Incorporation Master's Secrets
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What You Should Know About Sole Proprietorships, LLC, S-corporations and C-corporations But Don't.
ompanies that offer business filing services seem to provide plenty of information about different business structures right on their websites. But are you sure they provide you with all information so that you can make the choice that is most beneficial for you and not for them?
I'm not going to badmouth anyone, but let me ask you this question:
Most casinos offer Poker and Blackjack lessons right on the premises. But do they teach you how to play those games so you can win or just so you can spend more money at their establishment while thinking that you are going to win?
I'm sure you know the answer. So if you are making your decision about which business structure to form based on what you've read on a website of a company that offers to file your incorporation paperwork, then you are no better off that an amateur gambler at the casino table right after taking a lesson in gaming from that same casino.
Hello- My name is George Monaco, and I would like to discuss various business structures available in the USA, including Sole Proprietorships, Partnerships, LLCs, S-Corporations, and C-Corporations from a completely unbiased perspective.
Choosing the wrong business structure or mismanaging a business can result in higher taxes, weakened personal liability protection, and excessive paperwork and expenses. To help you avoid these pitfalls, I will discuss each of these structures in great detail. I will also discuss the differences between them so that you can decide which business structure is the best fit for your business needs.
Based on the feedback I receive from people who contact me at the number listed below, I am going to make some basic assumptions and ask you to ask yourself a few questions.
If you are reading this website, then you have probably been searching for this information on other websites. Unfortunately, you have likely already decided which type of structure to select for your business. Perhaps you are searching online and reading this page simply to reinforce your established opinion about which type of business structure to form before making the final decision.
Perhaps you have already decided that you want to go with an LLC, and you have been searching online for information about an LLC structure. On the other hand, you may have decided to go with a full-blown C-Corporation structure, and you simply wish to find more information about this particular structure.
Regardless of which option you are considering, how can you be sure you are making the right decision for your business?
Think about it. What made you choose one structure over the others? Was your choice a result of thorough research, or have you based your decision on the trend of what everyone else seems to be doing?
If you are considering forming an LLC, are you sure that the LLC is a better choice for you than the S-Corporation?
Can you clearly state what the major differences are between the two, speaking both generally and specifically for your business?
If you cannot state the differences, and if you do not truly understand the differences, then how can you decide to choose one over the other?
How can you make such a significant decision like this simply because "LLC" sounds fancier, or you have seen it posted on message boards more often?
However, what if there is some aspect of your business that actually requires a C-Corporation, but you mistakenly decide to go with an LLC or an S-Corporation?
Maybe you have heard something about double taxation with C-Corporations, but you really do not know what this means or how it will affect you. Do you simply dismiss this option based on the formidable phrase, "double taxation," alone? You probably do not know that you could actually pay fewer taxes with a C-Corporation?
Alternatively, you might have heard something about the lack of liability protection as a Sole Proprietorship, but how can you be sure it would be cheaper and safer for you to incorporate than to remain a sole proprietor with an umbrella liability insurance policy?
Did you know that there are huge differences in taxation between an LLC and an S-Corporation? This is true, but only if you structure your business in a particular way. If you mess up in the beginning, then you might end up actually owing even more taxes instead of paying less.
By the time you realize that you have made a mistake and picked the wrong business structure, it will be too late. Re-registering and fixing the mistakes at a later time, a time when it is too late, will be much more expensive, will involve much more paperwork, many more headaches, and possibly excessive legal fees than getting it right from the start would have.
If you cannot definitively answer the questions above, then how can you make a smart decision?
Being in business is nothing like hanging out with your friends at an elementary school playground. When something bad happens, you cannot say, "Oh, I didn't mean to do that, I'm sorry" to the people who might sue you or to the government, especially not to the government.
Can you answer the questions above with 100% certainty when it comes to your business? If not, read and learn what I have to say before you make your decision about the structure of your business.
You have probably visited a few message boards while looking for this information, and I am sure you have seen quite a few posts advocating one business structure over the others.
