Very nice info Larry! So, what is your take on incorporating in a state other than your home state for tax reasons? Is it worth the effort? -RickG
On Wed, Jun 3, 2009 at 1:09 PM, Larry Yunker <leyun...@wispadvantage.com> wrote: > What you are referring to is called "corporate formalities". These same > concepts exist with regards to LLC's. For instance: You must have those > officers which the state statute requires (usually president and secretary > but some states require others), you must make those filings which the state > statute requires, you must properly finance the company, you must reasonably > insure the company, you must follow appropriate accounting procedures for > the company, you must adhere to your own bylaws - articles of organization > or other controlling documents, etc. > > The bottom line is that the more that you do to treat the company as an > independent entity the less likely that someone can "pierce the corporate > veil." The more often that you treat the company like an empty shell or as > something owned and controlled solely for your benefit, the more likely it > is that a creditor can reach beyond the company and attach to your assets. > > Yet, I think the most commonly overlooked liability is the dreaded "personal > guarantee". Until your company has built up sufficient credit history of > its own, it is likely that you will be asked to guarantee the liabilities of > your company. When you purchase on credit or if you take out a loan, it is > quite likely that you will be asked and/or required to sign a personal > guarantee regardless of the structure of your company. If you sign such a > document, you may be held personally liable for the underlying debt EVEN IF > the company is a limited liability entity (such as a LLC or a S-Corp). Be > CAREFUL, some of these guarantees allow the creditor to seek payment from > YOU FIRST instead of even chasing the company! > > So, keep in mind that one of the biggest reasons for going with a limited > liability entity early-on is NOT to limit your liability to creditors (they > probably will reach you through personal guarantees). The reason to go with > limited liability from the start is to limit your liability in "tort" > (meaning when you or someone that works for you causes someone else to be > hurt). Also remember that torts happen outside of the company AND inside of > the company. I'd say at least half of the calls that I'm fielding these > days come from people who have recently been laid-off from their employers > and now they are suing their employers for some sort of tort. (wrongful > discharge, employment discrimination, sexual harassment, etc.) > > - Larry > > > > -----Original Message----- > From: wireless-boun...@wispa.org [mailto:wireless-boun...@wispa.org] On > Behalf Of RickG > Sent: Wednesday, June 03, 2009 11:29 AM > To: WISPA General List > Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability > > Apparently, "meeting minutes" are one of the differences between an > LLC & Corporation. I do my "minutes" for the "annual meeting". No > biggie, but considering changing over to an LLC. > -RickG > > On Wed, Jun 3, 2009 at 6:06 AM, George Rogato <wi...@oregonfast.net> wrote: >> Yeah, my accountant told me a story about one of his un named clients >> who was previously part of a corp . Turns out there was a lawsuit >> against a corporation that had filed for bk protection a couple years >> earlier. >> >> The person filing the lawsuit wanted to see the corporate minutes for >> the now defunct corporation to see if they were done on a regular basis. >> >> What they were after is, was it a real corporation that held directors >> meetings on a regular basis and kept minutes. >> >> if not, then the corporation would in fact be considered an illegal >> corporation and the shareholders would then be considered sole >> proprietors and the corporations bk would be over turned, leaving them >> open to that lawsuit. More so than exposing the share holders to that >> type of liability, the share holders, now sole proprietor or partners >> would have also filed false tax returns and would be subject to all >> those unpaid taxes and penalties interest etc. >> >> A can of worms indeed, when not done right. >> >> >> >> Travis Johnson wrote: >>> I understand the corporate structure and how it works. I also know that >>> if you follow all the proper corporate bylaws, they can NOT break the >>> corporate barrier. Yes, they will try and list each person individually, >>> but if you have a