Corporate Service Center, Inc. White Papers

Like us on Facebook…Win an iPad2!

Corporate Service Center, Inc. — 2011-12-09T03:57:47-08:00

Just a reminder, get your friends and family to 'Like' our page for a chance to win that iPad 2!!! We will be drawing for it on December 19th!

Business Tip of the Day

Corporate Service Center, Inc. — 2011-12-02T08:56:55-08:00

In recent news, Costco Wholesale CEO Jim Sinegal plans to retire within the next year. He is an outstanding example of how to be a CEO. He played a major role in building Costco into the third-largest retailer in the country, creating a model that rewards workers handsomely even while competitors cut benefits. ...Sinegal is often clad in one of Costco's $17 dress shirts, long a staple of the company's apparel department. ...The thing that blew me away about Sinegal was that his office is in the hallway at Costco's Issaquah headquarters. ... Not even a glass wall between him and the rest of the staff. ... He also gave me his cellphone number once, where most execs would make you call in through one of those conference bridges or have a secretary patch you through. ...The result is low turnover, low training costs and a family feeling to the company. They don't have to do much recruiting, as current employees are happy to put out the word to family and friends.  ...His desk on my last visit was a cheap, Formica-topped folding table -- I think it had been a Costco sale item -- and behind him sat an aged, fabric-covered message board. ...He wanted to talk to customers and employees, so he could learn more about how to serve them.

Business Tip of the Day

Corporate Service Center, Inc. — 2011-12-05T08:08:19-08:00

Unique Advantages to Incorporating in Nevada ▪ The independent spirit of Nevada supports the spirit of small business. ▪ Nevada’s legislature only meets every two years. ▪ State legislators are not professional politicians, but are regular citizens. ▪ Nevada has the only state association of incorporation professionals that continually works to improve and strengthen Nevada’s incorporation laws. ▪ Big city amenities, small town feel. ▪ Series LLCs. ▪ Early adoption of the Model Registered Agent Act. ▪ Charging order protection for closely held corporations. ▪ Charging order as the sole remedy of a creditor of a shareholder, member or partner. ▪ Business trusts

Business Tip of the Day

Corporate Service Center, Inc. — 2011-12-07T08:55:32-08:00

Our attorney and our accountant are both professional corporations (PCs). Do we still have to send them 1099 forms? IRS regulations require that attorneys always receive 1099s, regardless of the manner in which they do business. The law is a little fuzzier when it comes to accountants and other professionals, but Hunt advises that 1099s be sent to all providers of professional services, even if they are LLCs or corporations.

Business Tip of the Day

Corporate Service Center, Inc. — 2011-12-12T07:54:24-08:00

Did you just incorporate your business, but now have some legal questions? ..."DBA" stands for "doing business as," and it's is just another name for your business. ... For example, "Jones Inc." could be the corporate name, with "Bob Jones Landscaping" as the business name. In this case, you would see it described in a legal context as "Jones Inc. doing business as Bob Jones Landscaping." ...You may have heard about the corporate veil, which means that you can't be sued personally for anything that happens in the corporation and your personal assets can't be attacked by creditors or a lawsuit on the corporation. But in order to have this protection, you must act like a corporation. ...We file all the necessary paperwork with the Secretary of State to get your company name registered. ...But in NV you need one, unless your business is a nonprofit religious, charitable, fraternal or other organization that qualifies as a tax-exempt organization. ...Remember, tax and corporate laws change all the time and can vary significantly from state to state. If you're going to be successful in your business, you'll need an attorney on your team who can keep up with changes in the laws and tax codes and advise you as you move ahead in your business. This will reduce the chances of some unknown issue blindsiding you, and will also save you money as you use those laws and codes to your best advantage.

Business Tip of the Day

Corporate Service Center, Inc. — 2011-12-13T08:05:46-08:00

Using the right tools to get the right message to the right audience is critical over the holidays, when businesses and organizations are pulling out all the stops to capture consumers’ attention and dollars. ...Here’s some good news for small businesses on a budget: Social media extends the life and reach of your email marketing campaigns. It empowers marketers to better engage their audiences, and gives customers the means to share content and offers with their networks. ...Here's how to extend your email marketing reach and add some social spice to your holiday campaigns. ...And around the holidays, everyone is looking for a great offer, whether it's a clever gift idea, an awesome deal, or a money-saving coupon. ...When you start a conversation, request feedback, or make a promotional offer via email, the next step is to drive your audience to social destinations and engage them. ... It may be to "Like" you on Facebook to get a coupon, follow you and retweet an offer on Twitter to be eligible for a prize, or continue a hot-topic holiday discussion elsewhere. ...Your aim is to capture your customers' attention and then inspire them to comment on and share your content or offer with their friends or network. ... ▪ Add social share icons to the top of your email newsletter, so readers can easily share your content with just one click. ...Engage customers in social conversations, and use their input to develop ideas for future email content that they'll also want to share. ...Combining email and social media marketing enables you to better engage your customers, and inspire them to share your content -- and do some of the holiday marketing for you.

Business Tip of the Day

Corporate Service Center, Inc. — 2011-12-14T08:53:16-08:00

Another FAQ on taxes today: A graphic designer performed more than $600 of services for us last year, but she operates as a single-member limited liability company (LLC). Do we still have to send her a 1099 form? The IRS views single-member LLCs as "disregarded entities"--that is, the IRS does not view them as separate from their owner. Hunt believes the safest bet is to send 1099s to any contractor that is an LLC, a limited liability partnership (LLP), a business trust or other unincorporated business entity, especially if they use their personal Social Security number as their business's tax ID.

Business Tip of the Day

Corporate Service Center, Inc. — 2011-12-16T09:52:56-08:00

They want to get to know about you and your company, and most importantly get your information. ...Of course, you can't expect your business card to tell the whole story about your company. ...When crafting a design, start with the style that best supports the business image you wish to project. ...It's a no-nonsense approach that can appeal to clients and prospects who would not be impressed by fancy design features-the people who want "just the facts, ma'am." ...Having your face on your card-whether it's a photograph, a drawing or a caricature-helps a contact remember you the next time he or she sees you. Images representing a product or service, or a benefit your business provides, can help you communicate your business better than dozens of words. ...Tactile cards tend to be considerably more expensive than regular cards because they use nonstandard production processes such as die cuts. ...A card can do more than promote your name and business-it can also serve as a discount coupon, an appointment reminder or some other function. ... For example, a hotel may include a map on the back of its card for any guests who are walking around the local area. ...Some examples are cards made of chocolate or that folded out into a miniature box to keep small items in. ...This means your name, title, company name, address, phone number (or numbers, if you want to include your cell), e-mail and web site.

Business Tip of the Day

Corporate Service Center, Inc. — 2011-12-20T08:50:51-08:00

It's a business owner's dream to get the product they're so proud of in the hands of a star. In many cases a bit of stardust can have a huge impact on the success of your product, as celebrity watchers keep a close eye on these influential trendsetters. And with the right product, preparation, and persistence, a celebrity could be showing off your items on the red carpet. ...First you'll need a list of target celebrities, a database of media contacts, and a one-paragraph summary of your product or company for a press release. To grab attention, make sure your release includes the celebrity name, event information (when there is one), a paragraph about your product (plus cost and where to purchase it), names of VIPs (even local) or celebrities who have used it, your contact information and website, and your logo to reinforce your brand. ...You want your gift to stand out for the very reason a celebrity wants to stand out amongst his or her peers--to be memorable. ...You generally want to start with a celebrity's publicist, but realize this person might refer you to the next person on your list. Don't give up. is always someone on the star's team who is responsible for his or her image and who will be interested in your gift. ...To find out whether a celebrity is using your product, follow the star's comings and goings on entertainment websites like WireImage.com or GettyImages.com. If you know in advance that you've snagged a celebrity to wear your product on the red carpet, these are also the photo agencies you'll contact so you will own your own image. Chances are good that they will be sending a staff photographer to cover the event anyway, and when you call, you can confirm that they have the credentials secured already.

Business Tip of the Day

Corporate Service Center, Inc. — 2011-12-21T08:00:00-08:00

We treated her as an independent contractor, but we only recently learned that we were this person's only client last year, and our attorney says there's a possibility this person might be considered an employee of ours. Should we send the consultant a W-2 or a 1099 at this point? ...Your consultant has failed one of the basic tests of independent contractor status--that the consultant has other clients. Without knowing more about the relationship, though, no one can say for sure if she was or not. For example, if the consultant did all her work at her own location, worked less than 1,000 hours last year, and submitted regular invoices for her hourly fees and reimbursable expenses, she may still be considered an independent contractor even though you were her only client. You won't know for sure unless you go through an audit and the IRS agrees with your position. ...If you send her a W-2, you are admitting that she was an employee last year, and you'll be liable for Social Security, Medicare, and federal and state unemployment taxes on the amounts you paid her (along with interest and penalties for paying these taxes late). Talk to your attorney some more about this relationship, and see if you have any good-faith defenses to a claim that the consultant was an employee. If the attorney feels that you do, you can send the consultant a 1099 for last year. Just make sure she pays all federal and state withholding taxes on the amounts you paid her last year (don't be afraid to ask for proof, such as a copy of her tax return for that year). ...If you continue to be her only client, and especially if she is working so many hours that realistically she doesn't have time for other clients, you should put her on the payroll and start paying employment taxes to avoid liability this year.

iPad2 Facebook winner announced

Corporate Service Center, Inc. — 2011-12-21T08:00:10-08:00

Sorry it's taken so long to announce the winner of the new iPad2... But we want to say Congratulations to Mr. Raymond Couzens!!!! We will be sending out the iPad 2 tomorrow for you. Congratulations again. Have a Happy Holidays!

Merry Christmas

Corporate Service Center, Inc. — 2011-12-25T08:00:00-08:00

We want to wish all of our Friends a Merry Christmas! Hope you are enjoying the day with family and friends.

The December 2009 Founder's Summit!!

Corporate Service Center, Inc. — 2009-12-18T15:16:20-08:00

In December's episode, Derek & Cort talk about the latest news in small business funding. This hour-long show features Mark Kern, founder and director of Commercial Finance Help, Inc., a company that helps businesses navigate the world of obtaining financing.

Five Leadership Traits for Tough Times

Corporate Service Center, Inc. — 2009-11-18T14:58:34-08:00

On the bright side, I am seeing that businesses startups today – and those existing businesses that are surviving and flourishing in the current economic conditions – are much better companies than they were before the economic meltdown occurred. ...So, I thought I would share the six characteristics and traits that organizations need today in order to be positioned to make solid decisions and be positioned to make the best out of challenging times: ...There may be many people who are looking to you right now to measure how credible you are right now – from your spouse, your business partners, your vendors, your customers, and your banker. ...You can give hope to your team by giving them a realistic, but optimistic vision of exactly how you are going to succeed from here. No matter how dark, difficult and dreary things can appear to those who are in fear, you can open them up to a whole new world of possibilities that they are not thinking of, yet. ...You simply can’t keep working with outdated assumptions that are based on what your model/market looked like a couple of years ago. ... Unless you continuously monitor those changes and stay on the pulse of the reality of your changing circumstances, you can find yourself quickly in the buggy-whip making business. ...There has perhaps never been a time when it has been more important to have an accurate, ground-level assessment of your situation than right now. It can be easy for a business owner to become distant – and disconnected – from your team, your operations, and your customers. Now is the time they those around you need to see your intense, hands-on participation in working through challenges and finding solutions. ...By creatively planning and executing right now, you can take advantage of the weaknesses, fears, and disconnection that your competitors are feeling right now.