People like to post on message boards to brag about how they registered an LLC, an S-Corporation or a C-Corporation, but they do not provide any justification of their decisions. However, when they get sued or when they get audited, or when they have licensing problems, they are overwhelmed by the amount of trouble they face. They simply do not have the time or the inclination to post on the message boards any longer. As a result, you never read about the problems these people have created by making bad choices -- the wrong choices -- choices that could have been avoided.
You only read about the way these people registered something based on nothing. You never read about the way they screwed up their own lives in the process.
Do you want to register an LLC (or an S-Corporation or a C-Corporation) simply because everyone around you seems to be doing the same thing? If that is the case, then do you honestly realize how silly this is?
My first company was an LLC. I chose to go with an LLC simply because everyone seemed to be talking about how great it was. Now I know better. Now I know that, although it can be great for many businesses, it is not always the best option. I still use LLCs. As a matter of fact, this website is operated by an LLC. However, I know that there are situations when using an LLC is the wrong choice and can lead to more taxes with less liability protection.
Before I got a taste of my first real business problems, I was proudly posting replies on my favorite message boards. Whenever someone asked a question about choosing a business structure, I would post something like, "Go with an LLC. I registered one a while back and it's great." I simply posted this way in order to feel proud of my own LLC. I do not know why; I just did it. I know many other people do the exact same thing.
My posts did very little to actually help the people who were asking the questions. Not only was I posting information that had no solid foundation to support it, but also I was reinforcing the baseless logic of my fellow message board posters. We were caught in a cycle of misinformation, and everyone who came to these message boards seeking valid answers only ended up being misled by our unfounded logic.
So, if you have already made up your mind based on posts you have read on message boards, then you are making a decision based on opinions of clueless people who have not yet run into any problems. They will run into problems, but, by that time, you will have already made a bad choice based upon their bad information. Basing your decision on those opinions alone is a huge risk that cannot be justified under any circumstances.
Today you will learn all you need to know about incorporating. You will be able to look at your business and decide with certainty which structure can offer you the best combination of tax savings and personal liability protection at the lowest cost with as little paperwork as possible.
Forming a corporation, a Partnership, or an LLC involves more than just legal protection and taxation. There are many aspects to consider, and you need to know what questions to ask before you can even begin to look for answers, so read on and do not skip anything. Do not try to save a few minutes of your time now at the risk of making a mistake later. Get all facts straight before you make a decision.
There are five distinct business structures available in the USA, including Sole Proprietorship, Partnership, Limited Liability Company (LLC), S-Corporation and C-Corporation. The three most popular structures are Sole Proprietorship, LLC, and C-Corporation.
Obviously, the simplest business structure is a Sole Proprietorship. Most people who start their own business without doing anything to form a separate entity are called sole proprietors. This is, by far, the simplest business form. Basically, you and your business are one in the same. In some cases, a Sole Proprietorship is the best option, but it is not always so. Most likely, though, if you are reading this page then most likely you are not interested in doing business as a sole proprietor. Nevertheless, I will discuss Sole Proprietorships just to make sure you have all the information you need.
The decision you make when choosing one business structure instead of another will have an effect on the future of your business. The decision you make will affect your ability to attract investors, transfer your business to someone else, sell it or bring new people into the business (people of different qualities, such as managers vs. partners vs. angel investors vs. stock holders). For this reason, I will cover all possible choices.
The structure you choose also affects the exit strategy of your business. The structure you choose today affects what will happen to your business, if, God forbid, something tragic should happen to you, or if you decide to retire or sell your business to a competitor.
Ideally, you need to think about the structure before you start a business. If you are already running a business, though (or if your hobby is turning into a business), then you need to decide on the business structure as soon as possible. If you decided that today is the day you will pick a business structure, then make sure that today really is the day you do it. Do not put this decision away until you get "big enough."
Do not think that it will be easy for you to change your business structure whenever you feel like it. Although you can always register a new company and transfer assets to that new entity, you cannot erase the past; sometimes the past comes back to haunt you.
