Ten steps to help you become protected and use your entity in the correct way. We at Corporate Direct look forward to assisting you to achieve your financial goals.
Familiarize yourself with the different entity types. You can find tons of information on this website or if you’re the studious type and want to get in-depth information, check out the books that Garrett Sutton has written on the subject. You will find his titles as well as all the other Rich Dad Advisors’ books at RDA-Press.com. The more education you can get the better off you’ll be. We seek to make this website a resource and offer all the education we can because we enjoy enabling entrepreneurs to achieve their dreams by providing them with the knowledge and resources they need to be successful. If you go into your free consultation well prepared you will be able to make the most of it by pinpointing the most important issues for your situation.
2. Gather Business Information
Verifying and clearing the company’s name availability will be one of the first steps that your Incorporating Specialist takes when forming your entity. Trademarks as well as state restrictions can block the use of some names. When you fill out your formation checklist, we will ask for three name possibilities (in order of preference). It is important to choose three names that you will be satisfied with as we will move down the list if your first choice isn’t available. This step requires some thought in advance since if your name can’t be cleared it will hold up the entire formation process. If you are going to sell products and services (as opposed to investing in real estate) you may want to consider trademarking your name. (We can refer you to attorneys for trademarking.) The first step is to check for trademark name availability, which can be done at www.uspto.gov.
You will also want to start thinking about who needs to be a part of your business as you will need all of their information when you form your entity. You can operate on your own if you wish, but you should be aware of the asset protection issues when forming a single member LLC. If you plan on having more than one member (or owner), what will your management structure be? Will you be member managed or manager managed? If you are thinking of forming a corporation, who will be the President, Secretary and Treasurer? Do you know the purpose of all these roles? If you have questions after reading the articles and/or books on this subject be sure to keep a list of questions for your consultation.
3. Schedule Your Consultation
Now that you have learned the basics, you’re ready to schedule your consultation. You will be assigned an Incorporating Specialist whom along with our administrative team will be available to help you from start to finish when you form an entity with us. On this call, you will get a chance to get your formation questions answered and you will talk about the properties you own and/or all of the businesses that you plan on operating. With the information gathered on the call, your Incorporating Specialist will prepare and send you quotes with entity structuring options for your specific situation.
Our Incorporating Specialists are very knowledgeable, but they cannot give tax advice, nor are they allowed to offer legal advice. Should you need legal advice or if your questions are legal in nature, you will be referred to our in-house attorney Garrett Sutton of Sutton Law Center for a reasonably priced legal consultation. (Corporate Direct and Sutton Law Center are founded by Garrett Sutton and both are operated out of the same building.)
Click here to download referrals for CPAs that we regularly work with. Regardless of the CPA or tax advisor you work with, if you are a client of Corporate Direct, Mr. Sutton will gladly join a conference call with your advisor as needed to address overlapping entity and tax issues. (The regular consultation fee applies.)
4. Payment and Paperwork
After you have reviewed your quote(s) and chosen how you would like to move forward, you will then fill out a formation checklist for each entity you choose to form and complete your payment.
On the checklist, you will be asked to provide three possible names for your company, contact information for all of the individuals that will be involved with your company, and any other details pertinent to your formation.
All formations are processed in the order received unless you opt for expedited service for an additional fee. (Depending on the state, limitations may apply so be sure to ask your Incorporating Specialist for details if you are interested in this service.) A typical formation will be completed within 30 days.
5. Obtain an EIN
After you receive your Articles of Organization/Incorporation you can apply for your Employer Identification Number (EIN). Corporate Direct can obtain your EIN for you for a fee or you may obtain your EIN for free (without our assistance) at IRS.gov. If you have opted for Corporate Direct to obtain your EIN, you will be asked to sign the necessary IRS authorization and to provide your social security number through our secure portal after your Incorporating Specialist receives your articles (typically within a week or two from completing your checklist and payment).
6. Open a Bank Account
With your EIN and the corporate paperwork we provide when your company is formed, you will need to open a company bank account. (Know that banks will not open a business account without the EIN.) It is very important that you run your business activities through a business bank account. Commingling personal and business monies through your personal account can get you in trouble and possibly lead to someone being able to pierce through your corporate veil in a lawsuit.
Corporate Direct will ensure that you have a complete formation package at the state level so that your company is poised to take advantage of the limited liability protection that a state chartered entity can provide. However, your state, locality, and/or your industry of operation may require additional business or other licensing. Be sure to check with your state for any additional requirements outside of obtaining your Articles of Organization/Incorporation.
Your business, your assets, your money, your reputation. You want to protect all of them. As a business owner today, you’re working in a litigious world. You’re also working in a business world that gives you the tools to protect yourself, your business, and your assets. The right insurance policy can protect you and your business. When you’re setting up your insurance policy, pay specific attention to the verbiage and terminology utilized. If you don’t understand something in the contract or if you’re unsure what is being covered, contact your insurance agent in writing and keep a copy of the correspondence. If anything happens and you end up in court against the insurance agency, you’ll have a paper trail. Make sure the insurance is in the company’s name or you may not be protected.
Now that you are in business, you will need to keep accurate financial records. If you have employees, you need to handle reporting and payroll tax matters. You can do this yourself (if desired) but many people’s time is more valuable and better placed in running the business – so they hire a bookkeeping service.
10. Transfer Property Using a Warranty Deed
Many believe that a quit claim deed is the best way to transfer title but there are a few reasons a quit claim deed is not preferred. One big reason is because the quit claim deed serves an express or implied warranty of title. (This means you are just granting whatever you may own which may be something, or nothing.) As such, the title insurance doesn’t follow. While this may not seem like a big deal, let’s consider an example:
You buy a property in your name. Part of your closing costs includes a policy of title insurance. Several years later you want to transfer title to an LLC for asset protection. Your friend says a quit claim deed (which they mispronounce as a ‘quick’ claim deed) is the easiest and quickest way to go. You file the quit claim deed and now the property is titled in the name of your LLC. Later, you learn that the boundaries weren’t properly surveyed. You seek recourse from the title company since they insured the boundaries were correct. But you now learn that by quit claiming the property into your LLC you have unwittingly cancelled your title insurance policy. The boundary issue is no longer insured.
The way to avoid this problem is to use a grant deed or a warranty deed. A title insurance policy isn’t extinguished in such a transfer. As well, a grant deed is just as easy to prepare as is a quit claim deed. But in either case, remember that easy isn’t always best. While we do not assist in transferring title at Corporate Direct, we provide you with referrals to do so once your entity is formed and your documents are complete.
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