Special Sales Tax Deduction for Car Purchases Available through End of 2009

Corporate Service Center, Inc. — 2009-11-18T14:57:32-08:00

WASHINGTON — With 2010 models arriving in dealer showrooms, the Internal Revenue Service reminds taxpayers that purchasing a new car, light truck, motor home or motorcycle could qualify them for a special deduction for the state and local sales and excise taxes on their 2009 tax returns. Purchases made before Jan. 1, 2010, will qualify for this deduction under the American Recovery & Reinvestment Act of 2009 (ARRA). The deduction is limited to the sales and excise taxes and similar fees paid on up to $49,500 of the purchase price of a new vehicle. The deduction is reduced for joint filers with modified adjusted gross incomes (MAGI) between $250,000 and $260,000 and other taxpayers with MAGI between $125,000 and $135,000. Taxpayers with higher incomes do not qualify. Taxpayers who make qualifying new vehicle purchases this year can estimate the deduction with the help of Worksheet 10 in IRS Publication 919, How Do I Adjust My Withholding? Lines 10a to 10k of the worksheet show how to take into account purchases above the $49,500 limit, as well as the reduced deductions for taxpayers at higher income levels. The special deduction is available regardless of whether taxpayers itemize deductions on their returns. Taxpayers who do not itemize will add this additional amount to the standard deduction on their 2009 tax return. For those that have questions about the deduction for sales tax and other fees, these questions and answers might help. A video on the IRS Youtube.com channel and audio podcasts in English and Spanish are also available to help taxpayers take full advantage of the deduction.

Setting Up Your Chart of Accounts

Corporate Service Center, Inc. — 2009-11-18T14:56:42-08:00

Even if you don’t love it, you have to do it – or at least somebody in your organization has to do it for you. ...What’s worse, you are then at tremendous risk of becoming victimized by that somebody else because they know they can play with the numbers and you won’t catch it. ...Almost any of them will get you started, but I generally recommend going with a platform that most accountants and bookkeepers will be familiar with – like QuickBooks, for example. Among the first things that you need to do when using QuickBooks – or any other system, for that matter – is to set up your “Chart of Accounts”. ...That is how you know the difference between your marketing costs, and your advertising expenses, for example – and how to track your online advertising expenses separately from your radio advertising. ... • Inventory: This should reflect the cost of goods that you have on hand, but are not yet sold. • Accounts Receivable: This account is used to record amount owed to the company for goods that have already been sold, or services already performed. ... • Sales – Products: Usually, this account has a number of sub-accounts to reflect the various products or product lines offered by the company. • Sales – Services: This account might have a number of sub-accounts to reflect the various services or service lines offered by the company. ... • Bad Debt: This account would reflect any amounts owed for goods or services sold, for which payments have not be received, and which the company will not longer pursue. ...This list should help you get started setting up you chart of accounts, but it is possible – even likely – that you will need other accounts that will require additional assistance.

Entrepreneurship & Well-Being

Corporate Service Center, Inc. — 2009-11-18T14:54:57-08:00

If you are not familiar with it, the Gallup-Healthways Well-Being Index tracks and measures the emotional, psychological and physical health of Americans across all sectors. ...Recently, Gallup-Healthways published a report that demonstrated that entrepreneurs have the highest overall well-being of any occupational group – despite the fact that business owners work longer hours than any other category. The research shows that working long hours doesn’t actually diminish one’s well-being with the exception of those who are not really engaged in their work. ...The ranking is based on job satisfaction, the ability to use strengths at work, and the level of trust and openness in the work environment. ...This metric is based on access to basic needs, such as food, shelter, healthcare, and a safe, satisfying place to live. Entrepreneurs placed fourth in this category, trailing Manager/Executives, Professionals, and Clerical. ...Interestingly – but perhaps no surprise – those working in the Farming/Forestry sectors lead this category, followed by Professionals, Manager/Executives, and Entrepreneurs. ...This sub-index measures four behaviors strongly linked to physical health: eating healthy, smoking, regular consumption of fruit & veggies, and frequency of exercise. ...Construction workers rate in a statistical tie with Manager/Executives, then Professionals, Sales, Installation, Farming/Forestry, followed by Entrepreneurs. ...This measures where people evaluate their present and future lives on a scale of 1 to 10. Entrepreneurs rank fourth in this category, trailing Professionals, Manager/Executives, and Sales workers.

New IRS Retirement Plan Navigator Aims to Help Small Business

Corporate Service Center, Inc. — 2009-11-18T14:54:08-08:00

WASHINGTON — The Internal Revenue Service has created a new Web-based tool to help small business owners determine which tax-favored pension plan best suits their needs and how to keep their plans in compliance. The IRS Retirement Plan Navigator is intended to provide employers with an easy-to-use guide that focuses on three areas: choosing a plan, maintaining a plan and correcting a plan. By using the navigator, employers may find that choosing and maintaining a pension plan is not as daunting as they thought. ... The navigator does not suggest which plan may be best for a specific employer but it does lay out the options to allow them to choose one that best fits their situations. The navigator includes a side-by-side comparison of pension plans and their requirements. ...Employers can minimize problems by doing a once-a-year review to ensure they maintain compliance. The IRS also recognizes that mistakes can be made unintentionally, and many errors can be corrected without notifying the agency. The navigator offers suggested options to employers seeking to correct errors and bring their plans back into compliance.   Although the Retirement Plan Navigator is aimed at small business owners, it also can help mid-size businesses review their options as well. Individuals who want to better understand their employer’s plan may also find it of use. The Web-based guide will be kept up to date as pension laws and regulations change.

This Month in Lawsuit Abuse

Corporate Service Center, Inc. — 2009-11-18T14:52:01-08:00

When a man suddenly turned in front of seven-year-old Scott Swimm on the ski mountain, Scott reacted and prevented a collision. Instead, he passed over the man’s skis, and both Scott and the man lost their balance. As Scott stood up and tried to apologize, the man grabbed Scott and threatened to sue him and his whole family.

Understanding Tax Nexus

Corporate Service Center, Inc. — 2009-11-18T14:50:48-08:00

Nexus is a Latin work for a common tie or connection, and it is a key term in business today in determining the tax jurisdiction that applies to state business taxes. ...In 2006, for example, an independent survey of over 500 small and mid-sized companies found that companies average more than $325,000 per year in annual costs to manage just sales tax compliance alone. ...This illustrates that nexus is a very complicated and fluid issue these days, as the various states are aggressively pushing the boundaries of the legal limits on their power to impose tax on businesses operating across state lines. What’s worse, the penalties for underreporting, underpaying, and under-collecting can be devastating - especially given the fact that there is no statute of limitations on state tax issues. That means that if your business is snared in a tax nexus dispute, states can go back years to collect additional revenue. ...If an auditor determines that you failed to collect sales tax from your customer, the result is that you just decreased your profit margin by the percentage of the sales tax. ... Imagine what would happen if a state tax auditor determined that you failed to collect state sales tax - and that sales tax rate is 9% - there goes your entire profit margin! ...Many state and local governments have outsourced this tax collection process to private companies that collect a bounty on any tax revenues they identify. ...An answer to a survey question by one of your vendors (or a state tax audit of one your vendors) could target your company for an audit appointment. ...If, after assessing your operations, you find that you have established tax nexus, the law requires you to register in those jurisdictions and begin paying taxes. ...Contact a tax professional, such as one of our tax team at NCH Tax Solutions, to discuss your nexus activities and help manage your nexus exposure.

Small Business Lending Has Not Bounced Back

Corporate Service Center, Inc. — 2009-11-18T14:50:05-08:00

Although many of the nation’s banks are reporting an increase in small business lending, there is a growing sense of apprehension about the commercial lending markets that are keeping many lenders on the sidelines - and many small businesses without capital. According the Wall Street Journal, JPMorgan Chase claims to have issued $1.5 billion in loans to over 4,000 small businesses during the second quarter of 2009 - an increase of 32% over the first quarter. The country’s top 22 banks that received capital injections from the U.S. government have all reported similar increases. One of the factors in this increase in small business lending has been the Small Business Administration’s increase in it’s 7(a) loan guarantee from 75% to 90%. Unfortunately, the SBA also reports that it is running out of funds for the program that has been so successful. Still, small business lending is not currently as vibrant as it once was, and may not return to previous levels soon. The Wall Street Journal quotes Bob Coleman, a small business banking analyst as saying, “We’re still in a recession. We’re not talking Armageddeon here, but it will likely remain tough for businesses to get loans.” The problem appears to be rooted in a lack of solid private backing for small business loans - especially loans for commercial real estate and equipment. ... As many business owners have seen their credit scores slide, they have lost the ability to qualify for loans individually. This underscores the need for companies to establish, build and preserve an independent business credit profile and score for when the lending market returns.

Fourth Quarter Tax Planning

Corporate Service Center, Inc. — 2009-11-18T14:47:55-08:00

Now that we have entered the fourth quarter of 2009, it is time to start looking at tax planning issues while there is still time to make adjustments and decisions that can favorably impact your taxes this year. Taking action early enough can mean tax savings for the year and for years to come. ...It is always a good idea to periodically review the form of business that you are currently using. Depending upon your strategic needs, there can be advantages to using different entities for different tax outcomes. If you are using a “C” corporation, you should consider whether you should be preparing to file “S” corporation status for the coming year - or not. ...Take advantage of the increased dollar limit for first-year expensing ($250,000 in 2009). ...Generally, taxpayers must offer the goods for sale at a reduced price in order to take a loss on the decline in the value of the inventory. ...Review your supplies and reorder now to increase deductions for the current year. Also, you can schedule company meetings this year that are slated for next year in order to increase deductions. ...Generally, for a corporation to avoid paying penalties for underpayment of taxes, it’s estimated tax payments must be at least the lesser of the following: ... • 100% of the tax shown on the prior year’s return.

The November 2009 The Founder's Summit!

Corporate Service Center, Inc. — 2009-12-18T13:04:51-08:00

In November's episode, Derek and Cort talk about the economic recovery and a recent study on the background traits of entrepreneurs. Also in this episode is an interview with Dave Hall, CPA on year-end tax planning, and an extended interview with one of our clients, Chingho Lu, about “land banking” opportunities for real estate investors.