What if you start a business as a sole proprietor and do something wrong without any immediate consequences. Later on, you might finally get "big enough" and incorporate. All is well, until the day when you get sued for something you did years ago. Now as a big company, you present a lucrative target for others to sue you. Because they might sue you for something that occurred when you were operating as a sole proprietor, your new business structure might not be able to shield you from the liability.
You might have an investor dispute that originates in the days before you were incorporated, because some decisions you made back then can influence the future of your venture. Your future partners or investors (that you never thought you would have back when you were small) might blame you personally for it.
A person you hired in the past to do a small job may have done something wrong, and now you are personally responsible for it, even many years later.
Of course, sometimes incorporating might mean more paperwork without any benefits. Even worse, you might simply end up having to pay more taxes without any benefits. Once we are done, you will know more than enough to make sure you do not make that mistake. You will know if you should choose an LLC, an S-Corporation, a C-Corporation, or perhaps simply remain a sole proprietor.
There is one more thing, though. If you are planning to invite partners right from the start or in the future, there is a big difference between setting-up a Partnership versus a corporation with multiple shareholders who would be the acting officers of the corporation. I will discuss that as well.
You also need to decide where to set up your company. You can either do it in your home state or in another state. Business-friendly states have laws favoring corporate entities. It might be beneficial to set up your company in one of such states. Beware, though, sometimes doing so might not only offer no benefits but also require more paperwork and increased taxes.
As a side note, would you like to know when my various businesses really started picking up?
It happened to all of them at the same time. At a certain point, something changed and my ventures became much more successful than they were before.
Guess what changed.
I changed. I realized one simple thing that all successful businessmen know: I learned to value my own time. Instead of trying to do everything myself, I started delegating and outsourcing tasks. I started leveraging work of other people to achieve my objectives. As a result, I have more time to concentrate on activities that actually make money for me.
I still smile every time I see someone turn down a good offer by saying, "I can do that myself." I laugh to think that, in the past, I was one of those people.
A good businessman knows, understands, and believes that time is money. The amount of time you would have to spend researching business structures is much too great to ignore.
Say it takes two weeks to learn enough about business structures to make an educated decision about the future of your business. Assume you decided to be thorough with this important task by spending three hours per day conducting research on the Internet and asking questions on various message boards. Even disregarding the fact that most of the answers you would get from message boards are simply opinions of clueless people, you would still end up wasting a lot of time.
2 weeks * 5 days per week * 3 hours per day = 30 hours
That is 30 hours of your valuable time!
At the federal average minimum wage of $5.15 per hour, this research ends up costing $154.50!
So, let me ask you a question: Are you worth more than a minimum wage worker?
Does running your business require more than the ability to say, "Would you like fries with that?"
Really, how can anyone possibly be making any money without valuing his own time? The person who sets such low price on his own time cannot possibly make more than that. If you do not place a high value on your time, then how can you expect anyone else to value your time or what you have to offer?
I will assume that you are more intelligent, capable, and ambitious than a minimum wage worker, so I am going to try a different hourly rate. Say you earn $30 per hour, which is better than the minimum wage, but still modest enough so you will not think I am exaggerating the numbers.
If your time is worth $30 per hour, then conducting research to learn which business structure is the most appropriate for your business for 30 hours is going to cost you $900!
So, this is the first option. You will achieve your objective, but it will take a couple of weeks and cost $900 of your valuable time.
This is not the smartest way to solve a problem.
A more intelligent alternative is to go through a consultation with tax advisors and corporate attorneys. You would spend 3 or 4 hours and pay $300 to $500 to learn about possible ways to structure your business. This is the second option.
Take a look at these two options:
#1: $900 and 30 hours of your time
#2: $500 and 3 to 4 hours of your time
Obviously, #2 is a much smarter option. Any businessman worth his title would pick option #2.
However, there is an even smarter alternative. Leverage the time I have already spent studying this topic and use the compilation of my knowledge to solve your problem.
