Asset Protection Tips and News

Reasons Not to File Online

cssnevada — Thu, 11 Mar 2010 17:35:34 +0000

“File your Nevada Corporation online with us!!!” These words, or words similar to these, appear online hundreds, if not thousands, of times. The owners of those sites make it sound so easy. All you have to do is spend 5 to 10 minutes of your time and they’ll do the rest. It sounds good. You’re thinking: I just opened my business and I need a business structure in which to conduct my business. It won’t take much time, it doesn’t cost very much and then I’ll have my asset protection. So you decide to take the plunge and you file online through one of the many incorporating services available. A couple of weeks later you receive your filed documents in the mail together with your letter of congratulations. You are now incorporated. Now what??

You are now experiencing the biggest problem arising from filing online. The articles have been filed. What do you do next? You didn’t realize when you used the services of the online incorporating company that you were buying from an a la carte menu and all you received were the barebones filing package. The corporation is not yet ready to operate. There are several steps you must still complete. How helpful will the online incorporating company be? It depends upon the incorporating company you use. With some companies, they will take you through all the other steps necessary to complete the filing and structuring of your entity. Other incorporating companies will not offer that level of service. Here are some of the following steps you will have to take to complete the filing:

Obtain an Employer’s Identification Number (EIN) from the IRS. Some of the online incorporators will obtain this number for you. You may have to pay an additional fee for them to obtain it for you. But, if you don’t know how to obtain such a number, you will have to pay additional for that service.
Complete the meetings necessary to organize the corporation. You will have to hold a Board of Directors meeting in order to organize the corporation. At this meeting, officers, directors and stockholders will be identified. A set of By-laws will have to be prepared and adopted. Minutes and resolutions for the meeting must be prepared and adopted by the Board of Directors. These documents are not a part of the original filing package that the incorporating companies provide. Some of the companies will have available for sale preprinted meetings, by-laws, resolutions. Etc. for your use. The cost will vary depending upon the company and the quality of the corporate record book.
Additional documents may have to be filed with your state, county or city in order to begin conducting business. For example, Nevada requires the filing of both a Business Registration Application [together with the payment of the applicable fees] and an Initial List of officers and Directors [again, with additional fees required]. Most of the time your online recording company will not prepare and file those documents for you. You will have to do it yourself.
Open bank accounts. You will have to go to your bank and open a corporate account/ You will have to take various documents to the bank in order to accomplish this. Again, most online incorporating companies will not assist you in opening the bank account without the payment of additional fees.
Obtain trademarks and/or trade names for your business. Most incorporating companies will not obtain the trademarks or trade names for your business. You probably will have to retain the services of an attorney familiar with these procedures to assist.
On going consultation. Most clients will have questions to ask after their corporation is filed. Many online incorporating companies provide absolutely no consultation. Their job was to prepare and file the Articles of Incorporation for the client. Once that service is competed, their work is done and no additional services are provided. Other companies will sell you books, admissions to seminars, etc. so that you can educate yourself on the operation of your corporation. A very few online incorporating companies will provide ongoing consultation for your entities.
After filing communication. Many online incorporating companies conduct all, or the vast majority of, their business online. They do not work with clients over the telephone. But, if the only way you can communicate is through the use of email, you have left yourself totally at the mercy of the company you are trying to reach. If they do not want to communicate with you or answer your questions, you cannot reach them, for they do not respond.

The bottom line is that you must make certain that you are obtaining all the services you desire. If you have a background in business, an online company that merely files the articles for you will be sufficient. Most people do not fall into that category. They will need assistance after their entity is filed so that, first of all, the entity is properly formed and organized and, second, the client is aware of the benefits, and pitfalls, of using a business entity. Make certain you are getting what you want from this service. If there is no phone number to call, but rather just an email address, you may want to use an incorporating company with a better communication system.

You always get what you pay for. If you use an online incorporating company that charges very little, you will get very little. Normally, this will include the filing of the articles of incorporation and the appointment of a resident agent. And that is all. If you need assistance with your entity after filing, make certain the company you are working with is able to provide that assistance, even if it costs a little more.

