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There are a few limitations on S corps:

·       Can’t have more than 100 shareholders;

·       Can’t have foreign owners

·       Can’t be owned by other corporations or LLCs

·       S corp profits need to be distributed according to the percentage of ownership

An S corp requires a bit more corporate formality to “follow the corporate rules”.  It is not too big of a deal, once you understand the rules and have an easy to use system in place.My

Corporate Veil Pro package is a Clear, Concise, Step-by-Step program to assist small business owners to know what to do and when to do it with regards to their corporate record keeping requirements.  It Corporate Veil Pro package is a Clear, Concise, Step-by-Step program to assist small business owners to know what to do and when to do it with regards to their corporate record keeping requirements.  It

demystifies the process and shows how easy it can be to operate an S corp within the rules.  A one-time investment of $297 plus an hour or two a year of simple fill-in-the-blank tasks, and you can save a lot of taxes and do it totally legally.  For me, it was a no-brainer to decide on an S Corporation for my primary business.

Disclaimer: This is not intended as legal advice, just my understanding.  You need to research it yourself and get professional help before proceeding.  Life Tip: Don’t believe anything you read on a blog on the Internet unless you have checked it yourself.

Rob

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Hi All,

I’ve updated the website at CorporateVeil Pro and I am pleased to announce that…

Physical Copies of CorporateVeil Pro are now shipping…

Complete Corporate Veil Pro System for Small Business Owners

In addition, not shown is the Special Report: Business Insurance Blueprint.

If you would like to get an Affiliate link for this product, please sign up here:

Affiliate Signup Link…

Thanks for all the encouragement from everyone. Things are shifting into a higher gear now.

Seize the Day…

Rob

A few years ago, on a flight back to Atlanta, I met a well-dressed man from the Northeast. He introduced himself as George, and he seemed stressed.  Very stressed.

After a bit of polite back and forth, he started to tell his story. See, George didn’t just look successful. Not just an empty suit. In fact, he had built his own business from the ground up, with his own two hands. When he found out I owned my own company, this is what he said…

“Rob, tell me you’ve been keeping your corporate records.”

Me: “Well, mostly.”

“Rob, right now, I’m on my way to my second home to close it out. See, I didn’t keep my records well enough, just too much day to day business stuff, too busy growing my company, never thought it was important, it was too easy to put off.”

George’s voice drops to half the volume, “Then the subpoena came…I was being sued by a disgruntled ex-employee over nothing and they got a court order demanding all my corporate records.”

George continued,  “I didn’t know what to do. I tried to pull my records together, but I hadn’t touched them since I started the business.  And it was too late to update everything. In fact, trying to make any changes at that point would just make me look guilty.”

The pain in George’s voice was hitting me hard… 

“I’ve already spent $20,000 in legal fees since they’ve started piercing my corporate veil. And it looks like I’ll be losing much more than that, probably $100,000 or more. And that’s if I win. A part of my life, of my family’s life, has been taken away.  I’m on my way now to sell our property in Myrtle Beach to pay for all this and I haven’t had the heart to to tell my wife we have to sell it.  There are so many memories there and we all love that place.”

I was stunned.  I had no idea this was possible.  Talk about a huge wakeup call.  You can guess what I did as soon as I got back home.

There was no way I was going to expose myself and my family after seeing what George was going through. And, especially since I wasn’t being sued, I still had time to act and get things right.  The fix was necessary and didn’t take much time. What’s a few hours to save everything?

It’s this experience that triggered the thought to develop the Corporate Veil Pro system.

If your records aren’t up to date, if you don’t have minutes from your annual meetings—even if you’re a one man operation—you’re exposed. There’s zero reason for you to open yourself up to predatory lawsuits.

Get serious and take action now:

Order Corporate Veil Pro Today… It’s Sleep Insurance

Sincerely,

Rob Northrup
President, Basecamp Publishing Inc.

9 out of 10 corporations are easy pickings for shark attorneys and their money-sucking clients!

Yeah, I know, that’s a bold statement. But I’m not asking you to believe anything just yet, until you see the evidence for yourself. All I ask is that you refrain from disbelieving while I show you my proof. It only takes a minute to convey, but it speaks to one of the most misunderstood myths of corporate protection.

