Info on corporations

[Jason in LA]

What is the name of your state? CA

I don't know a whole lot about corporations, so I have a few questions.

I'm want to purchase houses in poor conditions, fix them up and re-sell them. One problem is that my credit isn't too good. I've been hearing about corporations, and wanted to know if it would be easier to raise the money needed through a corporation. I've been hearing commerials on the radio about Nevada corporations. One commerial said they help people get corporate credit. I've heard a lot about Ray Reynolds, but I heard that he's pretty much talking people's money with little results. I heard he has a lot of hidden cost that people don't find out about until they've already put a good amount of money down.

Any advice would be apprecaited.

 

[ALawyer]

Operating a business in corporate form is a way people use to shield their personal assets from some potential liability. For example, if Bill Gates wanted to open a restaurant, instead of risking his billions should someone die from bad food, he'd put X dollars into a corporation and it would own and operate the restaurant. If someone got sick and die the heirs of that person would only be able (in most cases) to sue the corporation that owned and operates the restaurant and not the shareholder (Gates). Thus all that is at risk is the amount invested in the restaurant, not Gates' real assets.

Anyone doing significant business with a small corporation -- such as making a large loan or signing a long term lease -- typically asks for the shareholders' personal guarantees as well as the financial statements of the corporation.

As for the radio ads, get real. If the corporation has no assets and its owners have bad credit histories so their personal guarantees are worthless, the line of credit you'd get is close to zero, and at most the amount by which the advertsiser is overcharging for its "incorporation services".