Tag: NCP

Need Another Entity to Protect Your Business or Assets by the end of 2020 or the beginning of 2021?

COVID may have greatly impacted your business in 2020.

We are all hoping that 2021 is a much better year for everyone.

January is right around the corner – a time when many traditionally revisit their goals and priorities for the year ahead.

One of NCP’s most important new year goals is to help you be more proactive in launching that profitable new business initiative or creating better protection for your assets.

We’ve found a solution that will help you feel more confident going into 2021 by establishing a complete foundation for your business and personal assets like real estate or investments. The best part is that takes less than 30 minutes of your time!

If you’re looking to form an LLC (most popular) or corporation (no matter what state) , December is the best time to get this done.

Waiting until January can be the most risky and costly approach – here’s why;

• If you wait until 2021, by the time the entity is filed and everything is in place, more than likely you will be operating as a schedule C for two to three weeks of the beginning of the year (assuming you are operating a new business, real estate is different).
• You are risking an audit! There is a $300 Billion tax gap and the #1 culprit is sole proprietors that file a schedule C (that’s why we want to help you avoid that track in 2021, or at least be on it for the shortest possible time).
• We realize that most incorporating services say they incorporate in 24 hours (which may be true but there are additional steps required to establish you business with EIN, banking and more by the first of the year and they all take time. Some states are very backed up with filing and it may take from 5-12 business days up to several weeks for them to process everything.
• Keep in mind at this time of the year; secretaries of state around the U.S. are becoming more and more overloaded with filings (mostly due to budget cuts). This means that even if filing expedited, it can take much longer to form your entity and get a bank account open in time for any end of the year transactions.

Here is some GOOD NEWS!!

We can help but we need you to take the first step to get started. Learn more here.

Even if you’re not 100% certain whether a new entity is best for you or just have a few questions about the process, we can help you make the decision that’s best for your individual needs. If a new entity will not improve your business situation, we’ll let you know with no risk or obligation on your part.

Perhaps this Strategy will be a Big Advantage for You…
Take advantage of immediate tax savings! Sec. 195 of the IRC states that capitalization of start-up expenses (up to $5,000) may now be immediately written off against personal income (S corp and LLC taxed as a flow through).

This ONLY comes into play if you start your business in December.
In most cases, the best option is to incorporate in December but record a January start date on the SS4 for the EIN to avoid a short year return (does not apply to C corps).

As a reminder NCP forms corporation and LLCs in all 50 states, and our goal is to help you launch your business with confidence. We will also help you build business credit and Keep the IRS off your back! Most importantly we have the tools and systems to help your business get off to a fast start to profits.

Also, if you have any partners or referrals that may plan on starting a new company at that time, please have us call them now (we now pay a 10% referral fees).

CAUTION: Avoid forming a $99 corporation or LLC, most of the times they will provide ZERO protection if challenged because it is not a COMPLETE FORMATION.

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Entity Structuring Fundamentals

Anytime you form a separate legal entity for a business or protect safe assets, it is very important to complete the entity structuring fundamentals.

When an entity is formed, you should be very clear on the best structure to support your goals, both short- and long-term.

For example, a C corporation may have lower tax brackets than you or I do personally, AND you may pay fewer taxes in year one, but it may be the WRONG structure for your results in years 2, 3, 4, and so forth.
which state is best to incorporate

If you are not looking to retain earnings in the company and grow and expand with infrastructure and overhead, it may be the wrong entity for your business.

If you are forming an LLC, you should know how the LLC is taxed and managed by managers or members. There is a big difference, especially with how the LLC is taxed.

To select the best entity, keep in mind that you must approach it from two main points of view: the best entity from a tax point of view and the best one from a legal point of view.

After you are clear on your goals, both short- and long-term, it is time to form the entity.

You want to be clear on who is the initial director if a corporation or manager/member, if an LLC. After forming the articles of organization or articles of incorporation (for a corporation), your next step is to open a bank account and capitalize on the new entity.

This seems simple, but so many people open an LLC bank account with a check with revenue and never properly have the owners capitalize and put money into the account in exchange for ownership in the company.