In my hundreds of talks with business owners, I’ve discovered their records are not good enough to protect them. Which group are you in?

Group 1: About 50% have no idea they’re completely exposed to shady lawsuits and don’t have any idea what I’m talking about (and if you incorporated yourself and don’t have an attorney, how would you know?);

Group 2: about 30-35% know there are records to be kept, and boards, and meetings, and some more stuff, but they aren’t doing it, and they aren’t at all clear what they should be doing, or the risk they are taking;

Group 3: about 10% think they are doing most of what they need to be doing, but they aren’t confident that they are doing everything needed, or they are relying on someone else and that worries them;

Group 4: the remaining 5-10% think they have their corporate records under control. If you are one of these people, congratulations! You may be excused now! I now count myself in this group, and I sleep a lot better at night than I used to when I was in one of the other groups.

This information is shocking. At least 80% of all business owners are definitely NOT getting the protection they are expecting from their corporate veil, and most likely the number is more like 90-95%.

Why would you expose yourself, your family and your future to sharks? Get out of the water! Why are you swimming when you see the fins fully exposed?

You know you need to act, you know you need to clean up your records to make you and your family safe, then please make a simple move by seizing the moment right now and investing in your own asset protection. It’s like insurance for your insurance.

ACT NOW–> Clear, Concise “7 Steps To Corporate Records”

Rob

Is Your Corporation Protecting Your Assets?
Personal Asset Protection For Small Business Owners…

… the shark lawyers and their sue-happy clients are circling around your business, salivating, and the Court Order has demanded that you prove that your corporation has been kept up to date—all paper work, all forms, all files—and they’re chomping at the bit to get you in Court…

So they can get your corporation thrown out on a technicality and start taking away your home, your savings, your family’s lifestyle… 

I’m not a lawyer and I don’t play one on TV, but the lawyers I’ve talked to say by the time you’re being served with a subpoena, it’s too late.  You can’t clean things up now– it’s too late—you’ve been negligent and now they’re going to eat you for lunch.

If you’re in this position go get a lawyer right now. Yup, it’s going to cost you an arm and a leg but it’s your only hope.   I can help you figure things out before you get sued, but once that happens you are at the mercy of the Court, and ignorance of the law is no excuse… your only hope is that the jury won’t hate all business owners…

Sure, life took over once you incorporated, got your business going, and you became swamped with a laundry list of tasks you had to accomplish every day—typical life of an American business owner. But your schedule doesn’t mean a thing in a court.

The fact is you have major responsibilities as the owner of a corporation. And, if you don’t take care of business in your legal entity—you know, the forms you filled out you thought protected you, your assets and even the home you live in—the security you thought you had will be flushed down the toilet.

You’re one “incident” away from getting hauled into court and being ripped to shreds by a money-hungry lawyer and their sue-happy client.

Yup… you better fix the problem. You intended to keep everything up to date, but you just got busy with business and life. If there something you can do? You can read the steps you need to take here:

Please order Corporate Veil Pro today while it is fresh in your mind.  How could you ever tell your family that you lost everything because you couldn’t spare a few hours to take care of these records?

Sincerely,

Rob Northrup

President, Basecamp Publishing Inc.

Now that you have been through the previous six steps, assuming that everything still looks good and you have your resources ready to go, and you have a Name, and you know what you are going to sell first, and you know what structure makes sense for you, you are ready to jump into the pool.  These instructions are for an S Corporation, the LLC is slightly different.  Get ready, here we go…

“Inc.” in 10 minutes!

You can use one of the online services like LegalZoom, but it isn’t that hard to do it yourself.

My last incorporation earlier this year took ten minutes on-line with the GA Secratary of State and I charged the $100 registration fee to my credit card.  I had to fill in a form to tell them the name of my corporation, who was incorporating it (me), the legal address, how many shares of stock were authorized, and my official Registered Agent (me again). 

After hitting SUBMIT, I got the ARTICLES OF INCORPORATION back approved with a receipt in just a few minutes…  Different states might be different.  If you are doing this yourself, you should order a Corporate Record Kit (I like www.fastkit.com) and you should order CorporateVeil Pro Step-By-Step Corporate Records system…  These things together will give you the necessary information to keep your corporation legal and proper from the start.  Just take my word on it, and do it.

