Aprendizaje significativo

A C-Corp give provides the most flexibility and still provides limited liability protection for the officers, shareholders, director’s etc. this protection creates the corporate veil. A C-Corp allows unlimited number of shareholders that can live anywhere in the world and be any type of entity. It provides numerous tax benefits that most of the other entities do not provide. In most cases with the proper corporate structure C-Corps pay less tax then individuals. The profits from a C- Corp are taxed at corporate rates on an 1120 tax return that is separate from the individual tax returns of the shareholders. Profits from a C-Corp can be kept as retained earnings or distributed to a retirement plan to defer taxes. The ownership of a C-Corp can easily be transferred. The board of directors of a corporation can determine their own “corporate year,” which can be used to defer taxes for up to a year. There are many perks and fringe benefits that are fully deductible; and shareholders do not have to pay self-employment taxes. The flexibility of this corporate structure makes asset protection much easier.

The biggest downside to a C-Corp is double taxation. This occurs when the corporation’s profits are taxed initially, then the dividends that are paid out to shareholders are taxed at a personal level. Double taxation can easily be avoided by proper tax planning, retaining the corporation’s profits for future use after they have been taxed on the corporate level, or deferring the corporation’s profits to a retirement plan and not dispersing them to the shareholders is a good way to avoid double taxation. The biggest advantage of a C-Corp is this entity can deduct any business related expense thus lowering the tax liability for the shareholders. (So as long as that new car was for business purposes or that night at the stripe club was with a client, or that new dress with the shoes and purse to match was for a business event etc.)

Though there are many advantages of a corporation there are some disadvantages as well. Most corporations have many formalities to follow, such as appointing a board of director’s, and holding shareholder meetings. If these formalities are not followed or proper records are not kept the corporate veil can be pierced. Ways to reduce or minimize the burden of formalities is to form a Close Corporation. So beside double taxation and formalities C-Corp are the best entity to build corporate credit on I strongly recommend a C-Corp to build Corporate Credit.

S-Corporations

There are several qualifications that the corporation must meet in order to elect S corporation status. A corporation must file a 2533, form with IRS to become classified as an S corporation. The corporation may have no more than 75 shareholders, it may only have individuals, estates or certain trusts as shareholders, it must be a domestic corporation formed in the U.S.A, and it may not have non- resident alien shareholders, and it may only have one class of stock. The biggest advantage of an S-Corp is pass-through tax treatment all the profits flow directly the through the shareholders, so there is no double taxation. The S-Corp provides limited liability for its shareholders. S-Corps can own subsidiaries. S-Corps must conform to state statutory restrictions, which limit the transfer of shares and owner of the corporation. Companies expecting start-up losses, or companies that do not expect to issue multiple classes of stock, or do not intend to go public should elect S-Corp status. All the profits of an S-Corp are taxed even if the profits are not distributed. An S-Corp requires full disclosure of corporate owners. S-Corps are subject to the same formalities that C-Corps are subject to. It is possible to avoid burdensome formalities by opting to become a Close Corporation.

Close Corporation

Under California law if a corporation has 35 shareholders or less the shareholders can elect to be “Close” Corporation. A Close Corp is formed when the articles of incorporation state that the corporation elects to be treated as a close corporation and that there are no more than 35 shareholders. Once a corporation has elected to become a close corporation, the owners can dispense with many of the corporate formalities and govern by shareholder resolution. Close Corps are like G.P’S in a sense that they do not have to adhere to corporate formalities relating to meetings of director’s in connection with the management of its affairs. This structure is good for business owners who struggle to maintain many corporate formalities. One disadvantage the IRS will often disregard the corporation the fact that the corporation is a close corporation and treat the Corp as a partnership for tax purposes and for purposes of piercing the corporate veil. Due to uncertainty of corporate benefits, tax treatment and limited liability, the Close Corp is not the ideal business structure because of unfavorable treatment by the IRS and other federal agencies.

Professional Corporation

A professional corporation is a special kind of corporation that only members of certain professions, such as lawyers, doctors and other healthcare workers, can create. By forming a professional corporation, professionals can limit their personal liability for the malpractice of their associates.

International Business Corporation (IBC)

The term international business corporation or IBC refers to a corporation formed in an offshore financial jurisdiction, which is afforded certain tax advantages and protection as to the disclosure of its beneficial owner. Depending on the offshore financial jurisdiction, shareholders of the IBC may remain confidential through the use of bearer shares. Just as with U.S. corporations, the same person may act as a shareholder, director, president, agent, or as any other officer within the company. Generally, however, the beneficial owner(s) will appoint resident officers and directors for the IBC. Typically an IBC is authorized to do business anywhere in the world except in its home country where it was incorporated. The IBC may purchase real estate, cars, businesses, etc. The beneficial owner may act as an agent of the IBC to purchase assets on its behalf. By this means, assets are held under a corporate name, thereby helping to protect the beneficial owner's privacy.

