come from an official government source. The letter solicits an annual fee of $125 or $150 and claims it will be used for record keeping and processing of a company’s annual minutes.

This is a time of the year where corporations and LLC in all 50 states face similar scam attempts.
Across the country, the Division of Corporations are warning business owners about this dishonest solicitations. It is common to find messages like “Do not confuse “Annual Minutes” or “Annual Corporate Record Forms” notices with the required Annual Report filings.  These notices, which solicit a fee are NOT from the Department of State or any other state or federal agency.  Please disregard these notices.  Neither form is required by this office or any other state or government agency”

It happens year after year and there are always new business owners that are unaware of this deceptive practices.

Hopefully you will not be the next.

Advantages and Disadvantages of Being Tax Exempt

Understanding the advantages and disadvantages of tax exempt status is critical to determining whether this is an appropriate business structure for your organization. There are a number of pros and cons to becoming tax-exempt.

Advantages of Tax Exempt Status

Organizations that qualify for tax exempt status under the Internal Revenue Code section 501(c) (3) are exempt from federal incomes taxes.   This is clearly the most common and well known benefit.  In addition, there are other benefits associated with tax exempt status. These include the eligibility to receive tax deductible charitable gifts under IRC section 170 as well as a high possibility of being exempt also from state and local taxes not to mention bulk postage rates.

For an organization that plans to take in a significant part of its operating budget from contributions and grants the ability for donors to make tax deductible gifts is significant.  This can be a powerful reason for seeking tax exempt status.  In fact, many foundations and government agencies as well as corporations limit their donations to public charities.

In addition, a nonprofit organization is recognized as a legal entity separate from the founder and therefore can put its own interests and mission ahead of the desires of the people associated with it.  It also follows that a nonprofit tax exempt organization possesses the benefits of corporate status protecting the founders and managers from personal liability associated with the operation of the organization.  This is also important to keeping the mission of the organization as the top priority.  Individuals concerned with their own legal liability may not operate in the best interests of the organization’s mission or goals.

Disadvantages to Consider

While there are advantages to tax exempt status there are also a number of drawbacks or disadvantages that should be considered.

First of all, forming a tax exempt organization takes time and money in terms of registration, record keeping and annual filings.  It is a legal entity and must comply with various federal, state and local laws.  It may be necessary to hire an accountant and attorney to provide assistance.    A business document filing service can also be helpful in filing the appropriate forms and documents.

Secondly, nonprofit and tax-exempt organizations are not able to divide profit among the members beyond paying a reasonable salary. They also often have limitations on the use of organizational assets which must support and justify the tax exemption.

Go out and Start Something!

“Go out and start something!” That is what New York Times reporter and best selling author Thomas Friedman is telling the country’s citizens these days as the global economy shows very little sign of recovery.

Never heard of him? Thomas Friedman is widely credited for introducing us to globalization. In his book, “The World Is Flat: A Brief History of the Twenty-First Century”, Friedman argues that the days of America being its own economy largely separated from the rest of the world is long gone, never to return. The Internet may be the single biggest driver of globalization as well as the amounts of goods we import and export on a daily basis. On top of that, looking at how world economic events affect the United States investment markets are proof that the economy is a world economy and no longer an American one.

In a recent CNBC interview, Friedman said that for those who are waiting for a giant corporation to move in to their town and hire hundreds or thousands of workers, those days are over. Because businesses are looking to the world to lower labor costs as well as larger companies increasingly using robots for manufacturing, American workers need to be more proactive. They need to “go out and start something”.

The way to solve the employment problem is for more workers who have skills that they used at another job or a hobby that is marketable to start a small business. If you’re a laid off computer programmer, start your own business. If you’re an investor who used to work at a bank, start your own wealth management practice and if you’re an ex plumber, start a small plumbing business. It’s ok to start small but as Friedman says, just start something.

How do you start a business?

First, form an LLC or sole proprietorship. It’s an easy process when you elicit the help of a business registration service. Some services offer these services for well under $100. If you form an LLC, it will protect your family’s assets should something happen to the company.

Second, pound the pavement for new customers. Do some free online advertising, reach out to old contacts, and find those customers. They’re out there and enthusiastic about hiring a good worker.

Last, do an incredible job. Good isn’t good enough. Your work has to be eye catching so those customers will recommend you to others.