You are now the proud owner of a brand spankin’ new corporation! One with an unlimited future that you will create and control…Now on to a few housekeeping matters, you need to get a Federal Employee Identification Number (EIN, it’s like a Social Security number for your business) using the SS-4 form.  You can call and get the EIN over the phone to eliminate a wait for the paperwork to be mailed back. 

The Gavel Drops… Initial Meetings of Shareholders and Directors

Once incorporated, you need to hold your first shareholders meeting and authorize the Bylaws and elected director(s), and hold your first directors meeting, and appoint officers. You also need to open a bank account and deposit the initial equity into it. 

VERY IMPORTANT:  Most small businesses should become an S corp, and this is very easy.  You have a short amount of time to fill out the IRS 2553 form electing this S Corporation status.  This form must be unanimously agreed to by all the owners, and this is how you will avoid double taxation on your profits. 

Sounds like a lot, but it isn’t really.   Total time expended less than two hours- start to finish.

You can use your receipt from the Secretary of State declaring you to be an actual, honest to goodness corporation to open your corporate checking account, and to secure a Post Office box in the company’s name. You are now open for business.  Just don’t forget to spend a half hour a quarter on those corporate records.

Finally, Should you Inc. without consulting an attorney?

I am not going to answer that.  It’s up to each person to decide for themselves.  I do think everyone should have an attorney they can talk to.  You don’t have to have a lawyer fill out the forms for you if you are comfortable doing it yourself.  If you are entering a high-liability business area, you will be inclined to seek more legal advice and there might be better ways to set up stronger asset protection than just a corporation. 

There are a lot of books on this subject, I will put together a short list in a future post.  And I be discussing how to select and  use an attorney effectively in the very near future. (Hint: preparation!) 

That’s it for this seven part series on Corporation Startups, let me know if there are questions…

Rob Northrup

President, Basecamp Publishing Inc.

Is Your Corporation Protecting You?

What is at Stake?

Everything you own personally (now and in the future) could be at stake in this decision…

“Limited Liability” business means that the business is a separate thing from you personally and if setup and managed properly it gives the owners of the business a level of protection from things that happen within the business.  Put simply, it makes the business liable for things that happen as a result of business dealings and situations, rather than the owners personally. 

Before we get too deep into discussing what form of business you should start, let’s talk a little about whether or not you need to have a limited liability business at all… 

The Sole Proprietorship is the Default Business

When you start an informal business and don’t incorporate or start an LLC, you are automatically a Sole Proprietorship without filling out anything else.

The IRS expects you to report all the income you generate in this business on your own personal tax returns.  You are also able to deduct many of your business expenses on your tax form, but the taxes for the business and you personally are all on your personal tax return.

The Sole Proprietorship Offers No Protection

There is no distinction between you and your business legally or financially. The business is officially your name although you can “do business as” a different name.  Even with a Sole Proprietorship, you should maintain a separate bank account and records of income and expenses for this business, but this is for ease of recordkeeping and tax preparation.  If someone sued your business, then all of your business and personal assets would be fair game to payoff any judgment against you. 

The sole proprietorship is acceptable for one-person micro-businesses with extremely low revenue,  no expectation of growth, and low liability risks.  If you are buying and selling $5,000 a year in beanie babies on eBay then you are probably ok to stay a sole proprietorship until you dream to expand and get larger.

The Six Triggers

There are at least six “Triggers” that I think make it almost mandatory that you start a limited liability business (it isn’t that hard or expensive):

·       Having a partner in the business OR

·       Having employees in the business OR

·       Startup losses likely to be incurred OR

·       Future Revenue Projections more than about $20,000 per year (not a hard number) OR

·       Business requires outside investment to fund operations OR

·       Business has risk of harming someone physically, financially, etc.

If even ONE of these Triggers describes your business, then you likely NEED a limited liability business. 

There is one other HUGE BENEFIT to having this more formal business structure.  It provides a structure to realize your financial dreams.  Once you have a business, your mind starts to look for business opportunities, and they are everywhere.  If you are looking to escape your Hamster Wheel job, then starting a business of your own could provide your escape route and there is something about the formality of a Corporation or LLC that is psychologically more valuable….