Business Credit Update

Corporate Service Center, Inc. — 2009-12-18T13:03:35-08:00

One of our most popular services is our BizCredit™ Accelerator program, that helps new businesses build and develop a business credit profile that is separate from the individual. The last 18 months has seen many dramatic changes to the way credit providers handle all aspects of credit, including eligibility, reporting, and more. Here are a number of items that we’ve seen pop up in the past month that reflect some of the most recent changes: ...), has changed their credit reporting policy in a way that is having a huge negative impact on small business cardholders. Traditionally, small business credit cards don’t appear on the personal credit report of the business owner unless the card goes into default. This separation between business and personal credit works to the advantage of the business owner, especially if the business is carrying credit significant balances, or uses a business credit card heavily in order to maximize rewards. Now, Capital One is reporting small business credit cards on the owner’s personal credit report. This has resulted in plummeting credit scores, due to the fact that balances on Capital One small business cards are hurting the owners “utilization ration” - the amount of debt carried in relation to available credit. ...While many credit companies are abandoning the business credit market entirely, Chase announced this month the introduction of four new business credit cards: • Chase Ink - is their standard small business credit card that features “Blueprint”, which allows businesses to choose which purchases they want to pay in full, and which they want to spread over time. ...This card comes with the Chase Ultimate Rewards program, with no expiration dates, no blackout dates, and no limits on how many rewards you can earn.

Personal Guarantees: Should You?

Corporate Service Center, Inc. — 2009-12-18T13:02:16-08:00

As the credit market struggles to rebound from it’s year-long collapse, more small business owners are being asked to provide personal guarantees on business loans and notes. The personal guarantee often becomes the critical do-or-die tipping point that can make all the difference in getting the loan or not. For lenders, getting the personal guarantee gives an extra level of protection and assurance that the loan will be paid. For the business owner, it is an emotional and psychological test that challenges their commitment and belief in the business model. It takes a lot of courage for a business owner to put it all on the line for the business. The practice of asking for a personal guarantee on small business lending is so common that many accept is as standard practice. For example, SBA loans requires every 20% or more owner to provide one in order to close the deal. ... If the business fails, the owners are pledging to pay back the loan anyway - even if the company has been dissolved. In practice, this means that the business owner is risking not only his/her livelihood in the form of the business, but also his/her lifestyle, including home, savings, vehicles, properties and every other asset of the business owner. ... • negotiate to pay a higher interest rate, or additional points on the loan in exchange for the lender taking a greater risk without a personal guarantee; ... • make sure your spouse does not sign the personal guarantee, and execute an asset protection strategy to focuses on building the separate property of the spouse.

The Problem with Series LLC

Corporate Service Center, Inc. — 2009-12-18T13:01:02-08:00

Traditional asset protection planning is built on the concept that business owners can separate themselves from business risk (and separate various business assets and risks from each other) by placing different assets into separately organized business entities that provide the benefit of “legal separation”. Depending upon the type of asset, the time-frame, the owner’s goals and other criteria, business entities such as corporations, limited liability companies, limited partnerships, and various types of trusts have been used to accomplish this legal separation. ...If a Series LLC, formed in Nevada, has property in a non-series-LLC state such as California, will California recognize the separateness of the internal series for asset protection purposes, or will the state apply it’s own, non-series-LLC laws and interpretation? ... The second-best answer is that each state has the power and authority to act in it’s own best interest, and is not obligated to recognize legal separation for assets within it’s borders that is owned by an entity for which it has not adopted governing laws. ...Because the bankruptcy court exists to balance the rights of debtors and creditors, it doesn’t take too much imagination to foresee that series protection could easily be set aside under circumstances that are yet to be defined. ...As a result, I suspect that a great many managers and members of Series LLCs will be unfamiliar with the fact that even when all the assets and operations within the entity is located in a state that recognizes Series LLCs, the asset protection across the various series is subject to whether or not each series has separate, complete and accurate records, including accounting records. ...Proponents of the original Delaware Series LLC Act have testified that the Series LLC was originally intended strictly as a vehicle for Delaware-based investment fund manager to maintain and operate separate regulated investment funds such as hedge funds, venture capital funds and fractional share arrangements.. ...Expect states to follow the example of California, which requires each series of a Series LLC that operates or has assets located within its borders to register separately with the California Franchise Tax Board. ...Perhaps the day will come when the Series LLC is broadly adopted by all states, and the questions and concerns about how non-Series-LLC states will interpret the separateness of internal series will be resolved. Undoubtedly, in coming years we will see a Series LLC go through federal bankruptcy, at which time we will have a much more reliable indicator as to the conditions the court will look at in order to recognize the separation of series. ...My recommendation, for what it's worth, is as follows: If all of your properties, assets, employees and operations are located within a state that provides Series LLC statutes - AND you recognize and are willing to accept the risk that the asset protection value of a Series LLC is merely theoretical for now, go ahead and use it.

Tax Audit? Here's what the IRS is looking for

Corporate Service Center, Inc. — 2009-12-18T12:58:32-08:00

If the IRS tags your business for an audit, it is important to remember that IRS auditors are trained to identify the “economic reality” of the business. This means that they will look not only at your tax return, but at you and your economic circumstances. As a result, there are a number of issues are likely to get their attention: ...If so, auditors will be looking closely to see if cash has been diverted to personal use without declaring it as income. ✓ Do you write off auto expenses for your only car? Auditors will expect to see some business deductions for auto use. Don’t expect them to believe that your only vehicle is being used 100% of the time for business. ... ✓ Are vacation costs and personal entertainment being deducted as business expenses? The IRS knows that there can be a lot of questionable deductions stored in the travel and entertainment expense category. ...If not, it can be a red flag that many other tax inconsistencies may also exist. Also, the IRS routinely audits businesses that hire independent contractors to make sure they are not really employees.

2009 Year End Tax Planning

Corporate Service Center, Inc. — 2009-12-18T12:57:06-08:00

As we close in on the end of 2009, the thoughts of most entrepreneurs turn to the holidays, family traditions, wonderful meals - and tax planning. In addition to all of the year-end planning issues that require your attention, it is also time to start looking at the coming year. ...But, the higher cap has been extended in 2009, so the maximum amount that can be written off under Section 179 of the tax code is still $250,000. ...This deduction is available for new property that has a MACRS recover period of 20 years or less. ...A small business owner with fewer than 500 employees, whose Adjusted Gross Income was less than $500,000, is able to base estimated tax payments on the lesser of 90% of the tax liability for either 2008 or 2009. ...Because of the Making Work Pay provision of the American Recovery and Reinvestment Act, there is now a refundable tax credit of up to $400 for working individuals ($800 for married taxpayers filing jointly). As a result, there are new withholding tables that impact individuals with Adjusted Gross Income less than $75,000. • Retirement Plan Contributions. 401(k) contribution limits have been raised from $15,500 to $16,000 - plus another $5,500 for those age 50 or older. ...The deduction limit has been increased to $5,950 for a family, and $3,000 for an individual. ...The IRS lowered the standard mileage rate for business use of vehicles to $.55 per mile for business miles; $.24 per mile for medical reasons or moving; $.14 for charitable purposes. ...Also, businesses can offer employees a tax-free benefit of $20 per month to cover the cost of purchasing, maintaining and storing a bicycle for commuting.

This Month in Lawsuit Abuse

Corporate Service Center, Inc. — 2009-12-18T12:55:59-08:00

• The Dallas Morning News reported on a lawsuit filed by a Dallas woman, Chris Daniel, “seeking six figures from a former neighbor and landlord for damage she says was caused by cigarette smoke wafting through adjoining walls of her high-end townhome.” According to the attorney for Estancia Townhomes, there is a solid, two-hour fire wall from foundation to roof between each of the homes. ... Daniel has evidently filed a complaint under the Texas Fair Housing Act, claiming that her sensitivity to cigarette smoke qualifies her for a disability. • The Chicago Sun Times reported on a workers compensation claim filed by a Cook County custodian, who claims she twice injured her back by “reaching around to pick up a piece of toilet paper”. ... • The San Mateo County Times reports that 60-year old Stanley Hilton has filed a $15 million lawsuit against San Francisco International Airport, claiming that his wife divorced him because of the constant airport noise. The lawsuit alleges the airport is guilty of being a public nuisance, negligence, assault, battery, fraud and breach of contract. Hilton, according the report is a former civil litigation attorney who also recently sued the property manager and owner of an office building for $20 million in August after being stuck between floors for an hour, arguing that it result in a fear of riding elevators. • Staten Island Live reported that after 12 years, a free-speech lawsuit against former College of Staten Island president Dr. ... In a settlement in which Springer admitted no wrongdoing, the judge accepted Springer’s offer of $9 - which calculates to seventy-five cents for each year of the lawsuit. ... • And finally, in a case of attorneys eating their own, the Seattle Times has a story about a Seattle civil-rights attorney, Bradley Marshall, who was disbarred after the Washington Supreme Court found he had gouged clients and bullied others into unwanted settlements. Marshall claims the Supreme Court, which is the highest court in the State, and oversees attorney conduct and discipline, exceeded it’s authority in making the move.

Ten Trillion Dollars Ain't What it Used to Be

Corporate Service Center, Inc. — 2009-01-20T12:32:25-08:00

Every business owner that I know is concerned about the long-term consequences of the government bailouts of banks, automakers, and who-knows-what-else. Nobody really knows how we are ever going to payoff the current national debt - at least in today’s dollars. An example of how it could play out is seen in Zimbabwe, which recently re-monetized it’s economy after a run of 231,000,000% inflation that has reduced the value of currency to virtually nothing. The government had to re-monetize in August - at the rate of $10 Trillion to $1 - because they had run out of room to print zeros on their currency: they even issued a $100 Billion dollar bill last July! After the re-monetization, the largest currency (for a while) was a $50,000 bill. Toilet paper cost $100,000. So, if you exchanged $100,000 Zimbabwe dollars for $5 bills, you’ll get 20,000 notes. Or you can buy toilet paper for the same price, which has only 72 pieces. You can see where this little tidbit is going...

Newspaper sues customer

Corporate Service Center, Inc. — 2009-02-02T12:31:07-08:00

In the era of the Internet, many newspapers must be feeling like they are going the way of buggy-whip manufacturers. Some papers are going out of business, and others are reducing the number of days per week that they actually print the paper. Generally, newspaper advertising comes from advertising and subscriptions. But, the Financial Times has discovered a new revenue source: Suing their customers! It seems that one of their business customers had paid to access subscription-only content on the website maintained by the Financial Times, (FT.com), and had been sharing a single username and password among its employees. As a result, FT claims that it is entitled to damages based on “infringement”, in addition to “increased statutory damages” due to the “willful nature” of the infringement.

IRS targets roll-over business startup financing

Corporate Service Center, Inc. — 2009-02-01T12:29:58-08:00

The IRS has issued a memorandum containing audit guidelines for schemes that are marketed as a means of giving prospective business owners access to accumulated tax-deferred retirement funds without paying distribution taxes in order to fund new business start-up costs. According to the memo, “an attribute common to this design is the assignment of newly created enterprise stock into a qualified plan as consideration for these transferred funds, the valuation of which may be questionable.”

