I sometimes get calls from people asking whether they should incorporate. When I am somehow able to stifle my automatic “YES YOU SHOULD!” knee-jerk reaction, I calmly provide some semblance of a well-reasoned argument in favor of incorporating.
Now, to clarify, by “incorporating” I don’t necessarily mean forming a corporation. I simply mean forming an entity so that you are no longer operating your business as a sole proprietor. The choice of entity includes a corporation, LLC, LLP, LLLP, and some other more obscure entity forms that I have yet to run across. The two most common entities I deal with are the corporation and the LLC. For either a corporation or an LLC, you start with registering the entity at the state level and obtaining a state business license.
Continue reading To Incorporate or Not to Incorporate?
On April 23, 2012, Nevada Governor Brian Sandoval and Amazon.com announced an agreement that Amazon would begin collecting sales tax on purchases made by Nevada residents starting at least January 1, 2014.
Even when Nevada residents make a purchase that doesn’t involve paying sales tax, Nevada law requires them to remit the equivalent sales tax to the state. Few residents do so, however, and for this reason Amazon.com has come under fire from states who argue that its failure to collect sales tax has given it an unfair advantage over local retailers, mostly small businesses, operating within each state.
With this new agreement, small businesses will enjoy a more level playing field with the online retailer and states can recapture some $23 billion in lost revenue.
Previously, entities such as LLCs and corporations in Nevada could apply for an exemption from the $200 annual state business license fee if the business was home-based and made less than approximately $26,000 a year.
Today, the Secretary of State issued a press release about its regulation clarifying that the exemption was intended to apply only to natural persons – sole proprietors and general partnerships – and not to entities.
Therefore, effective immediately, all entities must pay the $200 annual state business license fee.
People often ask me how they go after someone who owes them money. There seems to be a misconception that if you sue someone who owes you money, the lawsuit can be wrapped up within the span of an hourlong TV show and you magically get all your money and your attorney’s fees back in a giant check delivered to your house with flowers and balloons.
Okay, so maybe that’s a slight exaggeration. The point is, trying to recover money you’re owed is not an easy task.
First, if you spend the time and money to sue, chances are pretty good that even if you win, you won’t be reimbursed your attorney’s fees without a contract that says you should. Also, if you win, and get a judgment in your
Continue reading Someone Owes Me Money – What Are My Options?
Earlier this week, Clark County School District Superintendent Dwight Jones announced the Reclaim Your Future program, in which mentors from the community are paired with high school students to help raise the graduation rate.
CCSD is partnering with the United Way, Workforce Connections, the Las Vegas Chamber of Commerce, and Vegas Young Professionals to round up volunteer mentors. If you’d like to get involved, download the application or contact Debbie Tomasetti, Project Manager at 799-6560 or firstname.lastname@example.org.
I recently met with a client who had formed a Wyoming LLC because it appeared that he would save a few bucks on fees. He lives and works in Nevada and has no other connection to Wyoming other than the LLC he formed. I asked him if he was aware of and complying with the law (NRS 86.543) that requires him to register in Nevada as a foreign entity. He said no. I told him that even if the LLC was formed in Wyoming, if he’s transacting business in Nevada, he has to register that entity with the Nevada Secretary of State as a foreign entity. Same with corporations.
As it turns out, if you are doing business in Nevada under an LLC formed in
Continue reading Saving Money with an Out-of-State Entity? Maybe Not.
Recently, I made a pretty compelling argument for maintaining a corporate book, if I do say so myself. Now that you’re convinced, what types of records should be included? Generally speaking, you should include records of corporate meetings of members or shareholders, action taken without holding a meeting first, and approvals of common business decisions. Usually, the document that memorializes action taken by the owners, with or without a meeting, is called a resolution.
For some examples of documents to include in your corporate book, refer to this list:
Meeting minutes and notices of meetings sent to members or shareholders Adopting an operating agreement or shareholder agreement Adopting corporate bylaws Appointing a board of directors Opening bank accounts Approving contracts Authorizing or rescinding the authority of an employee
Continue reading What Types of Records Should Be in My Corporate Book?
When you form an LLC or a corporation with a commercial formation company, you’ll usually receive as part of the package a fancy-looking fake leather binder, sometimes with a heavy metal document sealer thingy. Often, this binder sits on your shelf, gathering dust, doing you and your company absolutely no good. There are many reasons to have a corporate book, but the two most important, in my humble opinion, are for business succession and litigation planning.
Your corporate book should contain all significant pieces of information relating to the company and records of major decisions by the company owners. If a business owner is somehow incapacitated, or made otherwise unavailable, the second in command can refer to the book to find where the bank accounts are, what insurance
Continue reading Why Do I Need a Corporate Book?
I’m super serious this time.
Lately I’ve heard from a number of business owners whose partners have stopped contributing to the business, financially or otherwise, and the business owner calling me simply wants out. Of course, it’s rarely simple.
A few callers are lucky in that the company has not yet transacted any business and therefore no equity really exists in the business to worry about leaving behind. However, most callers find themselves in a position where they have contributed a disproportionate amount of blood, sweat, and tears to the growth of the business while their partners have done little to nothing. Many callers report that their partners have not only done nothing but have even sabotaged the business by alienating customers, entering into lopsided contracts, or making large purchases
Continue reading Why You REALLY Need an Operating Agreement
One of my clients has been struggling to pay his $13,000/month lease. During a phone call about a year ago, his landlord told him, simply, “pay what you can.” At that time my client began paying about $6,000 a month while begging the landlord to move him to a smaller space within the same complex. Though the landlord never moved him, the client continued to pay the reduced rent.
The complex was recently sold to a new owner whose asset manager (during a meeting at which the client’s accountant and I were both present) assured my client that his reduced payments were fine and would become irrelevant as soon as she found him a smaller space within the complex for about the same rent. Her words, and I quote: ”You have
Continue reading Small Business Horror Story #4: Did Your Landlord Reduce Your Rent? Prove it.