Online Incorporation MaxBlog

The ability to raise capital is an important issue that you must consider as an entrepreneur. In fact, the decision of which type of entity to form when incorporating your business can be determined by this point alone in some cases. It is also vitally important to consider your cash flow needs to start out so you are able to grow your business later on.

There are basically two types of financing, debt and equity.

Debt financing is where you borrow money to be repaid over a period of time with interest. Full repayment is required within1 year or less for a short-term note and more than a year for long-term debt. Also, the lender does not gain any ownership in the company but may require a personal guarantee for the loan, especially for small businesses.

Equity financing is described as an exchange of money for ownership in the company, usually though common stock. This type of financing basically allows you to raise capital without incurring debt. The inherent disadvantage however is that by issuing stock in the company, your ownership interest is diluted and loss of control is possible.

When it comes time to incorporate your business, you’ll need to consider the different characteristics regarding raising capital associated with each type of business entity. The main point of difference is whether stock can be issued to the general public or not. Online incorporation services at MaxFilings provide an easy way to incorporate your business once you choose the type of entity you will be forming.

Only a C or S corporation can issue stock to the general public. Stocks can make it easier to raise investment capital and transfer ownership, and the ability to offer stock options can assist the company in recruiting and retaining good talent. All stock issued is subject to various state and federal securities laws.

A Limited Liability Company (LLC) cannot issue common stock to the general public, but the benefit of raising capital is replaced by the relative simplicity and ease of operating an LLC. Capital is generally raised through the companies’ partners and debt financing.

Both corporations and LLCs, however, must maintain the ratio between debt and equity financing at an acceptable rate. Too much or too little of each may make it more difficult to attract investors and obtain debt financing from a lender, who may question the ability of the note to be paid back.

In the end, this decision cannot be made lightly and must involve the counsel of an attorney and accountant. However, the two main points to consider in regard to raising capital boils down to growth needs of the company and the administrative requirements of a C corporation, S corporation, or LLC.

It has been documented on this incorporation blog and in the Knowledge Center at MaxFilings that an operating agreement, while not required in many states, is necessary for even solely owned/operated limited liability companies.

Creating an operating agreement for a LLC can be more time-consuming than for a corporation since state laws governing an LLC are much more flexible. Many of the issues the operating agreement addresses are already detailed in law for corporations.

Therefore, it is important to know what should be included when meeting with your attorney to draft an operating agreement for your LLC. In general, an operating agreement needs to include ownership percentages, management, voting, allocation of profits/losses, distribution, members’ rights/responsibilities, ownership changes, and amendments/dissolution.

Be aware of the elements needed in any operating agreement when forming your LLC with MaxFilings online incorporation center. LLC Operating Agreement - What Should be Included? addresses the general elements needed for an LLC Operating Agreement.

Even though an operating agreement is not required for an LLC in all states, you might consider it necessary. Even for a solely owned LLC, the operating agreement helps solidify your limited liability status. For LLCs with multiple members, an operating agreement pre-addresses many issues that could arise, from management to money issues.

If you do not have an operating agreement and a dispute arises between two members of the company, default rules apply which are established by the state. And which do you think is better, operating under the rules you wrote - or those of the state? Any entrepreneur should read Is An Operating Agreement Necessary for an LLC? for a closer look at this important issue.

by Matt Bacak

The Powerful Promoter

Copyright 2005 The Powerful Promoter

Use this comprehensive checklist to plan each step of your new business incorporation and transform your dream of entrepreneurship into reality. These steps may not necessarily be completed in the order listed; however, you can use them as a guideline for completing all of the necessary business startup tasks.

- Determine what kind of business you want to start.

- Learn about the industry for your business.

- Analyze the market for your business.

- Study your competition.

- Educate yourself on running a business.

- Join trade associations.

- Name your business.

- Perform a trademark search.

- Register a domain name.

- Design a website.

- Obtain a logo.

- Determine business structure (sole proprietor, partnership, or corporation).

- Evaluate your personal budget.

- Write a business plan.

- Write a marketing plan.

- Locate financing.

- Create a list of start-up supplies with budget.

- Set up a system for accounting and payroll.

- Apply for business license, fed tax ID, fictitious business name.

- Select a location and set up shop.

- Order signage.

- Obtain business tools (computer, printer, fax, postage, office supplies, and fixtures).

- Order business stationery (business cards, letterhead, brochures).

- Obtain inventory.

- Create an operations and employee manual.

- Hire employees.

- Set a launch date.

- Plan a grand opening event.

- Send announcements to everyone you know.

- Send press releases.

- Turn on the OPEN sign!

- Revisit your business plan and update often.

- Evaluate your marketing strategy often.

- Prepare a realistic business plan.

Think of this as your business road map. Define exactly where you want to get to with your business and then you can effectively map out your path towards achieving your goals!

By creating a detailed business plan you should cover all options and eventualities and have a clear future vision that will guide you through the rest of the start-up processes.