The Continued Death of Privacy

Corporate Service Center, Inc. — 2009-02-05T12:27:55-08:00

Here is a sampling of President Obama’s statements at a January 21 swearing-in ceremony: ◦ “For a long time now there’s been too much secrecy in this city.” ◦ “The old rules said that if there was a defensible argument for not disclosing something to the American people then it should not be disclosed. That era is now over.” ◦ “Starting today, every agency and department should know that this administration stands on the side not of those who seek to withhold information, but those who seek to make it known.” ◦ “Let me say as simply as I can: Transparency and the rule of law will be the touchstones of this presidency.”

How Money Works

Corporate Service Center, Inc. — 2009-02-03T12:27:21-08:00

With all the news about the economic situation dominating the headlines these days, I have found in my conversations that many people don’t feel that they understand the way money works in our economy. I found a very informative website that offers a good background and explanation about how money works. It covers the money supply, the Federal Reserve System, banking, payment systems, financial markets, the role of government and policy issues - all in easy to understand, bite-sized pieces. Check it out at www.wfhummel.cnchost.com

Man awarded $76.6 million for taking foolish dare

Corporate Service Center, Inc. — 2009-02-04T12:24:54-08:00

Tim Hoffman is a 26-year old former construction worker who is essentially paralyzed from the neck down as a result of injuries he sustained when, on a dare, he jumped off a dock in Florida and broke his neck. A jury awarded him $1.5 million for past medical expenses, $89,000 for lost earnings, $21.7 million for future medical expenses, $583,000 for future lost earnings - and an incredible $52.8 million in pain and suffering. But there is more to the story. Hoffman was a temporary worker sent by an employment agency to work for C&D Dock Works, the general contractor working on repairing the dock in question. Evidently, Hoffman was goaded by fellow workers into jumping into the water on a dare for $20. So, taking a running start, he cleared the railing at the edge of the dock and landed 10 feet below on his head in a foot of water, breaking his neck between the fifth and sixth vertebrae. This foolish tragedy was the consequence of a willful decision made by an adult to do something dangerous. As for C&D Dock Works, they have filed for Chapter 7 bankruptcy as a result of the incident.

Legal Upstreaming

Corporate Service Center, Inc. — 2009-01-30T12:22:24-08:00

To upstream the income of a C corporation in your home state for the purpose of reducing state income tax. For this have any benefit, the corporation must be generating sufficient “upstreamable” profits that justify the costs associated with making the strategy work. ... We use a rule-of-thumb of 12:1 – for every $1 that the strategy costs you, you need to be able to upstream $12 to a state-tax-free jurisdiction to justify the expense. ...To divide out multiple streams of income within a company to separate active income from passive income. This is particularly effective if your company has some active income that would be taxed at a lower rate, but where the more than 60% of income is passive, subjecting it to Personal Holding Company taxation on all income. ...In this scenario, the amount of “upstreamable” profits that exist are not really the deciding factor. ... When upstreaming to legitimize an asset protection plan, it is critical that the goods, services, or financing that is the basis of the commercial relationship between the two companies is REAL. In other words, everything needs to be arm’s-length, and the services need to be provided; the products need to be real; or the loan must actually be funded – and repaid according to the terms of the agreement. ...This can be a sticky issue, and probably needs an attorney’s review before you run with it. No matter what the strategy is, it won’t hold up unless it is completely verifiable, legitimate and documented. And, the company that receives upstreamed funds must have a defensible nexus of operations in the target state.

Bad Economy = Great Estate Planning Opportunities!

Corporate Service Center, Inc. — 2009-01-15T12:19:17-08:00

The annual gift-tax exclusion was recently raised to $13,000. Combine that with strategies such as loaning money or self-financing the sale of assets to family members at low-interest loans, or using “grantor-retained annuity trusts” (GRATs), it is possible to transfer significant assets out of your estate - as well as move potential appreciation out of your future estate. ...Next year, the estate tax is scheduled to disappear completely, only to reappear in 2011 with a $1 million exemption and a top rate of 55% on large estates. President Obama has said he favors extending the current $3.5 million personal exemption and capping the estate tax rate at 45%, but nobody really knows what the future holds. We do, however, know that today the tax rules and the economy have combined for a “perfect storm” of opportunity for estate planning. ...Making direct gifts up to the $13,000 cap. With depressed stock and real estate prices, this gift is more valuable than ever. ...If you don’t want to make a direct gift, you can still lend money to a family member who can’t otherwise qualify for a loan. The IRS sets the minimum interest rate for these transactions, which, this month range from .60% to 2.96%, depending on the maturity rate of the loan. ...Loaning to family members, and forgiving part of the loan each year through the annual gift tax exclusion. Do the math on that, it you can see that there are some powerful benefits.

10 Keys to Surviving the Recession

Corporate Service Center, Inc. — 2009-02-06T12:09:12-08:00

The common chatter heard from talking heads and prognosticators is that we should see the beginnings of a recovery in 6 months - or 9 months - or 12 months - or 18 months, etc. ... (For example, economists generally agree that we were in a bear market cycle from 1966 to 1982 - a period lasting 16 years; and that we experienced a bull market from 1983 to 2000 - a period of 17 years.) ...If you can reduce costs and still focus on critical priorities that differentiate your company from you competitors, that is wonderful. ...In 1981 (which was in the midst of a recession), Jack Welsh gave a speech in New York City where he outlined a strategy for success for General Electric. ... This provides even small companies like yours with the opportunity to hire a level of talent that was inaccessible even a year ago. By increasing the quality of his managers and employees - and then raising the expectations of their performance - Welsh guided General Electric to success in the midst of economic difficulty, and was named “Manager of the Century” by Fortune magazine. ...Jack Welsh decided that General Electric should only be in a business in which it could be #1 or #2. ... Spend your energies improving those things, and consider dropping products or services where you don’t - or can’t reasonably - offer the best. ...The hard reality is that not every company - even well-run companies in good markets - will survive this economic cycle. ... But, the scars can be limited in scope, and it is much easier for entrepreneurs to be able to rise again to chase another dream if they have protected their assets along the way. ...Business owners that do not act quickly enough to today’s economic challenges can find themselves in a death-spiral of cutting costs only after revenues slide.

Why asset protection? Because of stories like this...

Corporate Service Center, Inc. — 2009-01-17T11:57:46-08:00

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The California Train Wreck

Corporate Service Center, Inc. — 2009-01-26T12:01:05-08:00

• California is facing a $42 BILLION deficit, and is on the brink of insolvency • More people left California last year than any other state • The State Controller has stopped sending out tax refunds - money that belongs to the taxpayer - because it can't afford it. (If a business did that, the Federal Trade Commission would be all over it!) • California has the some of the highest personal income and sales tax rates in the entire country • California's unemployment rate is approaching 10% Any chance these factors result in lower California personal and business taxes? I don't think so, either.

Frivolous Lawsuits are so ridiculous - they are actually funny!

Corporate Service Center, Inc. — 2009-01-14T13:32:26-08:00

Small Business Survival Index ranks Nevada 2nd for business friendliness

Corporate Service Center, Inc. — 2009-01-12T14:41:46-08:00

The 13th annual "Small Business Survival Index," compiled by the Oakton, Virginia-based Small Business & Entrepreneurship Council, ranks Nevada second nationally for its friendliness to small businesses -- second only to South Dakota -- primarily because of the Silver State's favorable tax structure, the nonprofit small business advocacy group recently announced.

5 Steps to Obtaining Business Credit in Tough Times

Corporate Service Center, Inc. — 2009-01-06T14:23:22-08:00

“We work with businesses large and small in helping them secure financing needed to grow their business such as working capital, capital improvement and more. The one thing we’ve noticed over the last several months is that while it’s true banks may be hesitant to issue mortgages and want 10 to 20 percent down payment, unsecured lines of credit up to $100,000 are still readily available if you have been in business more than two years and have a good business and personal credit score.” ...Being late as much as one time on a bill can have a negative effect on your credit score. ...Lenders like to see you have the discipline not to extend your credit lines, that you “do not need the money” so to speak. ...Having one credit card with a $10,000 limit and $9,000 balance will impact your credit score far more than three credit cards with a total credit limit of $30,000 and a balance of $5,000 on each. ...Keep lines of credit separate from your partner or spouse - whether it’s financing a car, obtaining a credit card or conducting any transaction that involves borrowing money; if possible do not sign jointly on the account. ...People who rent a home do not have an anchor to hold them in one place if things go wrong. People with a home typically will fight harder to make things right and it is much harder to pick up and leave when you have to sell a home. From a character standpoint, it shows you are invested, figuratively and literally, in the place where you live. Adds Chalif, “While planning and credit scores play a major role in obtaining lines of credit, so does the key component of any transaction-the lender. Many small business owners get locked into the mindset that their bank is the only place they can turn to for a line of credit.

Lend-ability: Your Business Practices Can Impact Loan Qualification

Corporate Service Center, Inc. — 2009-01-06T14:20:51-08:00

But, there is a point at which the numbers - however they are painted - can impact your lend-ability as a company. If you are like many of our clients, you are using your Nevada corporation or LLC for a specific strategic advantage or benefit, it could be more likely that you could be using business practices that could negatively impact your lend-ability. To illustrate, consider a fictional Nevada company as an example: Tajax Industries is incorporated in Nevada and owned by James Smith. ... In order to take advantage of a new market opportunity, Tajax needs additional funding in order to finance the purchase of additional product for importation. James applies to an SBA lender bank for the financing, and provides all the documentation, including financial statements and tax returns. ...They determine the business is marginal at best, and is too high of a risk to qualify for the funding. ...Here are some of the things the bank might not have considered - some “damn lies” that were hidden by the statistics on the financial statements: ...The rent is adjusted to fair market value; salaries are adjusted to fair market, and “reasonable”; the son is removed as an employee; the financials are reported on an accrual basis, significantly increasing the value of the business, and; the perks are adjusted to remove personal expenses. ...Now the company shows a 19% rate of return on capital, the business is valued at $1.3 million, and the loan is approved. So, when trying to access business credit, the “statistics” on your financial reports might be telling a different story than you expect. Think through the “damned lies” that might be hiding in your financials before you submit loan applications to lenders.

IRS Commissioner Discusses Corporate Taxes with International Conference

Corporate Service Center, Inc. — 2009-01-06T14:19:06-08:00

He explained that these attitudes and perceptions draw “sharp lines” between classes of taxpayers, a separation that he calls “Wall Street versus Main Street” that pits the typical family against global corporations. This divide, according to Shulman, has many taxpayers and policymakers looking to ensure that corporations pay “their fair share” of the nation’s tax burden. ...“Call it what you will - fallout or consequences - but I believe that the events of the past year will create increased public pressure on corporate taxpayers to adhere to not only the letter of the law, but the spirit of their home country law,” Shulman added. Noting that “some of these tax strategies” used by corporations “can be legal”, Shulman acknowledged the difficulty for legal and tax advisors attempting to comply with the myriad of tax laws they face, especially in the arena of international business. ...“I recognize that transfer pricing is not easy to manage - even for those taxpayers that aim to seer clear of any grey area,” said Shulman. ...This includes the use of hybrid legal entities or instruments with the intention of excluding income from taxation or double-dipping on deductions and/or tax credits. ...“Today, the IRS will add withholding taxes to the Tier I list of issues” to add the appropriate priority to ensure compliance with federal withholding tax laws. ...“I want to repeat that undisclosed foreign bank accounts are, and will ever remain, a top priority for the IRS.” For most business that operate outside of the international arena, these IRS priorities and their associated initiatives may have little short-term impact. ... The definitions and standards that are used to control international transfer pricing may become the de facto standard for inter-state transfer pricing transactions as well. Attacks on hybrid business entities (such as LLC’s that have the ability to allocate income with great flexibility) based on their tax outcome will undoubtedly establish some precedent that might be also used in an inter-state business arrangement.

