Ideas previas

“A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law.” John Marshall

Why Incorporate?

Although incorporating offers many advantages a lot of business owners fail to incorporate because they think that since their business only consist of just them or close friends and family they do not need to incorporate. Unfortunately this can be a business owner’s biggest mistake. Operating as a S.P. or G.P. puts your personal assets at risk in the event the business fails or loses a lawsuit you personal assets are not protected. A corporation is a separate entity, the corporation’s debts and taxes are separate from its shareholders, thus offering personal liability protection. Let me ask you a question would you walk outside in the freezing snow without any clothes on? The answer is no. So why would you operate as a S.P. or a G.P. Every business owner needs personal liability protection for their personal assets. There are 50,000 new lawsuits filed every week with hundreds of millions in rewards. Not only does a corporation provide personal liability protection, it has many tax advantages and is a great tool that can be used to lower your tax liability, and since it has a perpetual life it is also a great tool for estate planning because a corporation is not affected by the death or bankruptcy of a shareholder. But wait it gets better, corporations provide a professional look in the eyes of the public and potential investors making it much easier to obtain capital. A corporation can buy products at wholesale saving the company thousands of dollars. Corporations can also offer shares of stock in the Corp to the public on the open stock market. This is a good way to raise capital that you do not have to payback, you don’t even have to pay interest. All you have to pay is 20% to your investment banker and the rest is profit. A corporation is an artificial person. Its rights, duties and liabilities do not differ from those of a natural person. A Corporation can open a bank account, sign biding contracts, and purchase real estate etc. again the only thing a corporation can’t do is walk, talk, think, and vote. The best part is a corporation will do whatever you tell it to and it will never talk back to you, steal form you or lie to you.

When Should One Incorporate?

If you notice the first step in the 7 steps to success is incorporate. I think a business’s first order of business should be to incorporate. You never know when an angry suppler or a sue happy Suzy client is going to slap your company with a lawsuit. For More information on incorporating your business you can contact us at (888)817-8222 or refer to our website at www.corporatecreditassociation.com Here is an example:

Rob & Joey

Let’s say Joey and Rob decide to name their pottery business R&J Enterprises. And their first piece of pottery up for sale in their catalog was named R&J’S Masterpiece. Since the business only consist of the two individuals, Joey and Rob decide to from a General Partnership because they saw no need to incorporate because they just looked at a corporation and its annual fees as a way for Uncle Sam to get more money out of them not to mention a bunch of extra paperwork. After all its just pottery they said what is the worst that can happen? This was their biggest mistake. A few months passed after getting their business license, DBA statement, and running the ad in the newspaper. Even though the business had not made a single dime in profits it was hit with a lawsuit. The lawsuit was from a company that had a patent and the rights to the name R&J’S Masterpiece. Neither Joey nor Rob did their due diligence before naming there product and this cost them big. Before they even made a profit and got the business off the ground they were hit with a lawsuit that forced them to shut their doors before they even opened them.

Let the story of Joey and Rob be a lesson to all us. A business should incorporate as soon it decides to go into business. You never know what may happen in the future and it is better to be safe than sorry. Besides a corporation has many advantages that S.P.’S G.P.S do not offer.

Where to Incorporate

One of the first decisions a business must make after deciding to incorporate involves selecting the proper state of incorporation. A corporation is not required to incorporate in the state of its operations; however, often the best decision is to incorporate in your home state. Two issues must be weighed to determine the proper state:

(1) A dollars and cents analysis comparing the costs of incorporating in the state of operation versus qualifying to do business as a foreign corporation in the state under consideration and

(2) Determining the advantages and disadvantages of each state's corporate laws and tax structure.

The decision usually falls between the state in which the business is located or in Nevada, Delaware, or Wyoming. If the corporation is a closely held corporation and does business primarily within a single state, a local corporation is typically preferable. The cost of a local incorporation will usually be less than incorporating in another state and qualifying to do business as a foreign corporation in the state. A foreign corporation that qualifies to do business in another state is subject to taxes and annual report fees from both the state of incorporation and the qualifying state. Another disadvantage of incorporating outside of your home state is the possibility of having to defend a lawsuit in another state.

The laws of the state in which you incorporate can make a tremendous impact. Make sure that the state in which you incorporate allows your business a range of flexibility in the management and structure of your company, and a high degree of favorable tax regulations. A corporation must either be incorporated in the state to benefit from the laws of the state, or the corporation must qualify to do business in that state as a “foreign” corporation from another state. Once a corporation qualifies to do business in a state other than its domicile where it was incorporated, it must register as a foreign corporation and pay the required fees.

When establishing Corporate Credit, it is important not be red-flagged as a sham business having a fake storefront or virtual office in Nevada, so it is much better to incorporate in your home state where you’re headquartered, when it comes to establishing Corporate Credit. The banks you will be applying to for credit will

much prefer an in state corporation, rather than saying you have Nevada Corporation with your headquarters in your home state.