What is an “S Corporation”

cssnevada — Tue, 09 Mar 2010 19:28:40 +0000

An “S Corporation” is a type of corporation authorized by the regulations of the Internal Revenue Service {IRS]. It was designed to allow small business owners to have the asset protection provided by the “C Corporation” without all the formalities that are required by that type of corporation. It is similar in composition to a “C Corporation.” Like the “C Corporation” it has a Board of Directors, officers, stockholders and employees. It may own assets in its own name. It may enter into leases and contracts in its own name. It may sue and be sued. It may conduct business in a manner similar to a “C Corporation.”
However, there are several main differences between a “C Corporation” and an “S Corporation. First is the method of taxation. An “S Corporation” does not pay its own taxes. It is known as a “pass through” entity. It files a tax return [IRS Form 1120s] and reports all of its income and expenses on the return but does not pay any taxes on the profits. All the profits flow to the stockholders and the stockholders pay the taxes on their share of the profits. If you are a 10% stockholder of an “S Corporation” and it earns a profit of $100,000.00 you will receive an IRS form K1 showing you have received 10% of the profits [or $10,000.00] and those profits must appear as taxable income of your state and federal tax returns.
Second, the shareholders of an “S Corporation” are different from those of a “C Corporation.” The shareholders of an “S Corporation” must be natural people [human beings] and may not be organizations, other corporation, LLCs, partnerships or most trusts. Additionally, all stockholders must either be citizens of the Untied States or legal permanent residents of the US [Green Card Holders].
Third, you may determine the manner in which you are paid by the “S Corporation.” If you are a stockholder of the “S Corporation” and are also employed by it, you may take some of the money paid you as salary and the balance as profit. The difference is the taxation. Salary is considered to be “direct income” and, as such, is subject to income taxes and social security withholding. Profits are considered to be “passive income” and are subject to only income taxes, and not social security withholdings. Social security withholdings remove 7.65% of your salary and the employer matched that amount by paying another 7.65% for a total social security payment of 15.3%. So, every dollar which is paid as profit instead of salary reduces your taxes by 15.3%. There is one big caveat, however, The IRS has ruled that if you work for the “S Corporation” your salary must be a reasonable salary that you would receive if you had provided those services to a third party who paid your salary. So, unfortunately, you cannot take a $1 salary and $99,999.00 in profits. If, in the open market, your job would demand a salary of $50,000.00, that is the amount your salary must be from the “S Corporation.”
Fourth, the “S Corporation” does not give you as many “tax perks” as a “C Corporation.” If you own more than 2% of the stock of an “S Corporation” there are two main perks you are not eligible for. First, you cannot have a tax freed medical plan. All medical expenses paid by the “S Corporation” on your behalf are subject to income taxes. And, second, you may not have a “tax deferred” retirement program in the “S Corporation.” All contributions to the retirement program are fully taxable as income to you.
In some cases an “S Corporation” is preferable to a “C Corporation.” For instance, in the event you have a medical, or other professional, business. This should be an “S Corporation” because if it is a “C Corporation” the IRS may rule that it is a “personal service corporation” and be subject to higher taxes than a regular “C Corporation.” The use of the “S Corporation” will reduce your taxes below that of the “personal service corporation.”