Your State Tax Bill is Likely to Go Up - Maybe WAY Up

Corporate Service Center, Inc. — 2009-01-06T14:10:06-08:00

Schwarzenegger refused to sign a bill with $9.3 billion in new taxes, disguised as “fees.” ...According to the non-profit Tax Foundation, California already has the third highest individual tax rate (topping out at 9.3%) described as “the most burdensome in the nation” - not counting an additional surtax of 1% for millionaires. California’s business tax climate is equally bad - 47th in the nation - when factoring income, sales, unemployment insurance and property taxes. The per capita tax burden in California is $5,028 - that is, for every man, woman and child! ...Since the state imposed the additional 1% tax on incomes over $1 million, the number of millionaires in Los Angeles County alone dropped by 7,000 households. ...The Washington Times reported that governors are proposing higher taxes on clothes, soft drinks, gasoline, auto registration, drivers licenses, and other items that impact low- and middle-income families. ...Paterson has proposed a 137 new or increased taxes, including an 18% “anti-obesity tax” on non-diet soft drinks. ...All totaled, at least 38 states are anticipating budget deficits totaling approximately $80 billion, with this number likely to grow. The Center on Budget and Policy Priorities estimates that this number may reach $145 billion by 2010. According to the Cato Institute, “states should have been retrenching after budget increases of 7 percent over the last two years, but they repeated the same mistakes they made in the late ‘90s, assuming the good times were going to last forever.” Chris Edwards, Director of Tax Policy Studies for the Cato Institute, points out that a report by the National Association of State Budget Officers showed that spending across the 50 states increased 6.5% in 2005, 8.7% in 2006, 9.3% in 2007 and 5.1% in 2008.

Estate Planning & the Pittsburgh Steelers

Corporate Service Center, Inc. — 2008-10-23T10:24:06-07:00

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State Tax Collectors Bill Online Braggers

Corporate Service Center, Inc. — 2008-10-23T10:22:42-07:00

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Lawyer Defrauds Client Estate

Corporate Service Center, Inc. — 2008-10-23T10:20:42-07:00

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Strip Club Sued

Corporate Service Center, Inc. — 2008-10-23T10:18:58-07:00

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33 Year Old Lawsuit Resolved

Corporate Service Center, Inc. — 2008-10-23T10:17:13-07:00

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Warren Buffet's 10 Rules to Success

Corporate Service Center, Inc. — 2008-10-23T10:10:22-07:00

This makes sense not only in the stock market, but in a small business as well. Entrepreneurs who bleed all the profits out of a business find that they may struggle to grow the business into something larger and more valuable. ...Doing what everybody else is doing - the same way they are doing it - is the recipe for becoming average. ...To Buffet, any time wasted to get to a decision is just “thumb sucking”. ...So, advantage of that opportunity to spell out the details and specifics of any deal before you start. ...In the investment world, this translates into watching not just the returns offered by investment funds, but also the fees charged by the fund managers. This is so true in every aspect of small business and personal finance, as well. ...This is a very counter-cultural (see #2) contrast to those who preach getting rich using Other People’s Money. ...If you’ve done your research, taken care of the details, watched your expenses and stayed out of debt, your success through persistence may only be a matter of time. ...This helps clarify the risks and rewards for any venture, which is critical to the decision making process. ...As he says, “When you get to my age, you’ll measure your success in life by how many of the people you want to have love you actually do love you.”

11 Ways to Protect Yourself from Business Risk

Corporate Service Center, Inc. — 2008-10-23T10:04:06-07:00

Incorporating allows you separate yourself from your business risks, and that is critically important today. However, there may be additional opportunity to divide higher-risk business activities from lower-risk or asset-rich activities by placing these activities in separate limited liability business entities. ...Put it in writing and have them confirm your understanding of the agreement. ...So, get an attorney to review your contracts before you sign them, and you may save yourself a lot of problems - and potential litigation. ...If you don’t check the credit worthiness of parties to whom you provide trade credit, you will lose control over the collectibility of those accounts. ...You can buy insurance against almost anything that can go wrong in business, including theft, fire, damage to expensive equipment, officer or director liability, product defects, errors and omissions, etc. ...State and local jurisdictions can have a variety of business licenses and permits that your business needs to have. ...You need to know what you can and can’t do, say, or ask when hiring, reviewing, disciplining or terminating employees. ...What will you do if your company experiences a natural disaster, or loses key employees to sickness or accident? ...Unfortunately, if you over promise, you put yourself and your company in a position that is not only difficult to defend. That is not the position you want to find yourself if the matter creates a dispute that lands you in court.

Business Litigation to Increase in 2009

Corporate Service Center, Inc. — 2008-10-23T09:59:38-07:00

Increasingly, arbitration is being used by small business as a method to reduce the cost of resolving employment disputes. However the study reveals that almost one-third of all small companies have spent between $50,000 and $100,000 per dispute, with 25% spending more than $100,000. Other reasons given in the study for the anticipated increase in 2009 lawsuits include: • Exposure to sub-prime and other real estate securities ... • Non-payment of bills by consumers in a down market ... • Employee termination or disciplinary actions ...Over the past year, the most numerous pending litigation cases involved labor/employment, contracts and personal injury. These litigation issues have consistently been top performers for trial lawyers in recent years. According to the survey, Texas and California led all states as the most active jurisdictions for business litigation, with the U.S. accounting for 80% of all business litigation in the world. The survey was not limited to civil litigation, however. The survey also found that almost 30% of all companies in the U.S. have received a grand jury or government subpoena or administrative summons in the past year, with 7% of smaller companies receiving three or more.

Nevada v. Wyoming

Corporate Service Center, Inc. — 2008-10-20T15:17:32-07:00

(For the record, Nevada does not share state data with the IRS, but it does receive federal data on state entities, making the information sharing a one-way street.) This factor provides Wyoming with no advantage over other states that do not collect financial data, such as Nevada. ...In practice, most information that is available to the IRS is provided by banks and other financial institutions, who collect a significant amount of data in compliance with the “know your client” provisions of the U.S. ...In fact, the Government Accountability Office issued a report (“Company Formations: Minimal Ownership is Collected and Available”) in 2006 that outlined what they perceive as weaknesses in state incorporation procedures and record keeping because ownership privacy is essentially provided in every state. ...In order to pierce the corporate veil, and attach assets of individual owners to satisfy the debts and obligations of the business, a court must apply a legal doctrine known as “alter ego” theory, which establishes that the business and the individual cannot be separated. ... Under Nevada statute (NRS 78.747) alter ego can only be applied when all three of the following factors are present: a) The corporation is influenced and governed by the individual; b) There is such a unity of interest and ownership that the corporation and the individual are inseparable from one another, and; c) To keep the corporation separate from the individual would be to promote fraud or manifest injustice. This is the “best” corporate veil protection available, because it relies on the standard of “fraud or manifest injustice”, which requires evidence of ill intent to proceed with veil piercing. Wyoming code (17-16-622) states that “unless otherwise provided in the articles of incorporation, a shareholder of a corporation is not personally liable for the acts or debts of the corporation EXCEPT THAT HE MAY BECOME PERSONALLY LIABLE BY REASON OF HIS OWN ACTS OR CONDUCT.” ... This general principle can be applied broadly by the court, to include numerous “acts” by the individual that fall far short of Nevada’s “fraud or manifest injustice” standard, including such things as commingling funds, failure to maintain corporate formalities, undercapitalization, failure to maintain arm’s length transactions, etc. ...While piercing the corporate veil can allow a creditor to “pierce” through the business to attach the assets of the owner, the concept of reverse-piercing is, as the term implies, the reverse: it would allow for piercing through the ownership to allow access to the asset of the business in order to satisfy a debt or obligation of a shareholder. ... Nevada is the only state to provide protection from reverse piercing through its application of a charging order on the stock of closely-held corporations with between 2 and 75 shareholders.

Rhode Island nightclub fire settlement

Corporate Service Center, Inc. — 2008-09-22T11:11:31-07:00

by Derek G. Rowley (c) 2008. All rights reserved. LAS VEGAS - You will recall the tragic 2003 nightclub fire in Rhode Island that occurred when the rock band Great White set off fireworks in the club that ignited soundproofing foam, killing 96 and injuring over 200. I saw a news report that Clear Channel Communications, which owns a local radio station that helped promote the concert, recently settled for $22 million, even though they had nothing to do with the fire. Apparently Rhode Island’s “joint and several liability” laws allow for the liability to extend to anyone with the remotest connection to the event. Thus, JBL Speakers settled for $815,000 because their speakers contained flammable foam; Anheuser-Busch settled for $5 million and their local distributor for $16 million because their beer was sold at the nightclub; the manufacturer of the foam paid $16 million - even though their foam was not designed for the way it was being used; WPRI-TV paid $30 million because their cameraman’s equipment allegedly blocked an exit. WPRI was there to do a story on the fire dangers of nightclubs when the fire broke out.

Most Downloaded: Social Security

Corporate Service Center, Inc. — 2008-10-01T11:10:08-07:00

As our population continues to age, with the Baby Boomer generation starting into retirement, businesses need to identify how to tap into that growing market. A recent email I received reported the “most downloaded” legal reports accessed by lawyers over a 60 day period. The winner? A Guide to starting Social Security benefits.

Drunken lawsuit

Corporate Service Center, Inc. — 2008-08-25T11:06:52-07:00

Rowley (c) 2008. All rights reserved. LAS VEGAS - In May, 2005 a man in Connecticut drank 5 large margaritas at a restaurant and then walked to the New Haven train station. According to court documents, he claims that the ticket agent sold him a ticket and told him the train was waiting on track number eight, and he’d “better hurray”. So, he drunkenly stumbles onto the first train he finds - an out-of-service metro train. The doors close and the train travels to the train yard, about 10 minutes away. When the doors opened, the man saw that there was no train platform. He looks down and can’t see the ground. So he jumps from the train, spraining his ankle. And then he files a lawsuit. On July 11th, the Judge threw the case out.

