I recently attended a luncheon where Nevada’s Secretary of State Ross Miller spoke about why Nevada has become an attractive state in which to incorporate. Chief among them is the low tax climate. Nevada has no state personal income tax; in fact, it’s prohibited by our constitution. Nevada similarly doesn’t charge income tax on domestic or foreign corporations. We also don’t have an estate tax or a franchise tax, which can be a costly startup expense for a new business. Nevada has no gift tax, which allows business owners to pass on their property and money without having to put money in our state coffers. Businesses enjoy no tax on inventory and no tax on corporate shares or LLC membership interests. Finally, our laws are written to limit tax increases, which
Continue reading Why Incorporate in Nevada – Low Taxes
There seems to be a significant difference between what lawyers have been taught to provide and what potential clients expect to get from an initial consultation. I blame those TV commercials that suggest lawyers can and will solve all your problems in one meeting. No lawyer can do that and if any lawyer tells you otherwise, call someone else.
An initial consultation serves three basic purposes: 1) for the lawyer to determine whether he or she can represent the potential client, 2) for the lawyer and potential client to determine whether they want to work together, and 3) for the lawyer to explain how the representation will proceed if the potential client decides to retain the lawyer.
A lawyer cannot represent every person who calls. Lawyers are required to follow
Continue reading What to Expect from an Initial Consultation
A few weeks ago I wrote about the concept of piercing the corporate veil. I received an e-mail asking what happens when someone breaches a contract he signed that included a personal guaranty. Short answer – get a lawyer. Here’s the long answer…
A personal guaranty is sometimes required for a contract. Commercial landlords often require one before leasing space, as do banks when issuing lines of credit. The terms of the guaranty are usually set forth in a separate section of the contract, or sometimes in an entirely separate contract. Personal guaranties are signed by someone not in his capacity as a business owner, but in his capacity as an individual. This is a significant difference and you should be aware of the implications when you’re asked to sign
Continue reading Personal Guaranty – Taking Scissors to the Corporate Veil
Virtual offices and executive suites provide a fantastic alternative for business owners who want the trappings of an office without the significant overhead. As beneficial as these arrangements are, they can leave clients high and dry if the virtual office owner stops paying rent.
There are three rungs on this particular ladder:
Virtual Office/Executive Suite Owner (VOO)
Virtual Office/Executive Suite Client (VOC)
The VOO rents space from the building owner and their relationship will be set forth in a lease agreement. Similarly, the VOC rents space from the VOO and their relationship is set forth in a lease or license agreement. Things get tricky when the VOO stops paying rent and the building owner evicts the VOCs. Unless a VOC’s
Continue reading Virtual Offices and Executive Suites
Yes. The End.
The IRS, business license bureaus, taxation departments, and sometimes secretary of state offices require an identifying number for your business. Without an EIN, your social security number is used, which causes identity theft concerns. Also, obtaining an EIN is another way to distance yourself from your business in the interest of keeping your corporate veil intact.
The IRS provides a quick and simple way of obtaining a separate identifying number for your business, called an Employer Identification Number. The application takes only a few minutes, the process is free, and most banks require the number to open a business account.
So what are you waiting for? In the immortal words of Toy Story’s Woody, “if you don’t have one, get one!”
Last week I met with a small business owner whose registered agent had access to her business bank accounts. A short investigation revealed this particular registered agent had formed dozens of corporations and named himself secretary, giving him access to the bank accounts. We quickly dissolved the corporation and reformed an LLC with no one but the business owner having access to the company’s money.
Registered agents are required for businesses but serve a very limited purpose – they provide a physical location where a human being can accept service (lawsuits and official papers from the state or taxation departments) on behalf of the company during business hours. The business owner can act as his or her own registered agent, but it may be difficult to ensure someone is available either
Continue reading What Does a Registered Agent Do?
I make spanakopita, a Greek appetizer, every New Year’s Eve. It keeps for a few days, reheats well in a toaster oven, and saves me from having to cook New Year’s Day when I just want to sleep in. This is especially important this year because tonight I am breaking out the margarita machine I got for my birthday.
I believe the traditional recipe calls for spinach, which always tastes gritty to me, no matter what kind of spinach is used. And requires it to be layered like a lasagna in a baking dish, which lacks the flaky deliciousness of phyllo dough. I thought I’d share my recipe for your NYE celebration.
The trick to working with phyllo dough is to thaw it in the refrigerator, unroll it onto a
Continue reading Spanakopita – My New Year’s Eve Tradition
The holidays are almost over and you’re looking forward to the new year. You may have taken some time off in December to spend with family and friends and your business has taken a back seat. In a day or two it’s time to get back into the swing of things. For the new year, what should you do with your business?
Make sure you’ve attended to all your corporate formalities – holding an annual meeting and putting your minutes in your corporate book, assembling all your receipts and records for your accountant, and making any last-minute charitable contributions. But what about the bigger picture?
First, take a few minutes to clear your head of any negative thoughts about the previous year. We all make mistakes and it’s important to
Continue reading Year End Tips for Small Business Owners
Um…with a pen?
Seriously, though. It sounds simple, but you should consider the implications of how you sign documents on behalf of your company. As a business owner you have a split personality. In any situation, you will be either Jane Doe The Individual or Jane Doe The Business Owner. Before you sign something that involves your company, think about the role you’re playing. If you simply sign your name, the party on the other side, namely a creditor, will try to pierce the corporate veil and come after your personal assets.
As a simple yet effective way of helping prove you are consistently treating your company as a separate legal entity, you should sign documents binding the company like this:
Jane Doe, as [Title] of [Company, Entity
Continue reading How Do I Sign Company Documents?
No, it doesn’t involve a safety pin or have anything to do with a wedding. This is one of those often-used yet rarely-explained phrases that every small business owner should understand.
If formed and managed properly, corporations and LLCs are treated as legal entities separate from their owners. This is why we business lawyers are constantly nagging sole proprietors to form a legal entity. Doing so allows the business owner to protect his or her personal assets from lawsuits against the company. Without a legal entity, a sole proprietor’s home, bank accounts, cars, etc. can be lost in court. The formal legal entity, such as a corporation or LLC, provides a “veil” of protection between the company’s assets and those of the business owner.
But it’s not enough just
Continue reading What Does “Pierce the Corporate Veil” Mean?