Not-for-profit or Non-Profit Corporation

A nonprofit corporation is a corporation formed to carry out a charitable, educational, religious, literary or scientific purpose. A nonprofit corporation doesn't pay federal or state income taxes on profits it makes from activities in which it engages to carry out its objectives. This is because the IRS and state tax agencies believe that the benefits the public derives from these organizations' activities entitle them to a special tax-exempt status. The most common federal tax exemption for nonprofits comes from Section 501(c)(3) of the Internal Revenue Code, which is why nonprofits are sometimes called 501(c)(3) corporations.

Nonprofit corporations enjoy an exemption from corporate income taxes on profits from activities that are related to their organizational purpose. Also, a nonprofit is permitted to raise funds by receiving public and private grant money and donations from individuals and companies. (And the tax laws encourage people and businesses to donate money and property by allowing donors to deduct their contributions on their own tax returns.) Finally, structuring an organization as a nonprofit corporation protects its directors, officers and members from personal liability for the corporation's debts and liabilities.

How do I form a nonprofit corporation?

There are several steps you must take to create a nonprofit corporation. The first is filing the "articles of incorporation," with the corporations division of your state government. To do this, you'll have to pay a filing fee of $30 or so.

After you file your articles, you must apply for state and federal income tax exemptions (the most common federal tax exemption comes from Section 501(c)(3) of the Internal Revenue Code), which require you to complete a fairly lengthy set of forms. You must also write "corporate bylaws," a document that sets out the rules that govern your corporation, including procedures for making major business decisions, voting rights and other important guidelines. Finally, before you start doing business, you must elect a board of directors and hold an initial meeting of the board.

Is it difficult to run a nonprofit corporation?

Although operating a nonprofit corporation requires some attention to detail, as long as you understand and follow some basic rules, you'll be fine. The first rule is to hold required meetings of directors and members and to keep minutes of these meetings in a corporate records book. The IRS also has a thing or two to say about what a nonprofit can and cannot do. For instance, a nonprofit cannot make political lobbying (influencing legislation) a substantial part of its total activities, and a nonprofit must make sure that its activities don't personally benefit its directors, officers or members.

Shelf Corporations

A shelf corporation, also called Aged Corporation, is a C, S, Professional, Non- Profit, or Close Corporation that has had no activity. It was created and put on the "shelf" to age. This corporation is then later usually sold to someone who would prefer to have an aged corporation rather than a new one. A business entity that is created through a process other than incorporation (such as a limited liability company) is simply called a shelf company.

Common reasons for buying a shelf corporation include:

Saving the time involved in taking the steps to create a new corporation.

Gaining the opportunity to bid on government contracts. Some states require that your company be in business for a certain length of time.

• Creating an appearance of corporate longevity. • Access to investment capital.

• Easier access to corporate credit.

If you decide to purchase a Shelf Corporation to expedite the Corporate Credit process make sure it comes with the following:

• 2 year history

• All Corporate Formalities must be kept. • Free of any judgments or liens.

Lenders look at a number of factors. You need a corporation that has:

§ Two years in existence or more

§ A Business profile with Dun & Bradstreet and Smart Business Report § No judgments or liens.

If any of the above items are missing, you will not be able to use your corporation to your best advantage.

Example

Let’s say you buy a five-year-old shelf corporation. You get an EIN number, all the proper licenses (business license, seller permits, etc.), an office and 4-1-1 listing. You call D&B and get a Duns number, and then they sell you their credit builder. They tell you that you have to add three trade references that are registered with D&B.

Finally you get your three trade references and D&B notifies you that they are doing an investigation on your company. You get a phone call from the D&B investigator and he asks you the following question:

“Your corporation states that it’s been in business for five years, but when we looked up your business license and contacted the County Recorder’s Office, they claim you have been in business for less than one year. Where have you been for the last four years?”

Then they ask you to provide proof that you’ve been in business for the past five years. When you can’t provide it, they put in your D&B file that you have been in business for less than one year, not the five years you claimed. Now the Shelf Corp was ineffective just a waste of time and money.

What do you do now?

Answer: You need a shelf that has all of the proper documentation to coincide with the years that it has been on the shelf.

Pay the past years licensing fees

Depending on the city you’re in, you can file for a business license for the shelf corporation and pay to back date the license to the date of Incorporation. Be prepared to pay for each year you are back dating the business License. Just tell the clerk at the county recorder’s office that “you started your business sum years back, and you didn’t bring in any profit until recently, because you were training, getting licensed, certified etc. Whatever works best for your line of work. Although Shelf Corporations are a great way to speed up the process of Corporate Credit, Leveraged Buyouts are another way to expedite the corporate credit process they do not require much out of pocket. And after the Leveraged Buyout is complete you are left with assets and a cash flowing business. And if you follow

the L.B.O guidelines this business should not only give you all the benefits of a shelf corporation, plus cash flow every month. The only downside to this option is the L.B.O process takes a while to complete. If you are looking for the fastest way possible to expedite the corporate credit process, then a Shelf Corporation might be the way to go for you. But remember there are a lot of scam artist out there. So before you purchase a Shelf Corporation make sure it has all the items listed above. There are several other entities available to business owners and since I do not recommend them for building Corporate Credit I am not going to discuss them. But in the end I recommend a Corporation for building Corporate Credit.