Foreign Corporation

A corporation conducting business in one state when incorporated or chartered in another is considered a foreign corporation.

If your corporation will conduct business in any state or states other than the state in which it was incorporated, you'll need to determine what qualifications or registrations are required by the other state or states.

Qualification or registration requirements: Every state requires some sort of registration or qualification for foreign corporations. Qualification requirements for foreign corporations vary from state to state, and are regulated by the state's Secretary of State.

The form required to be filed by foreign corporations is commonly called the Foreign Corporation Certificate, or the Statement and Designation by Foreign Corporation, and is mainly a way to provide information about your corporation to a different state from another state. Most of these statements require the name of the corporation, the state of corporation, the address of the principal office in the state of incorporation, and the foreign state, the name and address of the agent for service of process, and must be dated and signed by a corporate officer.

Some states have strict requirements regarding agents for service of process. Be sure to check on this. Some states also require that foreign corporations state their assets and liabilities. Registration or qualification of a foreign corporation must take place as close as possible to when the corporation starts doing business in another state. There will be a filing fee for registering as a foreign corporation. Many states also require a Certificate of Good Standing (also called Certificate of Authorization or Certificate of Existence) to be filed by a foreign corporation along with the Statement or Registration described above. These certificates are issued by a state official of the state of incorporation as evidence that the corporation exists and is authorized to conduct business in that state.

Consequences of not qualifying or registering: Penalties and other consequences will apply for failure to qualify and register to do business in another state. Possible consequences include:

• Monetary fines assessed against the corporation;

• Monetary fines assessed against the corporation’s agents or officers; • Denial of the right to enforce contracts in the state courts;

• Personal liability of the corporation’s officers or agents for the acts of the

corporation in the state.

State taxation of foreign corporations: The other reason states have for requiring foreign corporations to register and qualify in their state is to collect taxes from those corporations. You should determine what state taxes your corporation will be required to pay in other states in which it will do business.

Why Nevada

Nevada is a very corporate friendly state, with very favorable laws towards corporations. The biggest advantage that the state of Nevada has over most of the states in the country is Nevada does not tax the income of its individuals or corporations. Nor does it require its corporations to pay any franchise taxes, capital stocks taxes, inventory taxes or taxes on corporate shares. Case law prevents easy piercing of the corporate veil unless the corporation commits a fraudulent act. The stockholders are not public record and there is no information sharing with the I.R.S. Stockholders are not required to live in or hold meetings in Nevada, meetings can be held anywhere in the world. Only one person is needed to form a corporation in Nevada and there is no minimum capital required. Nevada corporations may purchase, hold, sell or transfer shares of its own stock. Nevada corporations may issue stock for capital, services, personal property, or real estate, including leases and options. The directors may determine the value of any of these transactions, and their decision is final. State law prohibits inspection of corporate records unless the inquirer owns at least 15% of the corporate stock. If an officer or director of a Nevada corporation does not want to be identified on public record they do not have to be listed. Instead, they can use a nominee, someone other than themselves, to serve as the director and all officers, thus maintaining their privacy.

Why Wyoming

• Unlimited ability to issue stock—Most states set a limit on the number of

shares that you are authorized to issue; Not so in Wyoming! You may issue as many shares as you wish (without any additional costs or fees) by simply making the proper entries in your Articles of Incorporation. Unlimited shares may be of paramount importance to you in particular, if you ever contemplate taking your company public.

• You can be everything in Wyoming—Some states require that you have

more than one person to serve as the various officers and directors of your corporation. Again, not so in Wyoming! One person can fill all of the required corporate positions giving you the ultimate flexibility and control.

• Privacy in Wyoming—The more information about you that appears in the

public record the easier it is for you to become a target. Wyoming has no requirement for the names of shareholders to be filed with the state. It asks only for a simple "Annual Report" which requires disclosure of only those assets located within the state of Wyoming and the name of one person, usually the one who submits the report.

• Restrictions and corporate formalities are at an absolute minimum in

Wyoming—If you would like less "red tape", bureaucracy and restrictions in your business life Wyoming is the place for you!

• Low annual fees—The annual fees in Wyoming are based solely on the

value of corporate assets located within the state. The minimum is $50 and a million dollars worth of assets within the state of Wyoming would cost you only $200. That’s right, $200 in fees for every million dollars worth of assets that you keep within the state of Wyoming and no fees for assets outside of the state.

• As an officer or director you cannot be held responsible for the debts of

the corporation—Wyoming law is quite strong in this respect and holds generally that as long as you did not intentionally break the law you are protected from claims against the corporation.