- Your business plan should encompass the financial considerations of starting your small or home based business:

Do you have the capital required?

Do you need to raise additional funds?

Who are you going to approach for finance?

Who do you trust for advice?

And don’t forget to open a business bank account…

- Consider the legal implications of becoming a business owner and proprietor.

Are you better off as a sole trader, a limited company or are you considering a partnership?

Make sure you consider all the angles and protect yourself and your assets personally from the outset.

Anything you bring to the business has to be itemized, valued… even if you’re a sole trader.

And make sure you are professionally covered with the appropriate business indemnity insurances.

- Get your family and friends behind you from the get-go.

Make sure your family and friends are fully understanding and supportive of your ideas to venture into small business start-up.

Do they understand the level of commitment you will have to show for on-going and long term success?

Their belief in you and continued support of you will work wonders towards your on-going success, so don’t forget to look out for them too.

- Protect your family, protect your business.

If, God forbid, something were to happen to your health, how would your business survive, how would your family cope?

Consider insurances - from health, critical illness and income protection insurance to life insurance ? and consider your pension and long term financial security.

- Face those ‘taxing’ questions from the start.

Your small or home based business has to consider its taxation situation.

Do you need to register your business for sales tax purposes; have you informed your tax office of your business’s inauguration?

Do you have a good tax professional lined up to guide and assist you?

The bottom line when it comes to taxation is that from the outset you need to make sure your papers and books are in order, this will save you time, money and heart ache in the long run.

- Prepare realistic and achievable goals and targets for your first year.

Do not expect to conquer the world with your first year’s business returns.

Starting a business is a life changing undertaking and one you must be patient with. The rewards are there, but make sure you set yourself achievable targets ? when you reach them they will give you the confidence and satisfaction to set new goals and to continue building your business’ success.

—

Matt Bacak, The Powerful Promoter and Entrepreneur Magazine e-Biz radio show host, became a “#1 Best Selling Author” in just a few short hours. He has helped a number of clients target his specialty, opt-in e-mail direct marketing systems. The Powerful Promoter is not only a sought-after Internet marketer but has also marketed for some of the world’s top experts whose reputations would shrivel if their followers ever found out someone else coached them on their online marketing strategies. For more information, visit Bacak’s site at http://www.powerfulpromoter.com or sign up for his Powerful Promoting Tips at http://www.promotingtips.com

Online incorporation service MaxFilings has officially launched its interactive, easy-to-use

Fees chart showing the cost to incorporate online in each state.

Many online incorporation services create confusion for companies wishing to incorporate online by presenting only their service fees and not showing additional costs such as state fees required to form a corporation.

But now with MaxFilings, you can easily view complete cost to incorporate or form an LLC in the state you’re interested in, including all necessary state fees and the cost to prepare and file articles of incorporation.

It’s also easy to save any service options you’ve selected while you continue to research your online incorporation choices… or choose to form your corporation or LLC right away.

You can compare incorporation costs across different types of business entities, including C corporations, S corporations and LLCs, and see how much it costs to form that entity in different states.

There are no unexpected fees – you can see exactly what it will cost to incorporate upfront.

You can also view pricing for additional services and materials that come in handy when forming an LLC or corporation, such as obtaining a Federal Tax ID Number (EIN) or a kitand seal to assist in compliance with any state rules and regulations for documentation and record keeping.

After viewing the cost to incorporate, users can click directly into the MaxFilings online incorporation service system, to complete an order right away or just explore the system and start organizing your information.

Check out costs to incorporate online right now: https://www.maxfilings.com/order-system/quick_quote_setup.php

Articles of organization must be filed with the appropriate state to form an LLC. While an operating agreement does not have to be filed, it is an important document that should set forth

the members rights and responsibilities….Incorporation Knowledge Center

Why should you form an LLC in Florida?

Business choose Florida as one of the top few states to incorporate. Florida has become one of the most desirable states in the country in which to conduct business. The State consistently leads the nation in new business incorporations. With one of the largest supplies of business parks, an advantageous business tax system, transportation availability, 14 foreign trade zones, an abundance of electrical power, and a large population of skilled human resources, Florida provides everything that a business requires to function.

New businesses are registered in Florida each year. Most of these businesses are incorporated as Florida corporations. In 1997, over 100,000 new Florida corporations were formed. The number of businesses that registered as limited liability companies, on the other hand, were less. There was only a little over 2000 Florida LLCs in 1997.

The substantial difference in the number was due to Florida’s LLCs laws. A 5.5% income tax was applied to every Florida LLCs. In addition, start up fees for forming an LLC in Florida is higher than incorporating as a Florida corporation.

The LLC law was changed in 1998. 5.5% income tax was eliminated. LLCs start up fees were lowered. Interests earned in LLCs were protected from any claims filed by creditors. This drastic change in the Florida LLCs law has prompted a increase in the number of businesses registration as LLCs.