good attorney, that is a simple motion to get the >>> individuals removed (been there, done that). >>> >>> Travis >>> Microserv >>> >>> Marlon K. Schafer wrote: >>>> It can be done a lot cheaper. But we work hard to do it right not cheap > these days. >>>> >>>> And the corporate veil isn't as strong as it used to be. If your > company screws up the officers (that's you) will be named on any suit these > days too. >>>> >>>> marlon >>>> >>>> ----- Original Message ----- >>>> From: Travis Johnson >>>> To: WISPA General List >>>> Sent: Monday, May 25, 2009 9:53 AM >>>> Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital > Availability >>>> >>>> >>>> Huh? We incorporated in 1997 and I think total cost was less than > $500. How do you ever expect to get away from having to do personal > guarantees if you don't operate like a "real" business? >>>> >>>> Travis >>>> Microserv >>>> >>>> Marlon K. Schafer wrote: >>>> One more thing. I don't agree with your definitions per se'. >>>> >>>> We all have businesses. A proprietorship is a TYPE of business. We are > a >>>> proprietorship because I'm not incorporated (incorporating is over rated > and >>>> expensive to do right). I'm still a business though.... >>>> >>>> http://en.wikipedia.org/wiki/Business >>>> >>>> http://en.wikipedia.org/wiki/Sole_proprietorship >>>> >>>> http://en.wikipedia.org/wiki/Asset >>>> >>>> marlon >>>> >>>> ----- Original Message ----- >>>> From: "Charles Wu" <c...@cticonnect.com> >>>> To: "WISPA General List" <wireless@wispa.org> >>>> Sent: Sunday, May 24, 2009 10:03 PM >>>> Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital > Availability >>>> >>>> >>>> Hi Marlon, >>>> >>>> I think it's appropriate to make a few definitions and distinctions on >>>> things so everyone is on the same page >>>> >>>> Specifically, for purposes of making my point, I define >>>> >>>> Proprietorship: A commercial activity engaged in as a means of > livelihood >>>> or profit >>>> >>>> Business: A unique system of processes and procedures that documents and >>>> codifies a specific method of proprietorship >>>> >>>> Asset: cash, inventory, equipment, infrastructure, customer contracts, >>>> brand, marketing, etc >>>> >>>> Grin. Sure it is. That's what a LOT of small business people do. > It's >>>> also kind of common for doctors, dentists, plumbers etc.... Sometimes > it >>>> sucks, >>>> Now, everything you stated above is just a method of > proprietorship, and >>>> in most cases, from a sale perspective, a proprietorships isn't worth >>>> anything more than the depreciated value of its assets >>>> >>>> Say you were buying out the local plumber's office -- what would he have >>>> of value? His truck? Some old tools? A customer list / brand perhaps >>>> (but the reality of things is that customers do business with him > because >>>> of him, and if you bought him out and he moved out of town, those >>>> customers would probably go back to being on the open market) >>>> >>>> Now, in comparing the WISP 'proprietorship' vs. the plumber, it's worth >>>> noting that the WISP is somewhat unique in that it results in the > creation >>>> of an independent asset that holds onto a lot of value (e.g., the >>>> recurring revenue and everything that goes to support it); in many ways, >>>> this is akin to real-estate >>>> >>>> Not >>>> everyone out there even wants to get that big (if I had a nickle for > every >>>> business owner that's told me the most fun they had and the most money >>>> they >>>> made was when it was just them, no employees......) But then again, >>>> that's >>>> one of the really cool things about this buisness, it's big enough and >>>> flexible enough to allow many different business models and operator >>>> dreams >>>> to bear fuit! >>>> True...and you have the added benefit of building an asset that > has value >>>> (be happy we're not plumbers =) >>>> >>>> -Charles >>>> >>>> >>>> >>>> >>>> >>>> > ---------------------------------------------------------------------------- > ---- >>>> WISPA Wants You! Join today! >>>> http://signup.wispa.org/ >>>> > ---------------------------------------------------------------------------- > ---- >>>> >>>> WISPA Wireless List: wireless@wispa.org >>>> >>>> Subscribe/Unsubscribe: >>>> http://lists.wispa.org/mailman/listinfo/wireless >>>> >>>> Archives: http://lists.wispa.org/pipermail/wireless/ >>>> >>>> >>>> >>>> > ---------------------------------------------------------------------------- > ---- >>>> WISPA Wants You! 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