Advice I have heard from lawyers, is NEVER EVER EVER DO THIS (emphasis from them).
RickG wrote: > Very nice info Larry! So, what is your take on incorporating in a > state other than your home state for tax reasons? Is it worth the > effort? > -RickG > > On Wed, Jun 3, 2009 at 1:09 PM, Larry Yunker <[email protected]> > wrote: >> What you are referring to is called "corporate formalities". These same >> concepts exist with regards to LLC's. For instance: You must have those >> officers which the state statute requires (usually president and secretary >> but some states require others), you must make those filings which the state >> statute requires, you must properly finance the company, you must reasonably >> insure the company, you must follow appropriate accounting procedures for >> the company, you must adhere to your own bylaws - articles of organization >> or other controlling documents, etc. >> >> The bottom line is that the more that you do to treat the company as an >> independent entity the less likely that someone can "pierce the corporate >> veil." The more often that you treat the company like an empty shell or as >> something owned and controlled solely for your benefit, the more likely it >> is that a creditor can reach beyond the company and attach to your assets. >> >> Yet, I think the most commonly overlooked liability is the dreaded "personal >> guarantee". Until your company has built up sufficient credit history of >> its own, it is likely that you will be asked to guarantee the liabilities of >> your company. When you purchase on credit or if you take out a loan, it is >> quite likely that you will be asked and/or required to sign a personal >> guarantee regardless of the structure of your company. If you sign such a >> document, you may be held personally liable for the underlying debt EVEN IF >> the company is a limited liability entity (such as a LLC or a S-Corp). Be >> CAREFUL, some of these guarantees allow the creditor to seek payment from >> YOU FIRST instead of even chasing the company! >> >> So, keep in mind that one of the biggest reasons for going with a limited >> liability entity early-on is NOT to limit your liability to creditors (they >> probably will reach you through personal guarantees). The reason to go with >> limited liability from the start is to limit your liability in "tort" >> (meaning when you or someone that works for you causes someone else to be >> hurt). Also remember that torts happen outside of the company AND inside of >> the company. I'd say at least half of the calls that I'm fielding these >> days come from people who have recently been laid-off from their employers >> and now they are suing their employers for some sort of tort. (wrongful >> discharge, employment discrimination, sexual harassment, etc.) >> >> - Larry >> >> >> >> -----Original Message----- >> From: [email protected] [mailto:[email protected]] On >> Behalf Of RickG >> Sent: Wednesday, June 03, 2009 11:29 AM >> To: WISPA General List >> Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability >> >> Apparently, "meeting minutes" are one of the differences between an >> LLC & Corporation. I do my "minutes" for the "annual meeting". No >> biggie, but considering changing over to an LLC. >> -RickG >> >> On Wed, Jun 3, 2009 at 6:06 AM, George Rogato <[email protected]> wrote: >>> Yeah, my accountant told me a story about one of his un named clients >>> who was previously part of a corp . Turns out there was a lawsuit >>> against a corporation that had filed for bk protection a couple years >>> earlier. >>> >>> The person filing the lawsuit wanted to see the corporate minutes for >>> the now defunct corporation to see if they were done on a regular basis. >>> >>> What they were after is, was it a real corporation that held directors >>> meetings on a regular basis and kept minutes. >>> >>> if not, then the corporation would in fact be considered an illegal >>> corporation and the shareholders would then be considered sole >>> proprietors and the corporations bk would be over turned, leaving them >>> open to that lawsuit. More so than exposing the share holders to that >>> type of liability, the share holders, now sole proprietor or partners >>> would have also filed false tax returns and would be subject to all >>> those unpaid taxes and penalties interest etc. >>> >>> A can of worms indeed, when not done right. >>> >>> >>> >>> Travis Johnson wrote: >>>> I understand the corporate structure and how it works. I also know that >>>> if you follow all the proper corporate bylaws, they can NOT break the >>>> corporate barrier. Yes, they will try and list each person