Top Ten Things millionaires don't want to reveal

Corporate Service Center, Inc. — 2008-09-08T11:03:44-07:00

Smartmoney.com surveyed millionaires and compiled the top ten things that millionaires don’t want to reveal: ▪ “You may think I’m rich, but I don’t.” A millionaire in 1945 would need $12 million today to be in the same position. ... ▪ “I didn’t get rich by skimping on lattes.” The most common path to wealth is entrepreneurism - starting a business. ...Many of the wealthy consider the value of their time to be worth more than to spend it doing menial tasks. ▪ “You don’t get rich by being nice.” ...The median college GPA of millionaires is 2.9. Most credit their success to hard work and determination, rather than “smarts”. ... ▪ “You worry about the Joneses - I worry about the Trumps.” There is a growing disparity between the middle-class rich and billionaires

IRS warns about outsourced payroll

Corporate Service Center, Inc. — 2008-09-02T11:02:10-07:00

by Derek G. Rowley (c) 2008. All rights reserved. LAS VEGAS - The IRS recently issued a warning to employers that outsource their payroll responsibilities to third-party service providers to be aware of certain potential problems. First, they remind employers that they are ultimately responsible if the provider fails to make payments. Second, they don’t recommend that you change the address of record on file with the IRS, so if there is problem you will know about it. Third, they recommend that you have the payroll provider post a fiduciary bond to protect you. And fourth, the IRS recommends that you ensure that your payroll provider uses Electronic Federal Tax Payment System (EFTPS) so you can confirm that payments are made on your behalf.

Dog sued

Corporate Service Center, Inc. — 2008-09-05T11:00:11-07:00

by Derek G. Rowley (c) 2008. All rights reserved. LAS VEGAS - The Macomb Daily reported on August 31 that a woman who claims the city police dog, named “Liberty” bit her on the buttocks has named the dog as an additional defendant in the lawsuit against the city. Attorney Charlie Langton is quoted as saying “I’ve never heard of that. A dog can’t be a party to a lawsuit.” He added, “It raises a lot of legal questions. How do they serve the dog, put it in his mouth? Is the dog going to have court-appointed counsel? Will the dog be able to sit in on the proceedings? This is a case you can really sink your teeth into.”

Financial turmoil impacts living trusts

Corporate Service Center, Inc. — 2008-09-17T10:57:24-07:00

LAS VEGAS - For years, legal practitioners and estate planners have advised clients to carefully think through the appointment of successor trustees named in living trusts. That advice has never been more relevant than now, as financial titans on Wall Street and elsewhere reel from the impact of our latest financial crisis. In light of the financial meltdown, now is a good time for you to review your trust and estate planning documents to look for potential problems. ...However, the traditional “catch-all” has been to name an additional successor trustee that is thought to be guaranteed to outlive any individual by naming a prominent national or regional bank as a corporate trustee. The reason for this is that the existence of a corporate trustee will ensure that the provisions of the trust will be carried out by someone with professional fiduciary responsibility. Today, however, that strategy may need to be re-evaluated as some of the biggest names on Wall Street and other regional and local banks are shut down, seized by regulators and their assets sold. This can result in an unanticipated change in the actual corporate trustee, often resulting in long-distance frustration for future beneficiaries. It is important to note that the trust assets held by a corporate trustee are not counted as property of the trustee, so they will not be directly impacted by the failure or bankruptcy of a corporate trustee. Nevertheless, the trust assets can be seriously impacted my market conditions, without any clear path for how trust assets should be invested to weather financial storms. While there may be no clear solution to these challenges, those who are aware of these potential problems may avoid serious future problems by reviewing how their living trust addresses these issues, if they are addressed at all. ... Fortunately, the beauty of the living trust is that it is revocable, allowing the individual who created the trust to make any necessary changes in the trust as long as they live.

Writings of UCLA law professor can highlight Nevada corporate advantages

Corporate Service Center, Inc. — 2008-09-15T10:54:04-07:00

Not to be stereotyped as a high-brow elitist intellectual, Professor Bainbridge maintains a family of blogs at www.professorbainbridge.com that offer a broad range of commentary “on law, politics, religion, culture & food” that is definitely worth reading. In 2007, Professor Bainbridge published an article, “Piercing the Corporate Veil in California” which exposes the alarming breadth of activity that can be used to pierce the corporate veil in California - and allow creditors to hold individual shareholders personally liable for corporate debt or obligations. ...Instead, it relies on California case law to provide limited liability; and that case law - as all case law does - is constantly evolving and subject to interpretation of an increasingly liberal and anti-business judiciary. Bainbridge writes that the case law of California courts provides for “an astonishingly large number of factors to be considered” in order to pierce the corporate veil, all with little guidance as to how the factors should be weighted, balanced or considered. ...Not only is the sheer number of possible factors that can pierce the corporate veil astonishing, as Bainbridge put it, but when some of these factors are considered individually, they are all the more astounding. ... California recognizes something called “Enterprise Liability”, which holds the entire business enterprise liable - including all divisions, subsidiaries and shareholders - for a debt incurred by one part of the business. All of these issues stand in stark contrast to Nevada, where the number of successful veil piercing cases can be counted on the fingers of one hand - and where in every instance the court found the presence of fraud. ...“Except as otherwise provided by specific statute, no stockholder, director or officer of a corporation is individually liable for a debt or liability of the corporation, unless the stockholder, director or officer acts as the alter ego of the corporation. A stockholder, director or officer acts as the alter ego of a corporation if: the corporation is influenced and governed by the stockholder, director or officer; there is such unity of interest and ownership that the corporation and the stockholder, director or officer are inseparable from each other; and adherence to the corporate fiction of a separate entity would sanction fraud or promote a manifest injustice. The question of whether a stockholder, director or officer acts as the alter ego of a corporation must be determined by the court as a matter of law.” ...Nevada provides no opportunity for analysis as to whether the stock is owned by members of a family, or if there is a shared attorney or business address, etc.

Jury finds California tax board guilty of fraud

Corporate Service Center, Inc. — 2008-09-04T10:51:03-07:00

In 1968, he advanced the concept of the integrated circuit when he developed the method for including all the pieces necessary to operate a computer - other than the memory and interface - in one place. ...While Hyatt’s patent application worked its way through the bureaucracy of the patent office, three engineers from Intel Corporation created the first commercially viable microprocessor. ... Gilbert Hyatt thought that was unfair, and fought the perception of Intel as the inventor of the microprocessor until 1990, when the U.S. ...So in 1991, Hyatt, a multi-millionaire electrical engineer and inventor with more than 70 U.S. patents, moved from La Palma, California to Las Vegas. ...The California Franchise Tax Board was not happy to see Hyatt - and the hundreds of millions of dollars in licensing from his patents - move from the state. So, they arbitrarily claimed that Hyatt was a California resident through 1992, and assessed millions of dollars in income taxes for those years, in addition to imposing harsh penalties alleging that Hyatt had committed fraud against the state by moving. Unable to resolve the dispute with the California tax bureaucracy using facts, logic and reason, Hyatt filed a civil lawsuit in 1998 in the Clark County, Nevada District Court. In his lawsuit against the California Franchise Tax Board, Hyatt alleged fraud, intentional infliction of emotional distress, abuse of process, breach of confidential relationship and invasions of privacy. ...In the actual trial, an eight-member civil jury ruled unanimously against the California Franchise Tax Board, finding the allegations of fraud, abuse, and privacy invasions to be true. On August 4th, 2008, the jury awarded Hyatt $138.1 million in compensatory damages, and an additional $250 million in punitive damages on August 14th. ...John Barrett, spokesman for the tax authority in Sacramento told the San Jose Mercury News that, “we’re reviewing the matter and hope to have a decision soon.”

Wisconsin pierces the corporate veil over violation of consumer regulations

Corporate Service Center, Inc. — 2008-07-02T15:05:06-07:00

Hinkston writes that, in Wisconsin, "the vast majority of 'alter ego' piercing cases involve attempts to pierce small, closely-held corporations (in which the number of shareholders and their interrelationship - often as family members - lend to the entity less formality than in larger entities) to pursue individual shareholders. Wisconsin courts have applied the 'alter ego' doctrine to impose personal liability in scenarios in which: 1) a corporation had no assets and the shareholders made little attempt to hold meetings or maintain records... and 2) two brothers, as sole shareholders in various corporations, operated the corporations as a giant cash box with many drawers, adding or removing from the drawers as desired without documentation to permit subsequent identification or reconstruction of the transactions." ...Reeves Custom Builders Inc., the Wisconsin Court of Appeals considered what it called an issue of first impression under Wisconsin law, namely whether the consumer protection regulations relating to home improvements "pierce the corporate veil and allow for personal liability against individual wrongdoers." ...The Rayners contended that personal liability could be imposed on the Reeveses because, as officers, they fit within the Code's definition of a "seller": a "person engaged in the business of making or selling home improvements [including] corporations, partnerships, associations and any other form of business organization or entity, and their officers, representatives, agents and employees." The Reeveses, on the other hand, argued that the phrase "and their officers, representatives, agents and employees" was merely intended to make employers vicariously liable for those individuals, with no personal liability imposed. ...Anew Health Care Services Inc., in which the Wisconsin Supreme Court held that the Americans with Disabilities Act (ADA) did not make an employer's agent personally liable for ADA violations. The court of appeals rejected the Reeveses' argument, finding that although under the ADA the term "employer" included "any agent of such person[s]," the considerations that led the supreme court to conclude that there was no personal liability under the ADA would not apply in the home improvement context. ...The court held that there was insufficient evidence to impose personal liability on Beth Reeves, because although she was a shareholder, her role was merely typing some documents, doing some of the corporate books, answering the telephone, and performing administrative functions. ...For example, under Wisconsin's Motor Vehicle Repair Code (chapter ATCP 132), a repair "shop" is defined as "any natural person, corporation, partnership, or other business association or entity engaged in the motor vehicle repair business, and includes all owners, officers, employ[ees] and agents of the shop." ... In view of these definitions, it is reasonable to assume that the court's logic in Rayner may apply in these other contexts to impose personal liability, but - as in Rayner - only to the extent the individuals have the power to prevent unfair dealings with consumers and "only when they commit violations of their own volition and design." ...In view of that precedent, officers should take action to ensure that their company does not run afoul of regulations that govern their business, because if a violation does occur, the officers may be held responsible if they sat back and failed to act."