Should you form an LLC or incorporate and elect an S Corporation?

An S Corporation eliminates double taxation. However, the S Corporation does not have the flexibility of an LLC in regard to the allocation of income to its members.

An LLC may have an unlimited number of members. However, ownership in an S Corporation is limited to no more than 35 shareholders. Further, an S Corporation cannot have shareholders who are C Corporations, other S Corporations, certain trusts, LLCs, partnerships or nonresident aliens.

LLCs are permitted to own subsidiaries without restriction, while S Corporations are not allowed to own 80% or more of another corporations shares.

You can use our guaranteed services to form a corporation or form an LLC, and save a substantial amount of money you would otherwise pay an attorney. However, if you need legal or financial advice as to the type of corporation or LLC that would best suit your business needs, consult your attorney or financial advisor.

Forming a Florida Limited Liability Company (LLC)

General Incorporation Requirement to form a LLC:

A LIMITED LIABILITY COMPANY is a hybrid form of business entity combining some of the attributes of a corporation with the status of a partnership.

Any entity that transacts business in Florida as a limited liability company is required by Florida Statutes to file Articles of Organization or an application for authorization with the Division and pay the filing fee. These documents must be typewritten or printed legibly in the English language. The professional advice of your legal counsel to ascertain exact compliance with all statutory requirements is strongly recommended.

All limited liability companies must file a Uniform Business Report with the Division each year between January 1 and May 1 and pay the filing fee. Failure to file will result in administrative dissolution of the limited liability company or loss of authorization to transact business in Florida as a foreign limited liability company.

Detailed Information on Forming a Florida LLC

FORM A FLORIDA LLC NOW

Florida Division of Corporations serves as the central agency for registering and incorporating your choice of business entities. You can incorporate with the Divisions yourself or or shop various online business incorporation services. The filing fees for these services vary. Form an LLC - So do your comparison shopping to find the best prices. But if you’d rather incorporate by yourself, the best place to start is: Florida Divisions of Corporations.

At the Florida Divisions of Corporations web site, you will find resources for starting and registering your business. The site will also give you information on self-incorporation. There may be a minimal service charge to incorporate with the Divisions.

Types of Business Entities and Other Incorporation Terms:

Florida Divisions of Corporations: Business Entities

The following summary of the Division of Corporations’ role, and descriptive list of the type of filings and registrations for which it is responsible, will help you determine if the Division provides the particular type of information or service you desire.

The Division of Corporations is a ministerial filing agency which serves as the statewide central repository for business entity filings and annual reports, the statewide central filing office for judgment lien filings, and the statewide central registration office for fictitious names, trademarks and service marks. The Division is also the resource for information contained in these records.

A corporation is a legal entity, created by statute (i.e. the state) with all the rights, privileges and responsibilities of a natural person; possessing the attributes of limited liability, centralized management, continuity of life and fee transferability of interest.

A for-profit corporation is a corporation created for the purpose of conducting business in the widest sense of the term. In Florida, such a corporation may be organized generally under Chapter 607 but may take on special attributes as prescribed by other subservient chapters.

A not-for-profit corporation is a corporation created for religious, charitable, or educational purposes which are generally formed under Chapter 617 but may take on special attributes as prescribed by subservient chapters.

A foreign corporation is a corporation authorized by any jurisdiction other than Florida, to transact business.

An alien corporation is any corporation authorized by any jurisdiction other than; the United States, any state, the District of Columbia, Puerto Rico, Guam or any possession or territory of the United States, to transact business.

A partnership is an association of two or more persons to carry on a business for profit as co-owners. General Partnership: An association of two or more partners each as a general partner with full status of unlimited personal liability and managerial control. Limited Partnership: An association of one or more general partners and one or more limited partners with limited liability and little or no managerial control (i.e. investors only).

A fictitious name is any name other than an individual’s legal name. Registration of that name is required if it is used in business in order to inform the public of who is actually conducting business.

A limited liability company is a hybrid form of entity combining some of the attributes of a corporation with the association tax status of a partnership.

A Trademark or Service Mark is a name or logo adopted by a person or entity to identify the source of a particular product or service provided in commerce. It is distinguished from a fictitious or corporate name in that it must meet a high standard of creativity and originality than do such trade names.

Federal Tax Liens, as authorized by federal law, are required to be filed in the state or local office designated for lien filings. The Division is responsible for filing liens against business entities, estates and trust. The counties record personal real estate liens.

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.

Read more here

A small business resource that you’ll want to check out, www.Business.gov is the official link to the U.S. government. Linked right from the home page, you’ll see essential topics like this:

- Find Small Business Grants and Loans

- Comply with Employment and Labor Laws

- Start a Home-Based Business

- Get Info for Restaurants and Food Businesses

- Buy Government Surplus Property for Your Business

There’s also a handy “permit finder” that lets you seek out permit information for your state and type of business.

See what’s there for YOUR business: www.business.gov