How to Incorporate?

Discussion in 'Homesteading Questions' started by Jena, Apr 4, 2005.

  1. Jena

    Jena Well-Known Member

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    I need to form a corporation for this work at home job. I know they require incorporation to provide protection for themselves from labor laws.

    I have the forms from my state, but I have no idea what to put on them.

    This is a "close" corporation. It's just me.

    What do I put for all the share stuff? Authorized Shares, Class, Number of shares proposed and consideration to be received?

    It also asks for my purpose. Do I have to state the type of business it's for, or what? Can one corporation cover two very different businesses? If I'm going to incorporate, I might as well add my meat biz in there if possible.

    Any help would be appreicated.

    Jena
     
  2. agmantoo

    agmantoo agmantoo Supporter

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    Would an LLC not better meet your needs and it should costs less to set up?
     

  3. Jena

    Jena Well-Known Member

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    It costs $500 to file Articles of Organization for an LLC and $150 to file Articles of Incorporation through my state. I'd rather keep that $350!

    Jena
     
  4. james dilley

    james dilley Well-Known Member Supporter

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    Theres a book on articles of incorperation avalibe from the Liabrary, you might want to see if your local one has it.
     
  5. fordy

    fordy Well-Known Member

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    ................A few thoughts...1) DON't PUT your realestate ...>>>into the Corporation . Leave it separate and let the corp. pay the necessary and required expenses for your home business . , (2) IF , you depreciate all or part of your home you'll have to recapture that depreciation when you sell the home . If it remains your personal residence , and you meet the time of ownership test , ALL gain , for the most part will be tax free . I'm not sure that "incorporating" is necessary in your particular case . You get to deduct your h. Ins. costs up to a point and and deduct your half of your self employment taxes . The MAIN reason for incorporating is "Limited Liability" but I don't see how you would come into play in your home computer business . fordy.. :confused: :eek:
     
  6. NWSneaky

    NWSneaky Well-Known Member

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    Do NOT incorporate. Save the money. Any lawyer knows how to penetrate a corporate shield when you are directly involved.
     
  7. amelia

    amelia Well-Known Member

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    I'm with Agmantoo-- I'd look hard at whether an LLC would meet your needs better, and be a lot less costly in the long run. Consider not only the "up front" costs, but the annual costs of keeping your registration current and--more significantly--taxes. Preparing a corporate tax return is going to be a lot more involved, and you're going to have two different levels of taxation (once at the corporate level, and once at a personal one.) LLCs, on the other hand, are treated like partnerships for tax purposes, which means that you prepare only one (personal) return. The whole idea of LLCs--which are a fairly new form of entity--was to reduce the cost and hassle of limited liability.

    One issue which I don't have a good handle on--but have heard mentioned--is that a corporation gives you the ability to "split" income between dividends and salary, with the result that you won't owe the whopping 15% self-employment tax on the dividend part. The idea is that when you run your own business, the profits are attributable not only to your efforts as an employee of the corporation, but to the equity that you have built in the business. (Of course, the allocation of income to salary versus dividends will have to be a reasonable one under the circumstances.) This might be a factor (but, again, it is only one factor) that would favor setting things up as an S corporation.

    Since the primary objective of entity formation is to insulate you from personal liability, I would also want to know exactly what protection each form of entity provides you in your state. You mention protection from "labor laws." This strikes me as perhaps mistaken--I can't imagine how either a corporation or an LLC would exempt you from labor law regulations. You might want to look into that further. Also find out exactly what kind of "liability" these entities will protect you from under your state's laws. It's not all protected; hence the need for insurance.

    These are complicated topics that don't lend themselves well to self-help. However, if you are bent on pursuing that route (you seem to do everything else on your own--go girl!), I'd check out the public library for "do it yourself" books on incorporation and LLC formation (especially those put out by the DeNovo Press). Make sure they are specific to your state. Another resource is the county law library (there will be one associated with the courthouse), where you may be able to find a few resources that would help--namely "practice manuals" in the area of entity formation and CLEs ("Continuing Legal Education") materials, some of which tend to be very basic, practical, "dummies" guides for attorneys that do not practice in a particular area of law. Most of them include forms.

    Good luck!
     
  8. Jena

    Jena Well-Known Member

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    I HAVE to incorporate in order to work for this particular company. They hire people to answer phone calls at home on an independent contractor basis. The company is structured in such a way that they are in a gray area of employment law....are the workers truly indenpendent contractors or actual employees? By requiring incorporation, they avoid the issue of possibly being determined to have actual employees.

    I'm not doing it for liability reasons. I answer the darn phone for customer service...not too legally risky!

    The meat business would be different, but that is not the primary reason for incorporating. I'll just leave the meat deal as it is, but I MUST have the corporation.

    My attorney is working with me on another deal, perhaps he'll answer my questions for free. He actually does that.

    Thanks
    Jena
     
  9. amelia

    amelia Well-Known Member

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    With all due respect to Fordy, it's not all that easy to "pierce the corporate veil." The usual circumstance in which people find themselves in trouble this way is when they disregard the corporate formalities, such as annual meetings, separate recordkeeping, and--here's a big one--intermingling of personal and corporate funds.
     
  10. amelia

    amelia Well-Known Member

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    In that case, Jena, I'd go for one of the DeNovo Press do-it-yourself books. Just make sure that it is state-specific.

    Ineteresting what this company you work for is trying to do. At least in my state, it wouldn't fly. There's a whole body of case law aimed at defining what is an "employee," as opposed to "independent contractor," and the test has to do primarily with the amount of control that the employer exerts over the day-to-day activities of the person. But I guess that's not your problem.
     
  11. CraftyDiva

    CraftyDiva Is anybody here?

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    By any chance is the company you work for "Live Ops" or "West at Home" ?

    I was thinking of becoming a home worker for one or both (to double the income) and I didn't see anything in the info about incorporating. Is this something they tell you after your accepted?
     
  12. Jena

    Jena Well-Known Member

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    I work for one of those companies. Incorporation is not required by either. This is a different company....don't want all my eggs in one basket as this will be my living for a while.

    Jena
     
  13. quadrants2

    quadrants2 Well-Known Member Supporter

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    being incorporated isnt that hard.....
    first an llc is not always good because you will have all flow through money..you cant leave it in the bank like you can in a c corp...also there is absolutely no advantage to an s corp since the creation of llc's. if you form a c corp then you are goign to want to have approx 10,000 shares of common stock..do not list preferred stock as this requires an explanantion why it is preferred. dont do more than about 50,000 shares as this usually requires more cost.
    you do not need an attorney to file this paperwork..just go to your .gov website for your state and they have everything you need.
    as far as dividends you need not worry about that because if you more money out of the corp then you just write another payroll check.
    there is not another business that compares to a c corp for benefits, tax breaks,perks, etc. and piercing the corporate veil is something you dont need to worry about...if you decide to involve real estate then do an llc just for the real estate...
    any more questions feel free to ask..i currently own a c corp and an llc.
    can offer advantages and disadvantages for both
     
  14. Suzie

    Suzie New Member

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    I believe you really need to talk too a tax accounting agent! Actually my husband and I have an appointment for later this month dealing with the same thing! And do not go too a big business accountant! Go to a smaller person they will be listed in your yellow pages. The accountant will help you decide if this the right thing for you! Don't worry a private accountant is about as cheap as a big business one if not cheaper. They also help you get more back on taxes and will work for you. Erica, Mich