California Gets Caught

Corporate Service Center, Inc. — 2008-04-14T14:49:04-07:00

Northwest because the fee was calculated by reference to the total income of an LLC that conducted ...The decision of the Court of Appeal in Northwest is final as to the ...and operative for taxable years beginning on or after January 1, 2007), LLCs paid an annual fee ...assessing an LLC fee on an entity that had no income attributable to activities in California ...The Franchise Tax Board received a number of claims for refund from LLCs based upon the above ...Because the decision in Northwest with respect to the LLC fee is now final, action can be taken on claims for LLCs that have the same facts as were involved in that case (i.e., an LLC that ...If you filed a claim with facts that are similar to those involved in Northwest, you must provide the ...A statement that the LLC did no business in California for each of the taxable years for ...the claim will not be acted upon until the other cases involving the LLC fee have been decided and ...If an LLC wants to file a protective claim based on the Northwest decision, the LLC or its

Charging Order Protection for Nevada corporations

Corporate Service Center, Inc. — 2008-08-20T00:53:23-07:00

Assets that cannot generally be directly taken by a judgment creditor usually provide for other recourse, such as potential foreclosure and forced sale of assets, or the imposition of a “charging order” against future income of assets. ...The Nevada Resident Agent Association (NRAA) proposes to the Nevada Legislature that charging order protection be provided as the judgment creditor remedy against the ownership of corporate stock of small business corporations, consistent with the application of the charging order as it currently applies to limited partnerships and limited liability companies. ...The purpose and theory behind the charging order limitation is to protect innocent partners (in the case of an LP) or members (in the case of an LLC) from being forced to inherit potentially hostile parties as partners/members in a partnership-type arrangement as the result of creditor foreclosure or forced sale. ...As a result, any amounts that would normally be paid to the debtor/owner, whether as distribution of profit or by virtue of the unforced, market-value sale of the entity ownership interest – which could include the exercise of internal partnership/LLC agreement provisions allowing existing innocent partner/members to exercise buy-out options to divest the interest of debtor/owner. ...The legal theory behind for this distinction between ownership of corporate stock as compared with ownership of LP or LLC interests is that stockholders are traditionally thought to be insulated and blind from one another; they are not generally considered to have a relationship or commitment to each other comparable to the partnership. ...Likewise, the potential of foreclosure or liquidation of the stock of a judgment debtor can have the same serious and negative economic impact on innocent shareholders as the charging order seeks to forestall where the entity is an LP or LLC. ...It is intended to protect stockholders who have a partnership-type relationship with other stockholders in a small business, and who have potential to suffer economic loss in the event of foreclosure or liquidation by judgment creditors of other stockholders. ...Because the intent of this proposal is to provide charging order protection in circumstances related to small business where stockholders are likely to have partnership-type relationships, it was necessary to consider an appropriate cap on the number of stockholders in order to ensure that this measure provides small business benefits. ...Stock of a publicly traded Nevada corporation would not be eligible for charging order protection under the NRAA proposal, due to the fact the corporation’s status as a public entity removes the partnership/owner relationship that the charging order is designed to protect. ...We feel that the addition of charging order protection for Nevada corporate entities will provide the state with a significant tool to gain national market share in the incorporation market, and to continue to aggressively compete with states such as Florida, Delaware, Wyoming and South Dakota for the importation of corporate filings and its associated revenues and economic development impacts. ...If stock of a closely-held corporation is liquidated in an auction on the steps of the county courthouse under foreclosure proceedings, the creditor is unlikely to receive anything close to full value for corporate stock or assets because the forced sale does not take place in an environment that enables the stock to be sold at its highest value.

Cheat Sheet: Non Profit Companies

Corporate Service Center, Inc. — 2008-08-19T23:56:58-07:00

Tax Exemptions: Under internal revenue Code Section 501 (c) (3) a non-profit corporation is eligible for certain federal and State tax exemptions. ...Receiving Public Funds: Many organizations are required by law to donate a certain percentage of their funds to non-profit organizations or possible endanger their own tax-exempt status. ...Limited Liability for Members and Directors: As with a General, for-profit corporation, directors, trustees, and officers of non-profit corporations are usually afforded the same limited liability status. Thus, creditors of the nonprofit corporation can only reach as far as the corporation's assets to satisfy corporate debts and not the personal assets of the people involved in the nonprofit corporation. Separate and Perpetual Existence: A nonprofit corporation, like a for-profit corporation, is an entity with a perpetual existence that may outlive all of its founders. in addition, the corporation can act like an individual in that it can enter contracts, incur debt, and own property. ...The specific language in the Articles must contain provisions required by the IRS for acceptance as a tax-exempt entity. ... In addition, Bylaws must be prepared, minutes must be maintained, and certain federal and state tax exemption filings must be timely filed to attain a tax-exempt status. Federal & State Tax Filings: On the Federal level, IRS form 1023 must be completed within 15 months of the date the Articles of incorporation are filed, in order to qualify for 503 (c) (3) Federal tax Exempt status. Although certain groups are NOT required to file Form 1023, it is recommended that these exempt organizations nonetheless submit the filing to ensure that the IRS view the organization as a tax exempt entity. Only after a corporation is approved by the IRS as a Tax Exempt Organization can it be assured that it is in fact a recognized tax-exempt company. ...A private foundation must limit its holdings in a private business to a total of 20% of the voting stock in a business – which includes any stock owned by any of its disqualified persons.

Tax nexus principles for Trucking

Corporate Service Center, Inc. — 2008-08-19T23:50:55-07:00

• Trucking businesses provide a service, which is not a generally protected activity under Public Law 86-272 • The Supreme Court has given states authority to tax interstate carriers for fair and reasonable compensation to the State for services and benefits provided for use of the highways. ... • Most states provide a “minimum highway use” threshold that must be met before nexus is usually established: • Two-thirds of states indicate that nexus is created by trucks passing through on a “regular basis”. ... • The Multi State Tax Commission (MTC) has adopted a regulation that define the de minimis rule as being less than 12 trips into state, totaling less than 25,000 miles and 3% of total miles, with no in-state pickups. • Pickups and deliveries within the state often supercede de minimis rules for nexus purposes ... • New York will not assert nexus for backhauling unless those activities produce 4% or more of NY-related revenues. • In a few states, when nexus is established, it may create Use Tax obligations for the use of trucks making deliveries in the state. • Failure to file state tax returns can result in delay of goods, seizure of cargo and equipment, and penalties • States often receive regulatory information, such as fuel tax filings, which can lead to arbitrary assessments of income tax. ... 3 Allocate taxable income among the states where nexus is established, and pay those taxes, and

Asset protection strategies for real estate investors

Corporate Service Center, Inc. — 2008-08-19T22:46:58-07:00

The LLC, like a corporation, provides asset protection for its members from the liabilities associated with rental real estate. ...Unlike a corporation that can produce taxable income if you refinance the property and take the money out for additional investment, an LLC allows money to flow freely. ...For example, three properties in one LLC might be an acceptable risk of loss if the sum total of equity is less than $250,000. The number of LLCs is a personal choice but it is extremely important to choose the appropriate form of LLC to hold your real estate. All LLCs are not created equal; if you are investing in real estate you need an LLC tailored to real estate and not an off the shelf standard operating agreement that does not contain specific real estate provisions. ...The operating agreement should cover such topics as refinancing, distributions, rents, property management, lease options, and much more that only an LLC tailored to real estate would contain. ...To be a Dealer in real estate you must have intent to buy and sell real estate versus holding real estate for investment. ... If you intend to rehab property, buy depressed properties then sell for a quick profit or wholesale properties, then you definitely are treading in Dealer Status territory. ...If you are classified by the IRS as a dealer then you face losing the following tax benefits provided to real estate investors: ...To minimize both the negative tax implications and the liability associated with these activities we recommend utilizing a corporation for this form of investing. The corporation is a separate legal entity that provides asset protection for its owners and removes the business activity of quick turning property from your personal return.

Ten facts that make Nevada's corporate shield ultra strong

Corporate Service Center, Inc. — 2008-08-19T22:40:50-07:00

1 There has never been a case in which the corporate veil has been pierced on a Nevada corporation that has been run properly. 2 Nevada courts have pierced a corporate veil only four times in the last 21 years, and that was because of fraud resulting in harm to another party. 3 Nevada courts have developed a strong record of case law which protects the corporate veil, making it one of the most difficult in the country to pierce. ...The filing of an amended list of officers or directors, if new officers or directors are elected or appointed after filing or during the year, is not required. 5 Nevada requires that only a corporation’s President, Secretary, Treasurer, and one Director be listed on the Initial List of Officers, as well as on the annual list to renew the corporation’s filing with the state. 6 Nevada’s business friendly laws vary from those of other states in that they can limit the personal liability of corporate principals. Most states follow Delaware in requiring that person to prevail as a defendant in a lawsuit before the corporation is allowed to indemnify him or her. ...These include, but are not limited to, the creation of a trust fund for such eventuality, self-insurance, securing the obligation through the granting of a lien on corporate assets, or placing a letter of credit, surety or guarantee to be drawn on in time of need. The value of this is in giving the corporation additional resources to draw upon to protect its officers and directors in the event of a lawsuit. ... 10 Through broad empowerment allowances, Nevada law specifically provides for a corporation’s principals to be given control over such things as the establishment of stock privileges, voting rights, the issuance of shares, etc, through provisions in the articles. These infuse the directors with tremendous flexibility and control over the affairs of the corporation since major changes in policy and procedure can be accomplished through an amendment of the articles, rather than relying solely on the statutes.

TRADERS: What is the best structure for tax savings?

Corporate Service Center, Inc. — 2008-08-19T22:27:32-07:00

In conclusion, if you work at a full-time job and are realizing capital gains in the stock market, you do not have any powerful methods for offsetting your tax liabilities. ...To qualify, you would most likely have to be trading full- time, hold your positions for less than a day, and trade a large amount almost every business day throughout the year. ...The bottom line is that while a very small portion of active traders can realize substantial tax savings by filing as a "trader", a majority of investors do not qualify and need an alternative strategy. ...For example, if you and another partner each owned 50% of the partnership, 50% of the partnership's taxable income (or loss) would flow directly onto your personal Form 1040 tax return and be subject to your ordinary income tax rate. ...However, the major drawback with this simple scenario of you individually owning an interest in a partnership is that it does not contain any provision for lowering your federal tax bracket. If you are already in the 39.6% tax bracket, you do not want your trading gains flowing to your personal return and then being subject to that high tax rate. ...The corporation would be in the lowest corporate tax bracket of 15% and would pay $2,700 in taxes, and this is not even taking into account the numerous business expenses that a corporation can take. Had that $18,000 have gone to your individual return and been taxed at the highest bracket of 39.6%, the tax on that would have been $7,128, instead of $2,700, a saving of almost $4,500. ...Now, you can own your own corporation and be able to write-off all "ordinary and necessary" business expenses, fully deduct the costs of attending board meetings that are held in vacation areas, write-off all medical expenses with no limitations, contribute up to $30,000 to your own pension plan and much more. For individuals that are generating a large amount of excess revenue, the corporation structure allows you to start-up additional businesses with the expenses of the new business offsetting the income from the trading business. ...If you are a part-time trader, or even earn excess income from varying sources, you can create a situation where you can take advantage of major tax strategies usually reserved for individuals with full-time businesses by establishing a multiple entity structure.