Those three steps will get you started but the most important thing to do is to start. Don’t wait any longer. As Friedman says, “start something!” There’s plenty of help out there for you.

Things to Consider Before You Register an LLC

A limited liability company is born when the articles of organization are filed with the Secretary of State’s office. In some states they are called the certificate of organization or certificate of formation.  Before you file your articles of organization and formally create an LLC there are a few things to consider.

Where to Form an LLC

A Limited liability company can be created in any state. Most people choose to form their LLC in their home state.  If you register in another state you will need to register as a “foreign LLC” which can be more expensive and will require having to pay someone to serve as a registered agent. You need to have a very good reason for going out of your home state.

Choosing a Name

Although the rules can vary a little bit by state generally the name of a limited liability company will end with the words Limited Liability Company, LLC, or Ltd Liability Co.  It is permissible to use someone’s name as part of the company name but the name should not be misleading in any way or be too close to the name of an existing LLC.

It is important to do some research to see if the name that you want to use has already been taken. If you’re using a business registration service to help with registering your LLC they may also have a service available to help you check the availability of your desired name.

Members and Management

A limited liability company is managed by one or more of the members. In an LLC a member is synonymous with an owner. The members are responsible for operation of the company. The specifics of each individual member’s responsibilities are typically outlined in the articles of organization. A manager is usually a person who has been chosen by the members of the LLC to operate as a manager of the company

Officers

A limited liability company is not required to have officers. With that being said, members may choose to appoint officers to handle business operations.

Registered Agent

Every LLC is required to have a registered agent. The registered agent is the person who has been designated to receive notice if the LLC is sued. The registered agent must be an adult living in the state where the LLC is formed or a company that is registered with the Secretary of State’s office in the state of formation.

These are a number of important considerations before proceeding with filing the articles of organization or Limited Liability Company.

Understanding Tax Exempt Status

Having a thorough understanding of the implications of tax exempt status is important for any organization considering this status. Tax-exempt organizations are subject to various state and federal regulations and tax laws.

Tax Exempt

Nonprofit and tax-exempt organizations typically seek to be exempt from federal income taxes, state income taxes as well as local taxes.  Obtaining tax-exempt status can have a major impact on the finances of a nonprofit organization.  One of the primary reasons for this is because it makes the organization eligible for tax-deductible charitable gifts under Internal Revenue Service code section 170.  Many organizations including corporations and individuals are more likely to give if their donation is going to be tax deductible.

Qualification

In order to qualify for tax-exempt status under Internal Revenue Service code 501 (c) (3), an organization must be operated exclusively for exempt purposes. These purposes can include such things as scientific and educational as well as charitable endeavors.  In addition the earnings by the organization may not be distributed to its directors, members or any individuals with the exception of the payment of reasonable salaries to employees of the organization.  In addition, there are regulations regarding lobbying and other types of political activities.

How to File

In order to file for tax-exempt status an organization must first be incorporated as a nonprofit corporation.  You must have an employer identification number and there must be bylaws created for your Corporation. There must also be a Board of Directors and officers appointed.  Upon meeting these requirements you must file a 20 page IRS form 1023 and other related forms with the appropriate filing fees.  The completed application should also be accompanied by a copy of the organization’s articles of incorporation as well as a copy of its bylaws.  It is recommended that a professional who is experienced in nonprofit incorporation review all documents and the application before they are submitted to the Internal Revenue Service. Is important to remember that even if you become tax-exempt under section 501(c)(3) of the internal revenue code you may also still have to comply with state laws to be considered tax-exempt in your particular state.


Before filing for tax-exempt status you’ll want to decide whether it makes sense for your organization and whether you will qualify. An accountant, legal counsel and a document filing service can be helpful in guiding you through the process. It is important to make sure you understand the process and the ongoing federal and state requirements before moving forward.

Big fish eats small fish…. With the help of SCORE

“Your SCORE listing needs to be taken down. SCORE does not recommend any specific services. Further, we have removed your link because we are only linking to free resources or to current alliances. Please cease and desist immediately” Signed, Christine Chirichella

Not very nice, is it? This was how we learned that, after more than a year as a recommended “Powerful Link,” one of our alliances had been terminated. A few days ago, the SCORE website listed Active Filings as a power link under Legal & Tax services http://www.score.org/small_biz_power_links.html#a_6).