For more information Call us at 1-877-5NV-Corp

Pros and Cons of the LLC

cssnevada — Mon, 08 Mar 2010 18:34:04 +0000

The limited Liability Company (LLC) is the newest business entity to be used in the Untied States. It was first recognized in Wyoming around 1975. It wasn’t until 20 years later, around 1995 that all 50 states of the country recognized the LLC as a separate business entity. The LLC was designed to combine the strongest aspects of a corporation and a partnership.
The LLC is comprised of 2 different parties. The owners of the LLC are the members of the LLC. The LLC is managed by a manager. The LLC may be managed by the members, in which case all the members have an equal say in the management and operation of the LLC. The LLC may also be managed by one or more managers. A member may also be a manager. In the case of a manager-managed LLC, the members who are not managers are merely passive investors. They have no say in the operation and running of the LLC, which is reserved for the manager.
The strength of the LLC is its asset protection features. If a judgment is obtained against the LLC, the judgment creditor can attempt to collect the judgment from the LLC by seizing the assets owned by the LLC. However, neither the manager nor the member of the LLC is liable for the debts and obligations of the LLC. So, if there are not sufficient assets to satisfy the court judgment, the judgment creditor may not attempt to collect the judgment from neither the members nor the managers. Neither these entities nor individuals are liable for any debts of the LLC. They may lose their investment into the LLC, but no deficiency judgment may be obtained against them. This is different than a limited partnership, for in that case the limited partners are not liable, but the general partner is liable for the debts and obligations of the limited partnership. But, it is similar to a corporation where neither the officers, directors nor stockholders are liable for the debts of the corporation.
If the member of the LLC is sued and a judgment obtained against him, both the member’s ownership interest and the LLC itself is protected from the judgment. A judgment creditor of a member of the LLC may not, statutorily, force the member to satisfy the judgment by transferring the member interests to the judgment creditor. The judgment creditor is limited to a “Charging Order” against the LLC. This charging order requires the LLC to pay the profits of the person who was sued to the judgment creditor until the judgment is satisfied. But, no assets of the LLC may be used for this purpose. This is prohibited by statute. In this case, the LLC is similar to a limited partnership which also limits the judgment creditors of limited partners to the “charging order.”
The LLC may be taxed in different ways also. It is the only entity which has the different tax options. An LLC may be taxed as a C corporation. In this case it files a corporate tax return and may deduct from its gross income all the deductions which are available to a C corporation. The taxes it pays are based upon the corporate tax rate. The LLC may also be taxed as an S Corporation. In this case, the LLC will file the S corporation tax return, and the deductions which are available to the S corporation are also available to the LLC.
The LLC may also be taxed as a limited partnership. It may additionally, be taxed as a sole proprietorship and it may even be a disregarded entity by the IRS and not required to file any tax return at all. In each case where a tax return is filed, the deductions that the LLC may take are the same deductions as are available to the type of entity under which the LLC is being taxed.
The biggest negative of an LLC is the fact that it is the “new kid on the block.” Corporations have been used in the country for several hundred years. The limited partnership has been in use since 1916. Both if these entities have a long line of court precedence. Those business structures have been analyzed by all courts of this country. The entities have been discussed by state courts, including the state supreme courts and by all levels of federal courts, including the US Supreme Court. Judges know how those entities are formed and how the statues are applied as to them. This is not true of the LLC. Because it is no older than 15 years in some states, not all courts have ruled upon the statutes pertaining to the LLCs. So different court opinions may be expected in the future regarding the asset protection properties of the LLC. As a result, it is somewhat difficult to know specifically how the LLC will protect the assets of the members of the LLC.
Also, because the LLC is relatively new, various jurisdictions have different rules regarding the LLC. For instance, neither California nor Colorado applies the “charging order” protection to a Single Member LLC. The other 48 states do apply such protection. Also, several states allow the LLC to be “pierced” in the same manner as a corporation. Again, most states do not allow this remedy. As the LLC ages, it will become more uniform throughout the country, but today there are still some minor questions about the strength of the LLC. However, notwithstanding these potential issues, the LLC appears to be an excellent vehicle in which to run your business and protect your assets.

Don’t file online for a Corporation

cssnevada — Thu, 04 Mar 2010 00:52:52 +0000

Obtain an Employer’s Identification Number (EIN) from the IRS. Some of the online incorporators will obtain this number for you. You may have to pay an additional fee for them to obtain it for you. But, if you don’t know how to obtain such a number, you will have to pay additional for that service.
Complete the meetings necessary to organize the corporation. You will have to hold a Board of Directors meeting in order to organize the corporation. At this meeting, officers, directors and stockholders will be identified. A set of By-laws will have to be prepared and adopted. Minutes and resolutions for the meeting must be prepared and adopted by the Board of Directors. These documents are not a part of the original filing package that the incorporating companies provide. Some of the companies will have available for sale preprinted meetings, by-laws, resolutions. Etc. for your use. The cost will vary depending upon the company and the quality of the corporate record book.
Additional documents may have to be filed with your state, county or city in order to begin conducting business. For example, Nevada requires the filing of both a Business Registration Application [together with the payment of the applicable fees] and an Initial List of officers and Directors [again, with additional fees required]. Most of the time your online recording company will not prepare and file those documents for you. You will have to do it yourself.
Open bank accounts. You will have to go to your bank and open a corporate account/ You will have to take various documents to the bank in order to accomplish this. Again, most online incorporating companies will not assist you in opening the bank account without the payment of additional fees.
Obtain trademarks and/or trade names for your business. Most incorporating companies will not obtain the trademarks or trade names for your business. You probably will have to retain the services of an attorney familiar with these procedures to assist.
On going consultation. Most clients will have questions to ask after their corporation is filed. Many online incorporating companies provide absolutely no consultation. Their job was to prepare and file the Articles of Incorporation for the client. Once that service is competed, their work is done and no additional services are provided. Other companies will sell you books, admissions to seminars, etc. so that you can educate yourself on the operation of your corporation. A very few online incorporating companies will provide ongoing consultation for your entities.
After filing communication. Many online incorporating companies conduct all, or the vast majority of, their business online. They do not work with clients over the telephone. But, if the only way you can communicate is through the use of email, you have left yourself totally at the mercy of the company you are trying to reach. If they do not want to communicate with you or answer your questions, you cannot reach them, for they do not respond.