LFC Marketing v. Loomis

Corporate Service Center, Inc. — 2008-08-19T21:43:42-07:00

This case presents us with two issues: (1) whether a writ of attachment may be used to secure property after a judgment has already been obtained; and (2) whether a judgment creditor can pierce the corporate veil using a reverse alter ego analysis to reach the assets of a corporation that is allegedly controlled by the judgment debtor. ...In support of their contention, the Loomises presented the following: (1) Roberts testimony that William wrote ninety percent of LFC Marketings correspondence to NLRC; (2) evidence that William negotiated and signed early drafts of the marketing agreement between LFC Marketing and NLRC; (3) testimony from one of LFC Marketings brokers that William drafted the final marketing agreement but asked that the broker sign the final version on LFC Marketings behalf; (4) evidence that William hired and supervised LFC Marketings brokers; (5) testimony from NLRCs accountant that he dealt exclusively with William and believed William to be the ultimate authority for all of LFC Marketings dealings; (6) documentation indicating that William was holding himself out to be the "president and CEO" and the "primary owner" of LFC Marketing; (7) evidence that LFC Communications paid LFC Marketings bills and that checks written to LFC Marketing should be made out only to "LFC"; (8) evidence that William was being personally compensated for LFC Marketings work; and (9) evidence that William had negotiated a settlement agreement between the LFC entities and NLRC, and determined how the proceeds were to be divided. LFC Marketing presented the following evidence supporting its claim that Williams participation in LFC Marketings activities was minimal: (1) testimony from Robert that he made LFC Marketings decisions; (2) testimony from the president of NLRC that he consulted Robert for marketing decisions and William for advertising decisions, but also had joint meetings with the two; (3) testimony that the only reason William dealt more with NLRC was because the parties had agreed that there should be only one point person; and (4) testimony that inter-company checks were only used to pay "incidental expenses." ...LFC Marketing appeals this order, claiming that the post-judgment writ of attachment procedure employed by the Loomises was improper and that the district court erred in allowing the corporate veil to be pierced in reverse. ...In particular, NRS 31.010 provides the general rule for when such writs may issue: The plaintiff at the time of issuing the summons, or at any time thereafter, may apply to the court for an order directing the clerk to issue a writ of attachment and thereby cause the property of the defendant to be attached as security for the satisfaction of any judgment that may be recovered, unless the defendant gives security to pay such judgment as provided in this chapter. ...LFC Marketing argues that other language in the statute -- namely, that a writ of attachment causes the defendants property "to be attached as security for the satisfaction of any judgment that may be recovered" - suggests that the writ is a pre-judgment remedy only. ...LFC Marketing first contends that the district court erred when it allowed the Loomises to satisfy their judgment against William out of property belonging to LFC Marketing by piercing the corporate veil in reverse. ...Nevada has long recognized that although corporations are generally to be treated as separate legal entities, the equitable remedy of "piercing the corporate veil" may be available to a plaintiff in circumstances where it appears that the corporation is acting as the alter ego of a controlling individual. ...Whether there was substantial evidence to support the district courts finding LFC Marketing next argues that the district court erred in finding it to be the alter ego of William because two of the requisite three elements of the doctrine were not demonstrated by substantial evidence. ...(1) the corporation must be influenced and governed by the person asserted to be the alter ego; (2) there must be such unity of interest and ownership that one is inseparable from the other; and (3) the facts must be such that adherence to the corporate fiction of a separate entity would, under the circumstances, sanction [a] fraud or promote injustice. ...In this case, there was evidence that William acted as the ultimate authority for all of LFC Marketings dealings, had negotiated the marketing agreement with NLRC personally, and did not distinguish his interest from the various Lange entities.

Why Everyone Needs a Living Trust

Corporate Service Center, Inc. — 2008-08-19T21:34:51-07:00

John’s estate for probate purposes is $500,000; but his estate for federal estate taxes is ...The probate attorney would take 5% of the value ($25,000 in the above scenario; ...John’s federal estate tax in 2011 is based upon a taxable estate of $500,000 ...In the end, Mary received only $1,319,200 of John’s $1,500,000 estate [Nevada] ...If there is real property to be sold, the probate could take one year or more. ...is a husband and wife and the gross value of their estate is $1,000,000 in a ...decedent’s estate is worth $2 million and the probate legal fees are $100,000.00. Note that if the decedent dies in 2011 or thereafter, with a $2 million probate ...AND HAS A TRUST, NO FEDERAL ESTATE TAXES ARE DUE AT FIRST ...NOTE THAT NO PROBATE OCCURS IF THE DECEDENT HAS A TRUST AND NO ESTATE TAXES ARE DUE IF THE DECEDENT IS MARRIED AND HAS A

Upstreaming Advertising

Corporate Service Center, Inc. — 2008-08-19T21:10:42-07:00

Chuck owns and operates a very successful mountain bike tire manufacturing plant in Illinois that has been in business for the past ten years. ...advertises his unique tires in many outdoor sports and mountain biking magazines and sells his products through a national network of locally owned ...because of competition from China that has forced him to cut his prices in half. Chuck has decided that he is looking for a unique strategy to lower his overall tax burden back in Illinois and has chosen Nevada as the place to do it. ...Chuck forms a Nevada C-Corporation with an office package and Nevada ...Chuck now has his new Nevada Corporation ...advertising plus a management fee of 20% which draws Illinois revenue into tax ...Chuck estimates he will save over $50,000 in taxes next year

Upstreaming PR

Corporate Service Center, Inc. — 2008-08-19T21:09:34-07:00

John runs a busy executive recruiting firm in San Diego and uses two Public Relations Firms extensively to get exposure around San Diego. ...was growing at an extraordinary rate and John was looking for an edge to reduce ...John decided to look into the advantages of setting up a second business entity in Nevada, to do business with his California S-Corporation. ...John formed a Nevada C-Corporation with an office package and Nevada ...Corporation contract with his outside PR Firms for all of his PR needs. ...managing these efforts his CA Corp paid his NV Corp a fee in excess of the actual fees charged by the contracted PR Firms. John was then able to draw additional fess out of California and into Tax Free Nevada.

Upstreaming royalties

Corporate Service Center, Inc. — 2008-08-19T21:08:13-07:00

Jill lives in California and has an active seminar business that teaches investors strategies on investing in the current real estate foreclosure market. ...her seminar business through a Nevada LLC foreign filed in California. ...her money by selling seats to her seminars and then up-selling her attendees ...She has decided to reduce her California tax burden and has formed a Nevada C-Corporation with an Office Package and Nevada Management Service. ...Nevada Corporation will own the rights to all of her published books and tapes as well as the materials that she hands out at every one of her seminars. ...California LLC will then pay a fee to her NV Corporation for every sale of published material (books, CD’s, DVD’s, etc.) that she sells. ...predetermined price list that her LLC will have to pay her NV Corp for each

Nevada dual corporation strategy

Corporate Service Center, Inc. — 2008-08-19T21:06:17-07:00

Sam runs a very successful pipe bending business in Los Angeles. ...company is a California S-Corp and Sam is looking for a way to legally pass some of his profits to Nevada to cut out some of the tax he pays in California. ...Sam formed a NV Corporation with an office package and Nevada Management Services that would act as a Management Consulting Company to his California ...Sam then had a contract made for services between the two businesses and had his Nevada Corporation invoice his California S-Corp ...Sam to upstream $120,000 in income over to Nevada allowing him to eliminate roughly $12,000 in state business income taxes. (10% tax in California) ...Note: Sam must have profits in his business and not need these profits for his business operations in CA to make this strategy work.

Web-based business

Corporate Service Center, Inc. — 2008-08-19T21:04:12-07:00

Jane is a PHD Nutritionist who lives in Seattle, Washington and writes a very successful e-newsletter on the latest trends in health and wellness. ...newsletter had become very successful and she was looking for a way to reduce ...Jane decided to form a Nevada C- Corporation with Nevada Management Services and moved her website hosting from Seattle to Las Vegas. ...purchased a Nevada Office Package to headquarter her new business in. ...Jane hired a Professional Employer Organization (PEO) to handle her personal payroll and benefits so that she can still get herself a paycheck but not have to ...draw payroll directly from her Nevada Corporation. ...business in Nevada and banks through a Nevada bank. ...eliminated state business taxes and only pays state income taxes on her

Royalties

Corporate Service Center, Inc. — 2008-08-19T20:57:54-07:00

Bob is a prolific writer of business success books and has written over 20 books ...Bob’s success in writing has been a mixed ...He has made over $500,000 per year for the past three years which has put him in the position of having to pay over $200,000 per year in taxes to ...Bob decided to work smarter and not harder so he formed a Nevada C- Corporation with an Office package and used Nevada Management Services to ...Bob transferred his royalty rights to all of his books ...Bob has also formed a Nevada LLC that is foreign filed in California that is paid to write on behalf of his NV Corporation ...his tax burden in California by $20,000 per year based on a 10% state income tax rate and Bob leaving $200,000 in his Nevada C-Corporation.

Foreigners doing business in USA

Corporate Service Center, Inc. — 2008-08-19T20:52:39-07:00

Larry lives in Canada and wants to start selling his unique line of fly fishing poles ...He has been selling his poles for several years to shops in Northwest Canada and is looking forward to expanding his market into the United ...Larry was looking for a suitable location for headquartering his business in the United States and stumbled across an article on the advantages of ...Larry formed a Nevada C-Corporation and purchased a Nevada Office Package. Larry has his entire US sales run through his Nevada Corporation and retains ...Canada’s business tax rates are over 50% of profits so Larry is really excited about leaving profits in Nevada for future business growth (top US business tax rates are 35%) After one year of utilizing this strategy Larry has saved enough money in his NV Corp. to purchase a

Nevada Single Entity Strategy

Corporate Service Center, Inc. — 2008-08-19T20:48:24-07:00

Sarah lives in New York City and acts as a manufacturer’s representative for ...Sarah currently operates her business as a ...Sarah wishes to avoid paying the high income taxes that come with living in New York City and has chosen to set up a Nevada C-Corporation with the Nevada ...Professional Employer Organization to handle her personal payroll and benefits so that she can still get herself a paycheck but not show up as a direct employee ...Sarah now runs her private Nevada C-Corporation and only pays NY tax on her ...Sarah leaves profits in her Nevada Corporation that she will use for future investments and/or business growth. (10% state/city tax rate in ...Note: If Sarah does not have a surplus in her business over and above her salary/draw she will not save anything in taxes in this example.

Litigation Facts

Corporate Service Center, Inc. — 2008-08-19T20:36:59-07:00

More than half of all companies have filed a lawsuit in the last year. ... Two-thirds of companies were served with a lawsuit in the past year; one-third of companies received between 6 and 20 summons and complaints. ... U.S. companies filed 2.5 times the number of lawsuits as U.K. companies. ... When small businesses have been sued, in only 25% of the cases, the small business was able to settle in advance of trial. ... More than half of U.S. companies have been to trial in the last year. ... 40% of companies in litigation had lawsuits against them in which more than $20 million is at stake. ... Litigation costs represent more than 70% of overall legal spending by the average U.S. business. ... 17% of the smallest companies in the U.S. have been in litigation over matters involving $20 million or more. ... The U.S. has over 1.1 million licensed, practicing attorneys – that is approximately 1 licensed attorney for every 300 men, women and children in the country. ... The costs associated with lawsuits and litigation that are built into every product or service we buy totals over $2,400 per person per year – which is 2.2% of U.S. ... The corporate veil can only be pierced in Nevada if a Nevada court finds either fraud or manifest injustice, judgments that have been found only four times in state history.

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