Online Incorporation MaxBlog

By ALEX PHILIPPIDIS

Eleven years after New York state first extended to startup business owners the liability protections of corporations, entrepreneurs are increasingly taking advantage of them, judging by five years worth of new-business filings.

The number of doing-business-as filings dipped 20 percent between 2000 and 2004, when 3,931 DBAs (doing business as) were recorded by the county clerk’s office.

No similar dip is evident, however, in the new corporate filings recorded by the state Department of State. During the same five-year period, the number of corporations, limited liability companies (L.L.C.s), limited partnerships and limited liability partnerships remained steady, a combined 4,947 filings processed last year - 27 more than in 2000.

Nationwide, the number of new businesses dipped less than 1 percent between 2000 and the most recent available year of 2003, when 572,900 new businesses were recorded.

John Tolomer, senior vice president and Westchester/Connecticut marketing manager for Commerce Bank, which operates five Westchester branches, said many entrepreneurs are wising up to the tax advantages of corporate filings. L.L.C.s and subchapter S corporations allow earnings to flow to owners and are taxed once at their personal income tax rate, versus the dual taxation of traditional corporations.

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While the legal framework in Nevada is favorable to companies, one of its most appealing aspects is that a business entity doesn’t have to be physically present to enjoy the benefits of incorporation here and many are doing so. Estimated to account for 80 percent of the 71,036 new business entities incorporated here last year, out-of-state incorporations are fast becoming a boon to Nevada, contributing mightily to the nearly $57 million total levied by the state through licensing and other fees for new companies as well as annual renewals for the 239,909 businesses in good standing with the Secretary of State’s office.Last week, the Business Press examined some of the misconceptions about incorporating in Nevada among out-of-state businesses, primarily the erroneous idea that incorporating a business in Nevada allows owners to avoid taxes in the state in which they reside and do business.

That fallacy is maintained and sometimes even encouraged by a few resident agents, who derive their income acting as an out-of-state corporation’s official in the jurisdiction and are therefore the main beneficiaries of increased activity. The intense competition to register business entities here have lead to other practices among a small number of resident agents that skirt the ethical boundary.

Despite the actions of a few bad apples, out-of state incorporations are a legitimate and lucrative business, with Nevada becoming the third largest jurisdiction in terms of new incorporations per population density behind traditional leader Delaware as well as South Dakota. As the Legislature looks to beef up the state’s attractiveness this legislative session by broadening the base of legal protection, the industry is only expected to grow.

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Last week I started an online incorporation lens for MaxFilings on Squidoo (a very informative, addictive social media/marketing site).

Many of the businesses that work with MaxFilings to form a corporation or LLC online are looking to take full advantage of all that online media has to offer when it comes to reaching out to their target audiences. Squidoo is adding to the touch points and opportunities available to dominate for your area of expertise, letting you become a lens master for your subject.

MaxFilings works hard to provide useful resources about forming a corporation online. We invite you to learn more about us and what makes us different. And don’t forget to find out how you can set up your own Squidoo lens for your business, too!