To be continued…

As people go through life, they accumulate assets, which are anything of value.  Other people want to take these assets away, either through a lawsuit or other judgement or something as simple as taxation…

Asset Protection is the legal maneuvering that is done to attempt to erect barriers around your assets so that they are tough to get to.  The higher the barriers and the more of them you have in place, the more secure that your assets are.  I made up the term “Asset Defenses” as a phrase to describe all of the various defensive structures that you could use to protect what is yours.

One good Asset Defense is a Corporation, which allows you to engage in a business enterprise and earn money and build equity (stored value in the company).  The Corporate structure is designed to put up a wall around the corporation so that things that happen within the business can not easily escape over into your other businesses or your personal life. 

Corporations are fantastic tools to contain risk and liability within the confines of the business. But they must be run strictly as a business, a separate entity from you personally, and this means you need to follow some rules… or your Corporate liability protection could be torn to shreds and your personal assets put at risk…

My new product CorporateVeil Pro , is available, and it is a clear, concise step-by-step system, written  for the busy business owner.  It is designed to get your corporate records ship-shape in 7 quick streps…

Rob Northrup

Is Your Corporation Protecting Your Assets?

Without proper corporate records, your corporation is like a ticking time bomb…

I am a full-time business person with a “regular” sales business to run, and I did my own incorporation about ten years ago.  No one handed me any clear, concise ”rules” about how to maintain the proper records for my corporation so that I could maintain the asset protection that corporations provide to their owners.  So, I looked everywhere…

Since I couldn’t locate this info in an easy to use format, I developed this system myself, to help people like business owners who are looking for a fast, easy and step-by-step approach to getting their corporate records correct. 

Here is my target customer I want to assist:

□          Owners of “small” businesses with less than five owners;

□          Owners of regular corporations—both C and S corporations 

(LLC version- available in 2009);

□          Corporations where the owner(s) are active in the day-to-day operations of the business;

□          Owners who want to understand these corporate records requirements and get their corporations working to protect their personal assets;

□          Owners who don’t have a large staff;

□          Owners who are very busy.

The system was specifically NOT designed for:

□          Companies with lots of silent “owners” (not involved in the business);

□          Public companies;

□          Owners who are engaged in fraudulent or border-line criminal activity. 

            (no amount of record-keeping can protect you if you are engaging in these behaviors).

CorporateVeil Pro is a clear, concise, step-by-step system designed to walk a busy small corporation owner through the basic steps to get the corporate records in order…

by Rob Northrup
www.AssetDefenses.com

Hi,

The “corporate veil” is an important, and often misunderstood, concept for many small business owners…

Corporations are started for a number of reasons…

One of their products explodes, someone trips in their building and is disabled, an employee sues them over something ridiculous and claims millions in emotional damages.  In today’s lawsuit-happy culture, it could be anything.

Disaster…

(but maybe not the end of the world…)

As long as everything is nice and proper with this corporation, the worst that will happen is that the judge will take away the assets of the corporation and give them to the person who filed the suit.  This sounds pretty terrible but it much better than what happens in the case where the corporate records are not in good shape…

With good records and procedures, their personal assets are safe behind the corporate veil…

The corporate veil is not automatic…you need to follow the “corporate rules”…

With no records or poor records, their personal assets like their house, their savings, their stuff are easy pickings for the vultures…

 

They call this “piercing the Corporate Veil” and what it means is the judge takes everything your corporation has, then he tosses your corporation in the rubbish heap and connfiscates everything the owners have as well… property, savings, asset accounts, automobiles, your stuff…

These sue-happy attorneys know that small corporations usually do not maintain large amounts of cash and valuables inside the corporation.  They know that the real money is in the bank accounts of the owners and the only way to get to the loot is to try to “pierce the corporate veil” in court.  So almost without fail, they demand these records and they go over them with a fine-toothed comb…

Looking for any “proof” that you weren’t dotting your i’s and crossing your t’s like a “real corporation” is supposed to.

I am  the owner of two corporations, and I met one of these unfortunate businessmen who was having his corporate veil pierced, and when he told me his wretched story on a plane to Atlanta from New York, I took notes and made an Action Plan. 