• No minimum capitalization is required in Wyoming—You can fund your

corporation with one dollar, with a million dollars or the amount of your choice. And, while there are sound business reasons of avoiding "under

capitalization" the point is that the choice is yours and you enjoy the ultimate in flexibility.

• Directors and/or shareholders meetings may be held anywhere in the

world—You are not required to hold meetings in Wyoming; indeed you need never set foot within the state. Wyoming is rich in history and breathtaking scenery but if your tastes run more to the Bahamas, Hawaii or, for that matter, the French Riviera the choice is yours.

• Stock in a Wyoming corporation may be issued in exchange for

"anything of value"—You may use cash of course but also property, services or any valuable consideration at the total discretion of the board of directors, which can be one person (you?).

• Maximum anonymity—Nevertheless, in today’s overly litigious society it

is a fact of business and personal life that the only thing necessary to involve you in a lawsuit is the perception by someone else that you have assets…you’ve heard it called the "deep pocket theory." Many business people have found it advantageous to maintain financial privacy simply to avoid looking like a good litigation "target." In Wyoming you may use "nominee officers/directors" meaning that anyone you designate can appear on the public record instead of yourself offering you valuable financial privacy. Furthermore, you may also be interested in using nominee or "third party" shareholders who can be the owners of record of the stock, which you control. Ask us how to explain the endless possibilities for privacy using the foregoing two strategies.

• Lifetime proxy—John D. Rockefeller was the first individual to acquire a

personal net worth of one billion dollars. When asked late in life how he accomplished such a feat he is reported to have shared with a young interviewer that his simple secret was to "own nothing and control everything." That is indeed wonderful advice for a host of reasons (consider, no one can take from you that which you do not own) but it is sometimes more easily said than done. By allowing another person or entity to own shares you can use proxies to maintain complete control. The problem is that most state laws require proxies to expire and be subsequently renewed every six or seven years. If the "legal owner" declined to renew your proxy you could be literally be left with nothing and no recourse. That is hardly a scenario that makes us neither feel secure nor is it one that we would

recommend to you. However realize that Wyoming allows for lifetime proxies thereby protecting you from any such problem arising.

• If you already have a corporation —Wyoming offers unparalleled

flexibility. By filing a few simple forms your existing corporation can become a bona fide Wyoming Corporation. Your existing corporation can retain its original incorporation date after becoming a Wyoming corporation. Anyone examining the Wyoming public record will see a corporation dating back as far as your current corporation does. You can promptly become a Wyoming Corporation without losing the many benefits of the longevity and continuity of operation.

Here are a few more benefits of incorporating in Wyoming:

• No information collected to be shared with IRS • Privacy allowed

• Shareholders are not listed with the state • Best Asset Protection Laws

• Nominee officers are legal • Citizenship not required • State tax not being considered • Wyoming draws little attention • No Nevada "Stigma"

• Lower Startup Costs

Wyoming has no:

• Personal income tax • Corporate income tax • Inventory tax

• Gross receipts tax • Franchise tax

• Burdensome regulations • Disclosure of shareholders • Business or "per-capita" tax • Excise tax

Why Delaware

More than half a million business entities have their legal home in Delaware including more than 50% of all U.S. publicly-traded companies and 58% of the Fortune 500. Businesses choose Delaware because Delaware provides a complete package of incorporation services including modern and flexible corporate laws, the highly-respected Court of Chancery, a business-friendly State Government, and the customer service oriented Staff of the Delaware Division of Corporations. One of the most popular places for both U.S. and Non-U.S. entities is Delaware:

Low cost incorporation fees;

No state corporation income tax for Delaware corporations not operating in Delaware;

No name or address disclosure requirement for the initial board of directors; One person may hold all corporate offices;

The corporation must have a registered agent in Delaware, but not a business office;

And you can form a Delaware corporation, limited liability company, or business entity without going to Delaware;

Claims relating to the corporation will be heard by the Delaware Court of Chancery;

There is no Delaware income tax for Delaware corporations or limited liability companies that do not do business in Delaware. If your goal is to eventually take your company public then you should incorporate in Delaware.

Top 10 reasons to incorporate in Delaware:

1. Delaware is considered the most attractive state in the nation for organizing. 2. Delaware courts have a reputation of reaching reasonable and fair conclusions when construing the corporation laws.

3. Only one incorporator is required. A corporation may be the incorporator. 4. There is no minimum capital requirement.

6. For companies doing business outside of Delaware, there is no corporate income tax.

7. Delaware has no sales tax, personal property tax or intangible property tax on corporations.

8. No taxation upon shares of stock held by non-residents and no inheritance tax upon non-resident holders.

9. A corporation may keep all of its books and records outside of Delaware. 10. You may have a principal place of business/address outside of the State of Delaware as well.

Selecting the Right Name for Your Corporation

Generally, a corporation can be named almost anything with few exceptions, as