How to incorporate

[thenomad]

this question pertains to the state of CALIFORNIA or NEVADA US

My wife is going into business of book keeping after so many years in the corporate world and she has several clients lined up. The problem I am facing, one wrong key-press in the accounting software and she is liable for anything we own, as you can guess.

I am hearing on the radio and reading on the net and on print publications that, incorporation of one's business is the way to protect yourself from such unfortunate incidents. Also, I am a savvy-enough consumer not to fall into, click this website or call this toll free number, and we'll handle your incorporation from start to finish, advertising pitches. I am sure, incorporating is not rocket science and there should be some documents explaining a methodical person like myslef, how to do it on your own instead of shelling out the few hundred dollars of my wife's not-yet-earned money.

We are living in the state of CA, but have an address in NV which we can use for setting up a NV corporation. I am hearing other pitches from NV saying it is more advantageous to incorporate in this state but I am a total newbie when it comes to business finaces.

Can someone guide me/us ?

Thanks for your kind help in advance.

 

[seniorjudge]

I am hearing on the radio and reading on the net and on print publications that, incorporation of one's business is the way to protect yourself from such unfortunate incidents.

Not exactly true.

Anyway, Google

nevada incorporation pierce corporate veil

if you want to incorporate in Nevada (for example).


Then gander:

http://sos.state.nv.us/comm_rec/crforms/crforms.htm

 

[thenomad]

Thank you for your kind response. I have read (as much as my time at lunch break allowed) and got the gist of the matter. I think it will be better for us to incorporate in our own home state CA. I have wandered into CA state website and found a one page incorporation form, which looked extremely simple in the level of silly. And I have checked few sites which help you fill in the blanks and they give you the document to print out for incorporation and the average price I have seen was around $150.

Now I am wondering what services are they providing to justify the price they charge and do these services really necessary for a one or two person incorporation. In other words, is it better to pay the price for the peace of mind or these places are trying to make a quick buck out of a clueless guy like myself, playing on my fears of doing something wrong in regards of state treasurer or god forbid the IRS.

Cheers

 

[seniorjudge]

...

I have wandered into CA state website and found a one page incorporation form, which looked extremely simple in the level of silly.

....

Well, you ARE in California....

 

[thenomad]

Well, you ARE in California....

Well, I know I am in California. But I would expect California rules to be more consumer friendly and corporation hostile. I would expect to jump million hurdles to get incorporated in a state like CA. 1 page form seems a little bit disturbing. Makes me feel like I am missing the boat somewhere. Here is the text from the 1 page document I mentioned:

SAMPLE
ARTICLES OF INCORPORATION
I
The name of this corporation is (NAME OF CORPORATION) .
II
The purpose of the corporation is to engage in the PROFESSION of _______________
and any other lawful activities (other than the banking or trust company business) not
prohibited to a corporation engaging in such profession by applicable laws and
regulations.
III
This corporation is a professional corporation within the meaning of Part 4, Division 3,
Title 1, California Corporations Code.
IV
The name and address in the State of California of this corporation's initial agent for
service of process is:
Name ___________________________________________________________
Address _________________________________________________________
City ___________________________ State CALIFORNIA Zip ___________
V
This corporation is authorized to issue only one class of shares of stock; and the total
number of shares which this corporation is authorized to issue is __________________.
(Signature of Incorporator)
(Typed Name of Incorporator), Incorporator

Is it really this simple ? If so, will this protect me from the piercing the corporate veil ? The one and only reason I want to incorporate is to protect our hard earned personal assets from a frivolous lawsuit. As I mentioned before, my wife will do book keeping and god only know what type of companies she will have to deal with. I am afraid, someone with a hidden agenda may come after our personal property. I want to prevent this from happening. Would LLC a better alternative for us ?

 

[divgradcurl]

The one page form is in fact sufficient to actually form a corporate entity, but in all likelihood is insufficient to actually run a corporation.

As for whether a PC is better than an LLC, it depends. Are you going to have employees? Are you going to issue stock? Are you planning on multiple owners? Do you want to be taxed at the corporate level, or do you want taxes to pass through?

The way to protect your personal assets is to properly create the proper type of corporate form (PC, LLC, etc.), then properly capitalize it (especially important if you pick a corporate form with stock), and then run the business properly (following the proper formalities, filing the proper paperwork on time, etc. -- along with treating the corporate form as a separate entity, and not as an extension of you personally).

If you have significant assets that you are trying to protect, it's probably worthwhile to sit down with a local attorney, who can review all of the facts of your sitation and advise you accordingly, and answer an questions you might have.

 

[clueless3]

1) If this is your FIRST time setting up a business entity, please BY ALL MEANS get the help of a professional incorporator, NOT a website or some DIY guidebooks. There are a number of rules and regulations that you might not know of that can jeopardize your forming of that entity. No, it's not rocket science, but there are enough rules out there that surprise you! If you have to form an entity, then you have no choice but to spend money wisely, and not cheaply.

2) Just because you have an address in NV, it does not mean that NV is the best place to incorporate. It all depends on your circumstances. And don't fall prey to the claims that a NV corp would save you taxes -- it doesn't. It all depends on your circumstances. If you live in CA, are CA residents, there is NO WAY you can avoid CA taxes, no matter where you form your corp. There are "wise" schemes, but, at the end, you'll have to pay CA taxes.

 

[Shay-Pari'e]

1) If this is your FIRST time setting up a business entity, please BY ALL MEANS get the help of a professional incorporator, NOT a website or some DIY guidebooks. There are a number of rules and regulations that you might not know of that can jeopardize your forming of that entity. No, it's not rocket science, but there are enough rules out there that surprise you! If you have to form an entity, then you have no choice but to spend money wisely, and not cheaply.

2) Just because you have an address in NV, it does not mean that NV is the best place to incorporate. It all depends on your circumstances. And don't fall prey to the claims that a NV corp would save you taxes -- it doesn't. It all depends on your circumstances. If you live in CA, are CA residents, there is NO WAY you can avoid CA taxes, no matter where you form your corp. There are "wise" schemes, but, at the end, you'll have to pay CA taxes.

YooHoo Miss Clueless, please check the dates of the posts you are responding to. You are looking pretty Cookoo!