WHAT IS THE BEST ENTITY?Written by Garrett Sutton, Esq. and Kathy Spitzer, Esq.
Continued from page 1
- 1 - Copyright 2001, All Rights Reserved. Sutton Law Center, P.C. revenue drain, IRS closed that loophole by designating C corporations that provide services to be PSCs. The additional tax rate for PSC earnings can be a flat 35% or regular C Corporate plus 15% of corporation’s undistributed personal holding company income. That maybe higher than you would pay through your S Corp, if you took a reasonable salary and rest as passive income. And, it's enough, in many cases, to make difference between going S Corp and C Corp. A downside to S Corps is limitation on who can be a shareholder, and what kind of shares it can issue. There can be no more than 75 shareholders in total, and no-one may take their shares in anything other than their personal names (or in their living trust). So, forget transferring your S Corp shares into an irrevocable trust, limited partnership or children's trust. And, you can't have any non-U.S. resident shareholders, either. Everyone who holds shares in an S Corp must file a U.S. resident tax return. And, you can only have one class of shares, which can be confining, especially if your plans include taking your company public or looking for outside investors. If you breach any of these requirements IRS will strip your company of its S Corp status, and automatically turn it into a C Corporation, which may have a negative tax consequence. Another downside is asset treatment. Both C and S Corps are not great vehicles if your business will hold appreciating assets, such as land, buildings, stocks, bonds, etc. The tax on them upon sale will be much greater if held in a corporation than if held in a limited liability company or a limited partnership. This is further explained in book How to Use Limited Liability Companies & Limited Partnerships, written by Garrett Sutton and available at www.successdna.com. The steps to create a C or S corporation are same. Articles of Incorporation are prepared and filed, Bylaws are prepared, directors are elected by shareholders, officers are elected by directors, and shares are issued to shareholders. This may sound difficult but we will be there to guide you through it all. The S Corp Declaration, that Form 2553 we mentioned above, should be filed within 75 days of incorporation date, so don't delay if this is how you see your company proceeding. If you don't file within that 75 day period, IRS can deny you S Corp status for a full year, meaning that your first year of operations will be conducted at C Corporation tax rates. The shareholders, directors and officers of company must remember to follow corporate formalities. They must treat corporation as a separate and independent legal entity, which includes holding regularly scheduled meetings, conducting banking through a separate corporate bank account, filing a separate corporate tax return, signing all documents related to business in their official capacity, and filing corporate papers with state on a timely basis. If these steps are not followed, a business creditor may be allowed to “pierce corporate veil” and seek personal liability against officers, directors and shareholders. Adhering to corporate formalities is not at all difficult or particularly time consuming. In fact, if you have our affiliate handle corporate filings and preparation of annual minutes and direct your accountant to prepare corporate tax return, you should spend no extra time at it with only a very slight increase in cost. The point is that if you spend extra money to form a corporation in order to gain limited liability it makes sense to spend extra, and minimal, time and money to insure that protection. To read more goto: http://www.successdna.com/free_reports.php
Garrett Sutton, Esq. has over twenty five years experience assisting and advising entrepreneurs, families and business in selecting the appropriate corporate structures to limit their liability, protect their assets, build their credit and advance their personal and financial goals through real estate investments and other means of wealth creation.
| | The 7 Traits of an Exceptional and Successful EntrepreneurWritten by Robert Moment
Continued from page 1
4) Successful Entrepreneurs Think Creatively Successful entrepreneurs are not afraid of thinking creatively. Whether a business idea has already been tried makes no difference to exceptional entrepreneur. He or she sees better ways of doing things and knows that every idea can be expanded upon, made better, enhanced or broadened . The successful entrepreneur is willing to think outside or proverbial box, which means using imagination, trying new things and expanding on a vision. The savvy entrepreneur pays careful attention as to whether a particular strategy is working. If after giving it his or her best shot entrepreneur realizes particular strategy isn’t working, they know there’s no point in continuing to invest energy, time and effort in strategy. They move on to another approach and idea. 5)Successful Entrepreneurs Explore Their Exceptional Skills Successful entrepreneurs realize that we each have our strengths and weaknesses as well as a multitude of skills and talents. Successful people ask themselves often what skills they have that no one shares in quite same way. An exceptional and successful entrepreneur explores their particular skills until they find ones that match most closely with their ideal. They don’t try to be and do everything. If successful entrepreneur needs help, they’re willing to find someone who can do it better, and allows in support. The successful entrepreneur stays open to change for they recognize that as they move forward, doors open in unexpected places that carry them to their next level of success. 6) Successful Entrepreneurs Envision Their Success The successful entrepreneur gives time to envisioning how they want their business to look and how they want it to be. Intention is a powerful and dynamic tool. For those who are not inclined towards intention and visualization, talk to a successful athlete and you’ll discover that before each sporting event, successful athlete envisions exactly how he or she wants things to turn out. Imagine what it will feel like when you’ve reached a particular set of goals. Get in touch with feelings, you’d have as a successful entrepreneur. Practice and conceive of sense of empowerment and joy of having succeeded. The successful entrepreneur knows they have power to live life way they want, but to make it a reality, they know it has to be seen first. 7) Successful Entrepreneurs Never Give Up Giving up is never in vocabulary of successful entrepreneur. Of course there may be days when a successful entrepreneur feels discouraged or disappointed, but giving up is not an option. Having faith, trust, confidence and determination are qualities needed for successful entrepreneur. To keep their focus on track, they seek out support of those that know them, encourage them and bring out their natural enthusiasm. The smart and successful entrepreneur realizes that there will be good days and not so good days. Being a successful entrepreneur requires accepting ebbs and flows of business for it is in fact what separates exceptional and successful entrepreneur from one who gives up far too soon.
Robert Moment, Author,Business Coach, and Success Strategist. Author of best-selling book, It Only Takes A Moment to Score. Founder of The Moment Group a small business coaching and consulting firm that help entrepreneurs attract well-paying clients. Visit his website www.sellintegrity.com or contact Robert@sellintegrity.com
|