individually, >>>> but if you have a good attorney, that is a simple motion to get the >>>> individuals removed (been there, done that). >>>> >>>> Travis >>>> Microserv >>>> >>>> Marlon K. Schafer wrote: >>>>> It can be done a lot cheaper. But we work hard to do it right not cheap >> these days. >>>>> And the corporate veil isn't as strong as it used to be. If your >> company screws up the officers (that's you) will be named on any suit these >> days too. >>>>> marlon >>>>> >>>>> ----- Original Message ----- >>>>> From: Travis Johnson >>>>> To: WISPA General List >>>>> Sent: Monday, May 25, 2009 9:53 AM >>>>> Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital >> Availability >>>>> >>>>> Huh? We incorporated in 1997 and I think total cost was less than >> $500. How do you ever expect to get away from having to do personal >> guarantees if you don't operate like a "real" business? >>>>> Travis >>>>> Microserv >>>>> >>>>> Marlon K. Schafer wrote: >>>>> One more thing. I don't agree with your definitions per se'. >>>>> >>>>> We all have businesses. A proprietorship is a TYPE of business. We are >> a >>>>> proprietorship because I'm not incorporated (incorporating is over rated >> and >>>>> expensive to do right). I'm still a business though.... >>>>> >>>>> http://en.wikipedia.org/wiki/Business >>>>> >>>>> http://en.wikipedia.org/wiki/Sole_proprietorship >>>>> >>>>> http://en.wikipedia.org/wiki/Asset >>>>> >>>>> marlon >>>>> >>>>> ----- Original Message ----- >>>>> From: "Charles Wu" <[email protected]> >>>>> To: "WISPA General List" <[email protected]> >>>>> Sent: Sunday, May 24, 2009 10:03 PM >>>>> Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital >> Availability >>>>> >>>>> Hi Marlon, >>>>> >>>>> I think it's appropriate to make a few definitions and distinctions on >>>>> things so everyone is on the same page >>>>> >>>>> Specifically, for purposes of making my point, I define >>>>> >>>>> Proprietorship: A commercial activity engaged in as a means of >> livelihood >>>>> or profit >>>>> >>>>> Business: A unique system of processes and procedures that documents and >>>>> codifies a specific method of proprietorship >>>>> >>>>> Asset: cash, inventory, equipment, infrastructure, customer contracts, >>>>> brand, marketing, etc >>>>> >>>>> Grin. Sure it is. That's what a LOT of small business people do. >> It's >>>>> also kind of common for doctors, dentists, plumbers etc.... Sometimes >> it >>>>> sucks, >>>>> Now, everything you stated above is just a method of >> proprietorship, and >>>>> in most cases, from a sale perspective, a proprietorships isn't worth >>>>> anything more than the depreciated value of its assets >>>>> >>>>> Say you were buying out the local plumber's office -- what would he have >>>>> of value? His truck? Some old tools? A customer list / brand perhaps >>>>> (but the reality of things is that customers do business with him >> because >>>>> of him, and if you bought him out and he moved out of town, those >>>>> customers would probably go back to being on the open market) >>>>> >>>>> Now, in comparing the WISP 'proprietorship' vs. the plumber, it's worth >>>>> noting that the WISP is somewhat unique in that it results in the >> creation >>>>> of an independent asset that holds onto a lot of value (e.g., the >>>>> recurring revenue and everything that goes to support it); in many ways, >>>>> this is akin to real-estate >>>>> >>>>> Not >>>>> everyone out there even wants to get that big (if I had a nickle for >> every >>>>> business owner that's told me the most fun they had and the most money >>>>> they >>>>> made was when it was just them, no employees......) But then again, >>>>> that's >>>>> one of the really cool things about this buisness, it's big enough and >>>>> flexible enough to allow many different business models and operator >>>>> dreams >>>>> to bear fuit! >>>>> True...and you have the added benefit of building an asset that >> has value >>>>> (be happy we're not plumbers =) >>>>> >>>>> -Charles >>>>> >>>>> >>>>> >>>>> >>>>> >>>>> >> ---------------------------------------------------------------------------- >> ---- >>>>> WISPA Wants You! Join today! >>>>> http://signup.wispa.org/ >>>>> >> ---------------------------------------------------------------------------- >> ---- >>>>> WISPA Wireless List: [email protected] >>>>> >>>>> Subscribe/Unsubscribe: >>>>> http://lists.wispa.org/mailman/listinfo/wireless >>>>> >>>>> Archives: http://lists.wispa.org/pipermail/wireless/ >>>>> >>>>> >>>>> >>>>> >> ---------------------------------------------------------------------------- >> ---- >>>>> WISPA Wants You! 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