We appeared there for more than a year because our website provides valuable free resources to our visitors and because we were one of the few incorporating companies developing content in Spanish. SCORE is a non-profit organization linked to the Small Business Administration, a well-known governmental agency.

SCORE is supposed to help small business achieve success by providing free tools and resources. In early December 2006, we received an e-mail from SCORE informing us that our listing had been removed due to the business nature of our website. SCORE representative Christine Chirichella wrote, “You were removed because overall the goal of your site is selling services, not providing free resources.”

At the same time, they added links to The Company Corporation, Business Filings Incorporated, and two other firms that were later removed. The Company Corporation and Business Filings are probably number one and number two in our market. They both belong to large corporations and have near-universal presence. There is no doubt that these companies are even more business oriented than Active Filings.

As Nina Birnbach, Active Filings' VP told the SCORE representative, “I understand what you are telling us about your policy, but I am very confused. You have left Bizfilings and Incorporate.com on the Score site and they also meet the criteria that you stated in your e-mail. The overall goal of their sites are selling services as well and not providing free resources. They are the same type of companies as we are. I am certain that these sites could not exist without selling a product. CCH, the owner of Bizfilings, is very sales oriented and profit driven. As a CPA I get advertising from them all the time. If they were non-profit, in the business of providing free resources, I don't think I would hear from them as much and they wouldn't advertise on the search engines for business as much as they do.”

For a small and independent company like Active Filings, the exact type of company that SCORE wants to help, a link on the SCORE website was very important. Not only for the visitors brought to our site, but also for the “link popularity” assigned by Google and other search engines. This link contributed to our overall search engine positioning and high ranks we have achieved after five years of hard work.

There is no need to hide the fact that this unfair action taken by SCORE has hurt us.

Not only they were unable to support their policy about not linking with business-oriented websites (why does SCORE continue to list Bizfilings.com, Incorporate.com, and many others on their links page?), but also it seems they are favoring large corporations. As a small company without the resources of these big fish in our industry, we needed this link. Unfortunately, we have no other way to show our frustration other than to draw attention to what SCORE and the Small Business Administration have done.

Perhaps we are missing a part of the story. The lack of an explicit and comprehensible policy leaves us with many unanswered questions. Perhaps SCORE and the SBA would better serve America's small business community, and Hispanic businesses, by establishing clear, consistent, and easily understood rules about linking with other sites.

Who knows?



Robert Neuberger is founder of Active Filings LLC, (http://www.activefilings.com) a company that provides business incorporation and LLC formation services in all 50 states and Washington DC. You have permission to publish this article electronically or in print, free of charge, as long as the bylines are included.

9 Ways to Choose the Right Incorporation Company

So you have taken the first step to opening your business and you have decided to make it a Corporation or Limited Liability Company. There are many companies out there that offer incorporation services, so how do you know which one is the right one for you and your business? These nine steps will help you make an informed decision about the incorporation company you choose, so you can avoid the pitfalls of incorporating with the wrong one.

1) If you build it they will come

Just because an incorporation company has a web site doesn’t mean that it is a legitimate business entity. There are many “incorporate.com” companies online that are simply that, a web site. You should thoroughly research the company you are thinking about using to incorporate your business to make sure they are a formal business entity (corporation or LLC). You can investigate a company by contacting the Better Business Bureau and State Attorney’s Office where the business is physically located to find out if any complaints have been filed against them. You can even go as far as to look up their business license to verify that it is current. Business licenses can be verified with the state in which the business is operating.

2) Business affiliations

Businesses like to place their business affiliations and organization membership logos on their website and other marketing material. Often times this helps to relax potential customers because it makes customers feel like they are working with a legitimate company. It is very important that you take these memberships at face value and dig a little deeper to verify that this company is actually a member of these organizations.

For example, when you see the Better Business Bureau logo on a web site, you probably breathe a sigh of relief. Take a few minutes to contact the Better Business Bureau via phone or online to verify the company’s membership status and to make sure that there haven’t been any complaints filed against them. It will take only a few minutes of your time and can save you a huge headache in the long-run.

Many organizations have stringent guidelines that a company must adhere to in order to become a member. For example, the local chapter of the Chamber of Commerce may require that the company provide a copy of their business license and occupational license, in order to ensure the company is a legally operating entity. These types of procedures are for the protection of the consumer, so utilize the public information available to you and verify everything!