In response, I wrote a clear, concise, step-by-step guide for small business owners to help them understand these requirements and also to bring them up-to-date with the minimum amount of time and effort, because one thing never changes—business owners never have enough time.  Don’t let that be your excuse for losing your corporate veil of protection.  You can find more information on this system at my CorporateVeil Pro website…

PS: The above assumes you are operating an honest business, if you are ripping people off or committing fraud, then you deserve to have your personal stuff confiscated. The vast, and I mean vast in the largest sense of the word, percentage of small businessmen and women I meet are honest, hard-working, and want to do the right thing…  I hope you are one of the “good guys”…

Yesterday, I was asked a good question by The Intuitive John Shoemaker…

Can you give me some idea on how much a S Corp costs to set up and administer v. regular corp?

Setup costs:  There isn’t any difference in the setup costs.  In both cases, you file with your Secretary of State to get your corporation.  This can be done in a few hours and you can do it yourself, you can do it through one of the on-line services like LegalZoom, or you can hire a business attorney.

[Note: An attorney can help you choose the right structure for your business.  If you have doubts and questions, then you should bite the bullet and hire an attorney.  I will give some pointers in later posts on Hiring an Attorney.  I will also give more details on the differences between the various types of business structures in future posts.  If you have already studied the options and know what you want, then you can likely handle it yourself.]

Once you have gotten your regular corporation, then all of the owners need to agree 100% to file a request with the IRS (IRS Form 2553) to be classified as an S corporation.  The differences between the two- regular and S corporations—is purely related to tax issues.  You have only a little more than two months after you Incorporate to file for S corporation status, and this can be a very important deadline.

There is no cost to file this 2553 form and you will receive an answer in a few months. Be sure to keep all of these records in your Corporate Records.

Administration Costs:  You fill out basically the same tax returns—the regular corporation fills out an 1120 each year, and the S corp fills out an 1120S.  Both are very similar and there isn’t a major time or cost difference between them.  The big difference is that on the 11s0 regular form there is a tax computation and depending on the amount of profits, you could owe a large corporate tax.

With the S corp, there is no corporate tax, the tax is all paid by the owners.

To get around this issue, most small regular corporations make every attempt to pay out all the profits of the corporation to the owners as salaries and bonuses before the end of the year.  These salaries and bonuses still need to have personal income tax (and payroll taxes Social Security and Medicare) taxes paid on them, but they reduce the profits of the company and avoid the “double” corporate tax.

There is always the danger that the IRS sees this, and says that the owner salaries and bonuses are too high, and they can reclassify these after the fact causing a huge tax liability.

Corporate Documentation and Record Keeping

In both cases—regular corporations and S corporations, it is absolutely required that you maintain your corporate records properly.  Many people have learned the hard way that the liability protection that a corporation gives you can be lost by incomplete records.  I have written the CorporateVeil Pro system to help small business owners to do this required paperwork in a proper manner.   It is clear, concise, step-by-step.  For a better understanding of these requirements, take a look at that page…

What is an S corporation?

The “S corporation” is a very popular structure for many “small” businesses.  Small refers to the number of owners rather than the size or profitability of the business.  For example, the “Chicago Cubs” is operated as an S corporation.

To start an S corp, you start a regular corporation and then you file for S corporation status soon thereafter using a special form for the purpose (IRS Form 2553).

There are a LOT of S corps in the US… 

In the US, in 2004, there were 3.5 million S corporations with 6.1 million total shareholders.  So we can see that the typical S corporation is owned by about 1.7 people.  That tells me that there are a ton of businesses out there, maybe yours?, that are S corps with one or two owners total.

These 3.5 million S corps were responsible for over $4.5 trillion in reeipts (these are 2004 numbers) and of that almost $500 Billion was income for the owners (officer salaries and net profits added together).  Another almost $500 billion was paid as wages to other employees that worked for them.  So you can see that S corps, although individually small, represent a good sized chunk of our economy…

Remember this the next time you hear a politician spouting off about the “Evil Rich” people.  The vast majority of these evil producers are small to medium sized business owners who do most of the hiring and investing in equipment and inventory in our economy.  If the burdens become too great, the risk/reward ratio shifts and it will freeze up the incentive for new growth and employment.  

And personal small businesses are the trend of the future.  It is important that all small business owners understand the rules of the game…

Rob Northrup

Is Your Corporation Protecting You?

PS: Next time we’ll talk about why an S Corp is preferred by many business owners…