This is what I have to offer -- simply a smarter alternative.
It will cost you $49 and will use only 1 or 2 hours of your time at the most. It will not take any longer than that, and you will know everything you need to know about the available options for forming a business entity.
I am a businessman, and I value my time. I assume that you value your time as well. When I was creating my e-book to help you quickly learn about business structures, I made sure to write it in a simple and condensed style.
If a concept can be fully explained in detail on one page, then it should be explained on one page, not on ten pages full of filler content.
What I have to offer you is an e-book with 49 pages of pure information about Sole Proprietorships, Partnerships, LLCs, S-Corporations and C-Corporations. It describes all the differences of those business structures regarding taxation, acquisition, financing, transfer, exit and, of course, liability.
In reality, it will probably take you less than an hour to read the entire thing. Then, you can use it as a reference whenever you need to look up any specific information.
I am not a lawyer; I am a businessman. My words are simple enough for any businessman to understand. My writing is meant for people who are interested in using their energy to make money rather than wasting time on things that are not directly related to generating profit.
So let's look at the options once again.
#1: $900 / 30 hours
#2: $500 / 3-4 hours
#3: $49 / 1-2 hours
When I look at those options objectively, I cannot imagine why anyone would pick anything other than option #3 by ordering my e-book.
You are a businessman, and you have a task that needs to be completed. You need to decide which is the best business structure for your business.
What we have is a situation where you can spend less money and time to achieve the same objective.
I am a businessman, and this sounds logical to me. Doesn't this sound logical to you?
In an hour, you will know all you need to know in order to make the right decision. You will not spend more time and money than you need to spend to accomplish this task.
This is a "no bull" 100% logical reason to order my e-book.
If I did not believe this to be the best solution in your situation, I would not be selling this e-book. I simply would not waste my time on something people do not need to buy.
I included all of this valuable information in an e-book format for fast and easy distribution. This way you can get it without having to pay for the shipping costs of a physical book, and you have access to the information immediately. Ordering and downloading this e-book only takes a couple of minutes.
By reading my e-book, you will learn the following things:
• The Differences Between Sole Proprietorships, Partnerships, LLCs, S-Corporations and C-Corporations
Sole Proprietorship
• The biggest financial advantage of a Sole Proprietorship
• The single worst danger of a Sole Proprietorship
• Limitations of a Sole Proprietorship
• Taxes of a Sole Proprietorship
• When a Sole Proprietorship is the most appropriate business form
• What you need to know about tax credits
• How to set up a Sole Proprietorship.
Partnership
• When a Partnership is really a Partnership
• Four different kinds of Partnerships and the most appropriate one for your business
• When to pick a Partnership instead of a corporation
• Advantages for raising capital and finding better-qualified employees
• The single biggest problem with Partnerships
• How to set up a Partnership agreement
• Splitting profits and picking up losses
• What taxes to pay
• How to set up a Partnership
Corporation
• When you really should set up a corporation (and when you really shouldn't)
• How to lower your taxes by forming a corporation
• Positive aspects of incorporation, including credibility, attracting investors, or transferring ownership
• The truth about double taxation
• Making sure your limited liability is not undermined by personal guarantees (many people get this wrong)
• Registration and maintenance of a corporation
• S-Corporation vs. C-Corporation and when to pick one instead of the other
• Taxes: what you can do with a C-Corporation that you cannot do with an S-Corporation
• Differences in tax rates and structures between C-Corporations and S-Corporations
• One major advantage of an S-Corporation over an LLC that most people rarely know
• Important limitations of S-Corporations
• Statutory close corporation -- what it is and how it is different from a regular C-Corporation
• When to go for a close corporation instead of a C-Corporation
• How you can distribute profits of a close corporation in a way that is prohibited for a C-Corporation
• Limitations of close corporations
• Professional corporation -- what it is and who can create it
• What a professional corporation can and cannot do
• Important differences for limited liability of a professional corporation
• How to set up a corporation of any kind: All you need to know about creating C-Corporation, S-Corporation, close corporation or professional corporation