If you are the entity owner, you should be the one putting money (or service or equipment) into the company in exchange for an ownership interest.

If you have another entity that is the owner, that entity will put money into the operating company in exchange for an ownership interest.

If you have a partner and are not going to put in capital to match your ownership percentage and one is going to contribute services, that may be a taxable event (check with your CPA).

In other words, if you get a 50% ownership in a business with no money in exchange for your labor (sweat equity) and your partner puts in $50K for their 50% ownership, the IRS looks at this as if you obtained $50K in value and would owe taxes on the $50K.

In that situation, are you able to say of the $50K, $45K was a loan, and therefore if your partner put in $5K, then there is no tax issue. That is correct, but now you have a totally new situation where the business will need to pay back the $45K loan out of profits before either partner is paid any profits.

Next, you have to ensure that if you were operating as a sole proprietorship before or a general partnership now, you actually make a complete transition to that new entity when you form the entity.

Over the years, I have seen too many people still operating as sole proprietors, even though they have formed an LLC.

How is this possible?

Several mistakes are when you don’t open a new bank account in the name of the LLC or corporation and keep operating under the bank account in your name as a sole proprietorship.

The other big issue is if you have a DBA or fictitious firm name linked to you personally and you form the separate legal entity and forget to reconnect the DBA name to the NEW entity – that is a big mistake.

Corporate and LLC formalities are a must (even if you incorporate in Nevada).

A corporation and an LLC are separate legal entities from you and me personally. They can do everything you can do except act and think. They do that through minutes, meetings, and resolutions.

This is the documentation for major decisions made by an entity such as adding a shareholder, changing the officers or managers, leasing real estate…Some falsely believe that LLCs are “easier” because they do NOT require the same formalities corporations.

When we did our research years ago looking at what judges actually do, we found they expect to see the same corporate formalities that apply to corporations.

That means an LLC will need an operating agreement, minutes, meetings, and resolutions for major decisions, membership certificates, and a membership ledger to track the owners.

This is all part of protecting both the LLC and corporate veil. If someone is going to sue your entity and do not operate it as such a legal entity, you MAY be personally liable.

The final big step to ensure your entity is structured properly is to make sure your taxes are being paid properly. That starts with knowing how your entity is taxed and the responsibilities with that.

If the entity is an LLC taxed as an S corporation, you will probably have some payroll required at some point in the year, even if to pay yourself.

If you have an LLC taxed as a partnership, you will realize that you will not be paid a salary if you are one of the LLC members. You may be paid a “guaranteed payment,” which is similar to but not a W-2.

It is very important to make sure that you work with a good tax team to keep you on track with your business entity.

Making sure your entity complies is a very important step in the process to build and protect your wealth! Take the time to create an action step or two, so you keep moving forward in your business and towards success!

If you need support with forming a new LLC or corporation, contact my company NCP at 1-702-367-7373. We incorporate in all 50 states and have amazing support to make it an easy experience for you.

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Don’t Take My Word For It

Anytime you’re visiting unfamiliar territory, it always helps to get travel tips from someone who’s made the trip before you – someone who knows the wrong turns to avoid and how it feels to be a newcomer.

Meet Kevin and Melissa Knecht – a husband and wife entrepreneurial team wrapping up one of their most successful and abundant years ever!

Click here to watch their video:

How did they do it? Kevin and Melissa are happy to share their secrets with anyone ready to take their business success to the next level. Certainly, they already had the desire, determination, and a clear vision of their destination.

What they were missing was a complete business foundation that could multiply and protect their profits. After some heavy comparison shopping for someone to walk them through the process of forming a corporation or LLC, they decided that NCP was the best value.

Sure, we could go on about the comprehensive process we took them through – but no one can explain what this experience did for their confidence and earning power better than Kevin and Melissa. They share the important highlights in this quick video.

If you’re ready to put your business on a powerful new success trajectory in 2021, as Kevin and Melissa did, NCP is ready to help! You’ll be amazed at how fast, complete, and affordable our system is. Please take the next step and call us today at 1 (888) 627-7007 or (702) 367-7373.

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