3) All American

Be sure to place your order with US companies. The US has security laws that protect the consumer from having their information distributed or used inappropriately. If you happen to deal with a company that looks like an American business, but actually operates from abroad then you could be putting you and your company at risk. The last thing you want is your credit card information to be sold in a foreign country.

4) Filing fees
Many incorporation companies advertise and promise you low fees, but they actually place a mark-up on the state filing fees in order to make a profit. Find out if the incorporation company will provide you with a receipt directly from the state. This way you will be able to verify that what you were charged for the state filing is actually what it cost. If the incorporation company will not provide this to you, then they probably have something to hide.

5) Identity theft:
With the growing concern of identity theft, it is important that you deal only with web sites and companies that provide you a strong guarantee about the way they are going to protect your personal information. Make sure that if you are providing credit card information online that you are providing it on a secure server that has a “Hacker Safe” certification. This is going far beyond a secure server. This is a system that monitors a server (not a web site only) 24 hours a day to check for potential vulnerabilities. The company should also comply with the FBI guidelines in terms of internet security.

Even if you are giving the credit card or personal information over the phone, inquire as to what the company will do with the information after your order is processed. Keeping your information on file could put you at risk. Make sure that they have some sort of policy that deletes your information after it has been used in filing your incorporation order.

6) Satisfaction guaranteed
What if something goes wrong with your transaction? Verify that the company provides you with some sort of satisfaction guarantee, or money back guarantee. This way if something is to go wrong, you won’t find yourself out of money and without your business incorporation documents properly filed.

7) Avoid the middleman
Be sure to do business with companies that deal directly with the state where you are going to incorporate your business and not through other incorporating companies. Intermediaries will not give you the timely response that you deserve. Again, just because a company has set up a web site to provide incorporation services, it doesn’t mean they have the expertise to perform professionally.

8) Customer support
Before placing you order, send an email or make a phone call to the company you are thinking about using. See how long it takes for them to respond to your inquiry. This will give you an idea of how responsive they are to your needs and it also allows you to indirectly gage the overall professionalism of the company.

9) Look at the whole picture
Make a list of all of the services that you wish to receive and compare the prices for these services on 3 or 4 different companies. Try not to let yourself be lured into using a company because they offer a low fee on one service. By totaling all of the services you will need, you will be able to see what the total cost to you will be and choose the one that is most cost effective.
Follow these nine steps carefully in choosing your incorporation company and you will be well on your way to success. Happy incorporating and good luck with your new business!

* Robert Neuberger is founder and President of Active Filings LLC

7 Advantages to Incorporating

There's no question that hard work and a little luck is what it takes to BE successful. But a little knowledge, especially when it comes to setting up your business, will help you STAY successful.

While many business owners give a lot of thought to location, store décor, customer service, hiring employees and management issues (and rightly so); choosing the proper business structure (such as sole proprietor, partnership, corporation, limited liability company) doesn't get the attention it deserves.

Many entrepreneurs don't realize this, but the business form they choose can often times be the difference between success and failure, especially in today's competitive and litigious marketplace. If you want to succeed, you need all the advantages you can get. High on the list of safe bets is the corporate form of business.

Incorporating, while definitely not for everybody, offers several distinct and money-saving advantages over the other types of entities. Here are seven of those advantages:

Asset Protection - If you operate as a sole proprietor or partnership, there is virtually unlimited personal liability for business debts or lawsuits. In other words should you go out of business or be a defendant in a lawsuit, your personal assets such as homes, jewelry, vehicles, savings, etc. are up for grabs. This is generally NOT the case when you incorporate. When you incorporate you are only responsible for your investment in the corporation. The limited liability feature of a corporation, while not a guarantee, is DEFINITELY one of the most attractive reasons for incorporating.

Easier To Sell - Corporations are generally much easier to sell and are usually more attractive to buyers than either a sole proprietorship or partnership. The reason for this is because a new buyer will not be personally liable for any wrongdoings on the part of the previous owners. If someone buys a sole proprietorship, for example, the new owner can be held personally liable for any mistakes or illegalities on the part of the prior owner…even if the new owner had NOTHING to do with the situation! This is usually NOT the case with a corporation.