Here is the Corporate Chain of Command Structure:

Shareholders- (also called stockholders) are the owners of a corporation. As such, the board of directors and the officers of the company owe a fiduciary Duty to the shareholders to do what is in their best interest. Specific shareholder rights are outlined in company bylaws and in state law. Though specific duties and reporting practices vary from state to state, the shareholders generally vote on the president, the election of the board of directors and any major changes in the composition or organization of the corporation. They do not possess any power in daily decision making.

Directors- are elected by the shareholders to serve one year terms. They create the long and short-term goals and policies for the corporation. They are also responsible for appointing and removing officers.

Officers- are appointed by the board of directors to supervise management. Corporate officers typically consist of the president, vice president, treasurer and secretary. Optionally, there may be additional positions. Many states allow one person to hold all of the offices. The authority and responsibilities of each officer are outlined in the corporate bylaws.

The President

Is usually elected by the Board of Directors and is responsible for carrying out the orders issued by the Board of Directors.

The Treasurer

it is the duty of the treasurer to manage corporate bank accounts, and record corporate finances.

The Secretary

Is generally responsible for maintaining and keeping corporate records. Management- hires and fires employees and supervises daily operations.

Employees- perform the day-to-day operations and carry out all the policies of the corporation.

The Structure of Corporations

Corporations are made up a few key documents. These documents determine the laws, guidelines, procedures and format of how a corporation is put together, operated and dissolved. These documents are:

Corporate Formalities

Corporate Formalities are formal actions that must be performed in order to maintain the protection that a corporation provides to personal assets of its directors, officers and shareholders. As part of these corporate formalities, you must maintain your corporate funds separate and apart from your personal funds, hold annual and, as needed, special Board of Directors' meetings and shareholders' meetings to approve transactions entered into by your corporation, write and maintain adequate corporate minutes of the meetings (or written consents in lieu of the meetings), execute and maintain written agreements of transactions such as real estate leases, insider loans, executive employment agreements and benefit plans entered into by the corporation. Failure to observe corporate formalities helps the creditors, other plaintiffs and the IRS to pierce the corporate veil during a lawsuit or an IRS audit, rendering your personal assets at risk. Your corporate records can be kept simple; they just need to be done.

Important Corporate Formalities • Annual meetings and minutes • Annual fee to the state

• Annual filings • Resident agent

• Maintain a distinction between corporate assets and personal assets • Separate bank account

• Separate tax return

• Avoid undercapitalization Corporate Records Book

A corporate records book is the place to keep important corporate papers all in one place, including Articles of Incorporation, Bylaws, meeting minutes, stock ledger, stock certificates, stock certificate stubs, and stock transfer documents. The corporate records book should be maintained. You may want to purchase a "corporate kit" from one of several companies, although most office supply stores carry the items included in a corporate kit. A corporate kit generally includes a corporate records binder (either with or without embossed corporate name); customized stock certificates; index dividers for Articles of Incorporation, Bylaws, minutes & meetings, resolutions, stock certificates, List of Officers; share register; stock transfer ledger; corporate seal; and instructions for use.

State Statutes- Are laws that are developed by each state that governs how a Corporation can operate within their state.

Articles of Incorporation- Are the documents that are filed with the Secretary of State in order to form a corporation. They are the primary legal document of a corporation and serve as a corporation's constitution. After approving the articles, the state issues a Certificate of Incorporation the two documents together become the Charter of Incorporation.

Articles of incorporation contain:

• The name of your corporation • The corporation's address • Period of existence

• Purpose and power of the corporation • Authorized number of shares

• Classes of stock

• A "registered agent" (a person who agrees to receive legal papers on behalf

of the corporation), and sometimes

The following is an Example of an Articles of Incorporation form:

Articles of Incorporation

I

The name of this corporation is Corporate Credit Association Inc.

II

The purpose of this corporation is to engage in any lawful activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code.

III

The name and address in the State of California of this corporation’s initial agent for service of process is:

Name: Reginald Ringgold

Address: 2333 San Ramon Valley Blvd.

City: San Ramon State: CALIFORNIA Zip: 94583

IV

This corporation is authorized to issue only one class of shares of stock; and the total number of shares which this corporation is authorized to issue is: 1,000,000 shares with a par value of $1.00 per share.

Corporate Bylaws

The bylaws of a corporation contain the rules and procedures that govern the rights and powers of shareholders, directors, and officers. Most lawyers have a prepared "standard" set of template bylaws that may be modified to meet your company's specific requirements.

The bylaws are typically adopted by the incorporator or by the board of directors in