• When incorporation is not the way to go
LLC
• What a Limited Liability Company (LLC) is
• Tax flexibility of an LLC
• Special allocation of income
• Limited liability of an LLC and how not to jeopardize it
• What taxes to pay with an LLC
• Disadvantages of an LLC
• Creating and managing an LLC: All you need to know about forming a Limited Liability Company
• Buy-out -- what it is, the benefits and disadvantages, how to prepare for a buy-out from the start
All Types of Corporations and LLC
• List of incorporation friendly states, why they are considered incorporation friendly, and a discussion about each of those states
• When to incorporate in your home state instead of an incorporation friendly state
• List of filing fees of each one of the incorporation friendly states
• Doing business on the Internet as a corporation
• Payroll taxes, federal income taxes, sales taxes, state taxes -- all you need to know about taxation
An Overall Closing Discussion
• Setting up your business
• Choosing a business entity
• Determining the legal requirements
• Registering a business name
• Getting an EIN (Employer's Identification Number)
• Determining if people you are paying should be considered employees or contractors
• Getting a business license
• Getting insurance coverage
• Obtaining other licenses from concerned state agencies
• Registering a trademark
Do you see how much information I discuss in my e-book? It would be a great bargain even if the price were three times higher than it is now. Enough about the e-book, though; its value to any businessman should be clear by now.
In the beginning, I said it would take you two weeks to learn all this on your own. Now that I have put more thought into it, I actually think it would take even longer than that. I guess that is why most people choose not to do any research at all, going with their gut feelings instead.
You do not have to compromise, though, because you were fortunate enough to have found this website. Now you can save time and still benefit from thorough research before making this important decision.
Tell me this: If you spent more than two weeks of your time conducting research on your own, and at the end you realize that you were not able to find answers to all of your questions, who would refund two weeks of your life? Who would refund the cost of your valuable time spent? No one.
I, on the other hand, promise you that, if this e-book does not answer all your questions, then I will refund your money upon your first request. You would simply need to tell me what you think is missing.
If, after refunding you, I agree that your suggestion would be interesting to other people, I will do the research myself, update the e-book, and give you a free updated copy for your trouble.
It really does not get any better than this. If you do not think this offer is more than fair and is the best option for you, then please give me a call to tell me why. Call 302-476-2625, and ask for George.
I cannot think of a single reason why you would not want to handle this matter like a truly professional businessman by utilizing my research efforts to solve the task of picking your business structure. After all, using other people's work to achieve your objectives is what business is all about.
Besides, forming your business correctly will save you 10 to 200 times the price of this e-book in taxes next year alone. I am basing those estimates on the national average of the difference in the taxes paid by small businesses registered as C-Corporations, S-Corporations, LLCs and Sole Proprietorships for the tax year of 2005. How much you save depends on your market and the size of your business, but in any case, you will recover this money many times over.
You simply have no reason not to read my e-book. As I mentioned above: if after reading it you do not think my information is worth the price then I will refund your money to the penny.
Also, for some reason, a lot of people keep calling or e-mailing me and ask if I'm still selling the Incorporation Master's Guide or if this is just a stale website that's no longer working.
Because I get many such inquiries, I want to assure you that the website is active and I'm selling the e-book. I am not a web designer, so this page might look simple. But keep in mind that my expertise is incorporation, not web design. Besides, I'm sure you came here looking for useful information, not for flashy graphics.
In any case, if I ever decide to stop offering this e-book to the public, I'll take the page down completely. So please rest assured knowing that the website is active, current, and the e-book is still being sold.
Order Incorporation Master's Guide on our secure server and download instantly for only $49!
Sincerely,
George Monacoinfo@vastpublishing.comwww.VastPublishingProjects.com
P.S. If you need any help with your order or if you have any questions then don't hesitate to call me at 302-476-2625. Just ask for George.
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