Tax Savings - When you incorporate there are numerous tax advantages at your disposal that are virtually impossible to accomplish with other business entities. When you incorporate you create a separate and distinct legal entity. Because of this, there are many transactions that you can structure between you and your corporation to save big money on taxes. For instance, if you own a building you can rent office facilities to your corporation and claim depreciation and other deductions for it. Your corporation can then claim the rental expense. You are prohibited from doing this if you are a sole proprietor or a partner in a partnership.

Privacy and Confidentiality - The corporate form of business is a great way to keep your identity and business affairs private and confidential. If you want to start a business, but would like to remain anonymous, a corporation is the best way to accomplish this. States such as Nevada offer even more privacy protection for corporations and their shareholders.

Easier to Raise Capital - When you're looking to raise money through investment or borrowing, a corporation can actually make finding and getting the money you need easier. If you want to take on investors you simply sell shares of stock. If you want to borrow, a corporation can add clout when dealing with banks or other lending institutions.

Perpetuity - As I mentioned in #3, when you incorporate you create a separate and distinct legal entity. This separate and distinct entity (the corporation) can endure almost forever irrespective of what happens to the shareholders, directors, or officers. This is NOT the case with sole proprietorships, partnerships or even limited liability companies. For example, if an owner, partner, or member dies the business AUTOMATICALLY ends or gets wrapped up in legal red tape. Corporations, on the other hand, have unlimited life.

Increases Credibility - Let's face it. Most people feel more secure and confident dealing with a corporation as opposed to a sole proprietorship. Having INC. or CORP. after your company's name adds a touch of professionalism and credibility to your business dealings.
As always, be sure to consult with your attorney or business advisor before undertaking any important legal or financial decision. While there are many advantages and money-saving reasons to incorporate, as I've said before, it's not for everybody. However, you do owe it to yourself to find out more.


Alex Goumakos is a CPA, business advisor and guest consultant of Active Filings LLC, a professional incorporating company that provides services in all US. (http://www.activefilings.com).
You have permission to publish this article electronically or in print, free of charge, as long as the resource box at bottom is included.

Run your business safely!

If incorporating was your first step to a new and safe way to do business, compliance with the law is the easiest way to keep you safe from any liability associated with they way you manage your company. Let’s talk about this important topic.

Failure to follow corporate formalities may expose corporate officers, directors and shareholders to personal liability. Maintaining good records, including corporate minutes, on a timely basis goes a long way toward maintaining the limited liability benefit of a corporation.

If incorporating was your first step to a new and safe way to do business, compliance with the law is the easiest way to keep you safe from any liability associated with they way you manage your company.

There are many reasons to pay attention to the formalities associated with running a corporation: Business Corporation laws require that articles of incorporation and bylaws be filed. In addition, other events must be recorded in the company’s record books.Articles of incorporation and bylaws serve as a contract between the corporation and its shareholders, obligating the corporation to act in accordance with them.

Directors and officers owe the corporation and shareholders a fiduciary duty to use good faith, exercise due care, and act in the best interest of the corporation. Majority shareholders must act in good faith, in a manner not calculated to oppress the rights of minority shareholders. Corporate formality must be respected and observed to preserve the integrity of the corporation; as well as to shield officers, directors, and shareholders or related businesses from personal liability.

Don’t think that due to the fact that you could be the only person holding all the positions of a corporation you are safe from keeping your company in compliance. Small companies also have duties with State Agencies, providers and even customers.

Why Are Minutes So Important

It’s the law. There is nothing clearer than that. Minutes are legal records that serve to document actions and support business decisions, made by the principals of the business throughout the year. Minutes help you to separate your own affairs from the company’s actions. It is the way to protect you from liability.

During an IRS audit a privately held company may be required to produce the minutes of the company. If they do not, or can not give the minutes to the IRS agent, the problems stand as found. There is no negotiation with the IRS. State law requires corporations to prepare annual minutes and in many cases; failure to do so has contributed to piercing of the company veil resulting in exposure to the principals.

As mentioned, without current and complete minutes, corporate players could be held personally liable for the actions of the corporation.

Protect Yourself

Your legal protection could be in jeopardy if a creditor successfully pierces the corporate veil due to the corporation’s failure to keep minutes.
Good recordkeeping habits and paying attention to detail are necessary for any successful business. Now you know it.

* Robert Neuberger is founder and President of Active Filings LLC. Active Filings provides incorporation services in all 50 States and Washington DC.
You have permission to publish this article electronically or in print, free of charge, as long as the resource box at bottom is included.