Living Trusts

cssnevada — Thu, 25 Feb 2010 19:44:49 +0000

The living trust is an extremely effective tool for the elimination of probate. A properly drafted and funded living trust will totally eliminate the need for the preparation of a will and the probating of that will through the legal proceeding.

Additionally, the living trust will help you maximize your “Transfer Tax Credit.” Everyone has a “transfer tax credit.” In 2009, each person had a transfer tax credit of $3.5 million. That meant that each person could transfer during their lives or through their estate up to $3.5 million without the imposition of transfer taxes which begin at 37%, increase to 55% and has a 5% surcharge on larger estates. There are 2 exemptions to this transfer. You may transfer up to 13,000 per year to as many people as you wish and those transfers will not reduce your transfer tax credit. Also, you may transfer as much as you wish to your spouse, again, without any reduction of your transfer tax credit. Unfortunately, when you transfer all your assets to your spouse, you do not transfer your tax credit to your spouse. The transfer tax credit remains with you and cannot be transferred to a 3rd party.

In the year 2010, the transfer taxes were eliminated entirely. So, if you die in the year 2010, there are no transfer taxes [previously called “Estate Taxes”] due at all.

Unfortunately, the law, as written today, will bring back the transfer taxes in the year 2011. And, the transfer tax credit will be reduced from $3.5 million to $1 million.

Unlike a transfer of assets to your spouse, the use of the living trust allows both you and your spouse to avail yourselves of the maximum transfer tax credit. So, the use of a living trust in 2009 would allow a couple to transfer to their beneficiaries the total amount of $ 7 million without the imposition of transfer taxes. The use of the living trust in 2011 will allow a couple to transfer a total of $ 2 million without the payment of any taxes. Without the use of the trust, both the husband and wife will have a transfer tax credit of only $1 million.

The living trust will allow couple to double and maximize their tax credit, no matter what that credit is at the time of death of the 1st spouse. With the reduction of the transfer tax credit, it is essential that all persons utilize whatever tools are available to obtain the greatest tax credit available. The living trust is one of the best tools available.

For more information go to www.CssNevada.com

Who We Are

cssnevada — Wed, 24 Feb 2010 20:03:06 +0000

Welcome to Corporate Support Services of Nevada. CSS Nevada provides the professional support for your business, real estate and personal ownership entities. CSS Nevada was founded in 1998 with you, the client in mind. We strive to provide a complete range of services for our clients. We specialize in personal service and we are always able to respond to individual inquiries. CSS forms and organizes corporations, limited liability companies, limited partnerships, land trusts, living trusts and other business entities in the United States. CSS Nevada serves clients in all 50 states and throughout the world. CSS Nevada is a recognized leader in the industry. For those entities formed in Nevada, CSS Nevada provides it’s clients with a legal physical presence in Nevada. Our office has both conference facilities and a client office where clients can conduct their business while in Las Vegas. Our service provides your business entity with the required office identity so that it can maintain it’s status as a domestic Nevada business entity. While it is not necessary for the client to ever physically come to Nevada, we always welcome the opportunity to personally meet with our clients.

In 1987 Nevada enacted new statutes to regulate both domestic and foreign (entities formed in a state other than Nevada) business entities which conduct business with Nevada. It was the goal of Nevada to become the “Delaware of the West,” a state which is traditionally thought to have the most favorable corporate laws. This goal has been achieved, for the enactment of those statues has resulted in Nevada becoming the best state to form and operate a privately held corporation. For the last several years Nevada has been ranked among the largest states in the nation in new business filings. CSS Nevada is proud to be part of that enterprise process. This is quite a feat for a state with only 2 major urban centers and a population of approximately 2 million people.