General Business (Legal) Stuff Archives - Page 3 of 10

What’s a registered agent?

That’s the short way to say “registered agent for service of process”, which, I realize, probably still doesn’t answer your question. This is the individual or business that is charged with receiving legal process, i.e., claims from third parties and government agencies against the company. This gives the public someone to serve with legal process, since entities aren’t individuals you can find at work or home.

July 7th, 2015|0 Comments

Can anyone own an S Corporation?

You probably didn’t think to ask this until you saw it was a question. Answer: No. S Corporations are restricted with respect to their ownership, one of the key factors why they can’t always be used. For example, no more than 100 shareholders can own shares in an S Corp, no shareholder can be a non-resident alien, and unless certain filings and compliance rules are met, they generally can’t be owned by other entities, only individuals.

July 7th, 2015|0 Comments

When I form my corporation or LLC, is that a license?

No, but thanks for asking a weird question. You’re likely getting confused with some industries, like talent management, that may require you to obtain a license from a particular state agency. The formation of the entity doesn’t trigger automatic licensure, nor does it automatically require you to get a license for your business. Licensure for your business is separate and apart from forming an entity. And, in some instances, if you are required to obtain a license, that may dictate the kind of entity your form.

June 15th, 2015|0 Comments

What’s a Tax ID number?

I find that this is much more critical than some people think. A tax ID number is your corporation or LLC’s separate tax identity. Whether it’s opening a bank account, setting up payroll, or filing a tax return, this number is THE number for all purposes. Here’s how you can get one (good luck to you) or here's how you can get one (answered by me). Important note: you need some kind of tax identification to get a Tax ID Number. Usually that original identification comes in the form of an individual's Social Security Number (usually the person forming the entity if it's a small business). But foreign owners have a more difficult time doing this since they don't usually have Social Security Numbers; in that case, they need to apply for an individual tax ID number, and then use that number to get the Tax ID Number for the corporation or LLC.

June 15th, 2015|0 Comments

How do I get a tax identification number?

You can go to the IRS’s website, and go through their multi-page question and answer pages. Make sure you're ready with your SS-4, as the IRS may ask for that over the phone if it doesn’t like one of your answers. (PS, the IRS is not in the habit of liking.)

June 15th, 2015|0 Comments

Do I need an attorney for this process?

YES! Of course!! Actually, no. Though "need" is a funny word. An attorney is not required to incorporate an entity. But if you learn nothing else from bouncing around this website, it’s that there may be a great deal of things to consider, traps for the unwary, and housekeeping items that may make or break your liability protection. Consider yourself warned!

June 15th, 2015|0 Comments

What’s an assignment?

An assignment is a document used to transfer assets from one entity or owner to another. Click here to see if you need one.

June 15th, 2015|0 Comments

What’s a capital contribution?

In its most basic terms, this is the money (or sometimes the assets, like equipment) you put into your business. It differs from a loan in that it doesn’t accrue interest payable to you. If you put money into your corporation or LLC (or partnership), then the return of that money to you as you start to distribute money to you, is non-taxable.

June 15th, 2015|0 Comments

Do I have to make a capital contribution?

No, a capital contribution isn't necessary. But typically you would, and should, make one. You would because there’s almost no way to start a business with zero invested in it. And you should because if your corporation is “under-capitalized”, then you could be exposing yourself and fellow shareholders or members to personal liability, making the formation of the entity a waste of time and money. And it takes more than $1.00 to protect yourself (but nice try).

June 15th, 2015|0 Comments

When is an S Corp election due?

For a corporation to be an S Corporation, the paperwork to make that effective is due no more than two months and 15 days after the beginning of the tax year the election is to take effect (yes, I copied that from the IRS instructions). If you’re really ahead of the game, then anytime during a tax year preceding the year you want it to be in effect. For new corporations, the tax year typically begins on a day other than January 1, unless you formed on that date. So, for example, if your corporation was formed on July 8, then the S Corp election would be due 15 days after September 7, or September 22.

August 10th, 2015|0 Comments

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