December 23, 2008, Brad Sugars posted a great column on Entrepeneur.com, Top 5 Mistakes in Forming Your Corporation. The column has some great tips to consider when starting a corporation or LLC.

You have many considerations when deciding to run your business as a corporation or LLC as compared to a sole proprietorship, but it doesn’t have to be a frightening decision. With the help of an experienced team, the transition from sole prop to formal entity can be much simpler and save your time for doing what you do best: your business.

If you have questions after reading the article, don’t hesitate to contact us at 866-663-5224 or email us at: info@nexstepinnovations.biz

Individuals often tell us that they have been told by their legal or tax advisor that they are too small to incorporate. After talking with these individuals further we discover that the answer of  “You’re too small”  is really just a way for the advisor to discourage further conversation and discussion because the advisor has no education, experience, knowledge and/or clear understanding of incorporating.

A lot of Business owners, for some reason, believe that every legal and tax advisor has knowledge of every single area of law and taxes. Which is simply incorrect; it’s kind of like saying that a chiropractor could prescribe you medication for a bacterial infection. He’s a doctor, right? All legal and tax advisors specialize in specific areas of practice, so not every legal advisor will be able to give qualified advise about incorporating, as it is a specific area of law. The majority of tax advisors specialize in personal 1040 tax preparation; that does not qualify them to advise you on corporate or LLC taxes.

One of the main reasons why an advisor might say to you “You’re too small” is because stating the truth is like saying, “I will lose the money I am making off your business because I am not qualified or capable to handle your business, if you choose to incorporate.” By stating the truth your advisor would be making your business a priority over their business’s financial benefit and they are not going to do that. Professional advisors do not like admitting lack of experience or knowledge, so they will say what they need to in order to keep your business and feel superior. In addition, most legal advisors do not grasp the tax benefits of incorporating and most tax advisors do not grasp the liability benefits of incorporating. Neither cares about the benefits of the other side, because it isn’t their area of specialization, but you should care as both taxes and liabilities affect you and your business.

The choice to incorporate is yours; the choice is not your legal advisor’s or tax advisors. You should know that there is no such thing as a specific dollar amount in your bank account that triggers the need to incorporate. There isn’t a specific amount of liability that requires you to be incorporated and there is no such thing as too small to incorporate. You should also know that there are benefits to incorporating that you may not receive due to the industry your business operates in. You should be advised to the upkeep needed to ensure the integrity of the incorporated entity. You should understand the risks involved if the incorporated entity is mismanaged. You have the right to be able to make an informed decision. You may just have to replace your current tax and/or legal advisor, and it is ok to do so.

At NexStep Innovations, LLC we don’t believe in providing curious business owners information about incorporating that is self-serving. We don’t believe in bulling business owners to do business with us. We don’t offer “have-to-do-it-now” specials or “first-time caller” discounts. You’ll never have to file a restraining order against us because we don’t specialize in stalking. We do specialize in incorporating, so if you would like to speak with someone, call us today to schedule your consultation.

Question: I formed a Corporation or LLC for my business; do I need to open a Bank Account for it right away?

Answer: Yes, it is important that the LLC maintains its own financial identity. Money made should be deposited into the business bank account and expenses should be paid from the business banking account. Most banks will require a copy of the Articles (some request a charter or documents showing approval to transact business in the state), Banking Resolution, employer identification number (EIN) for the LLC, and your personal social security number.

Co-mingling will get you every time! An LLC has a legal identity of its own, completely separate from its owners. The IRS loves proving the comingling of financial identities as it opens the door for dismissing deductions that will increase the personal and business tax liability, penalties, and interest. If the Courts can combine the two identities financially, they can combine the liability of the identities, putting both the business and personal assets at risk.

Question: What are the requirements of an S Corporation as far as mandatory/required meeting minutes?

Answer: All Corporations, no matter how they elect to be taxed, must record meeting minutes that document the thoughts and actions of both the Directors and Stockholders. Both the IRS and the Courts will request the amendments, resolutions and meeting minutes of a Corporation, and if these documents have not been implemented, the Corporation may be set aside, holding the stockholders personally responsible for taxes and legal actions.

Being successful involves knowing when to hire an expert to handle tasks you may not understand or have time for. Delegating time consuming tasks to a professional costs very little, when you calculate in your time wasted figuring it out yourself instead of focusing your time on the growth of your business.

Since you have found us I will guess that you’ve probably been doing a lot of research about incorporating, estate planning, and business credit. I am sure that you have found plenty of websites, and read lots of expert information.

What makes NexStep Innovations different from all the other companies out there?

The Incorporating & Estate Planning Industry has become a lot like the fast food industry in many ways. You have McDonalds, Burger King, Wendy’s, Carl’s Jr., and Jack in the Box, each one claiming that they are #1 because of their fast service and great food. However, more often than not they fall way short of their claims. Well, the same is true with the Incorporating Industry; hundreds of companies out there are all claiming to be the “Best Incorporating Company” or the “Best Estate Planning Company”. By what standards do these companies determine that they are the “best”? Is it the number of clients? Is it the number of years in operation? Maybe it’s the number of entities they represent (some in bad standing with the States).

Remember customer service?

I grew up in upstate New York, and my Dad ran a Full Service Gas Station when I was child. I know a Full Service Gas Station is an oddity today; however, back then they could be found in most towns. They existed when customer service mattered. Or should I say when customer service existed. For those of you who have never seen or experienced a Full Service Gas Station, you would pull in to the clean gas station, up to the shining gas pump, and immediately a guy would run out to your car with a genuine smile to greet you politely. He’d ask you if wished to have the tank filled all the way up and what grade of gasoline; after beginning to pump the gas, he’d ask you to pop the hood so he could check all the fluids, filling up any that were low. He’d then check the air in all your tires, and he would even wash all the windows. When he was done, he’d come back to tell you the total for the gas. You would give him the money for the gas; he would charge your card or get your change; then he’d thank you for stopping by and send you on your way.

Where am I going with all of this?

My Father created relationships with his customers, they knew all about him and he knew all about them. His customers would travel many miles to have their cars serviced at his Station. I can to this day remember being with my father on his days off and people coming up to pinch my checks, and to tell him how much cuter I was than in his pictures. His customers would invite him to family weddings; if a customer passed away he would attend their funeral. The guys who worked for my father and his station didn’t complain about their lives. They wouldn’t discuss hating their jobs with co-workers while serving you. They didn’t greet you with a scowl. They weren’t poorly groomed. They didn’t look or act like they were stoned. They didn’t flip you off for not tipping. The soda machines inside were always filled, and all the soda was wiped down before being put into the machines so no one got sticky goo on their hands. These were things that were intended to be taken for granted. In those days, a business wouldn’t last a week if it were run the way we see things today.

NexStep Innovations brings something to the industry that is long overdue; we’re bringing back good old-fashioned Customer Service. Our clients aren’t treated as just some random number in the punch bowl of clients. Each client is a priority. We are the benchmark for this industry. Soon others will follow suit and there will be competition, but, for now, NexStep Innovations is unique in this field.

Your service does not end at the close of the sale. Indeed, that’s when it begins. In fact, we do not have a sales force. No leathery hacks here trying to squeeze out your last dollar. We don’t measure success in the number of one call closes, the turn and burn sales deals, the number of dollars on a sales board. We don’t even measure success by the amount of dollars in our bank account.

Our long term business relationship with our clients is what determines our success.