The Launch Blog: Expert Advice from the CorpNet Team

One of the reasons why entrepreneurs find the Limited Liability Company business structure attractive is that it gives them flexibility in dividing ownership among the LLC’s members. How you determine LLC ownership percentages can be based not only on members’ financial stakes in the company but also on the expertise they bring and the time and effort they spend managing and working in the business. While LLC members can have different ownership percentages, the ownership interests of all members in total must add up to 100%. For example, a multi-member LLC with three members might...

If you’re an accountant, attorney, or in the business of otherwise professionally advising entrepreneurs, you may have had clients inquire about what they need to do to expand their companies into other states. One of the most important steps involved in the process is to file a Certificate of Registration in the additional states where LLC or corporation wishes to conduct business. You may have heard it called by other names, such as foreign qualifying or filing a Certificate of Authority. Filing a Certificate of Registration means that the LLC or corporation wants to operate as a...

Legislative Update Gives Exemption to New California Limited Liability Companies LLCs registered to do business in California must pay an annual franchise tax of $800 to the state's Franchise Tax Board (FTB). However, to relieve some of the financial pressures amid the pandemic for newly formed businesses, California Governor Gavin Newsome signed legislation in 2020 to exempt startups from paying the LLC franchise tax during their first year in business. This is welcome news for aspiring business owners in the Golden State! The new rules established by the state’s 2020 Budget Act (AB 85)...

No matter where you’re buying a rental property, protecting that investment is important. Many real estate investors who own rentals choose to set up each of their properties as a Limited Liability Company (LLC). Doing so helps protect their personal assets from mishaps or accidents at their rental locations. But do you really need an LLC for rental property in another state? And, where is it most advantageous to register an LLC when buying real estate property out of state? Is it in the investor’s home state or where the rental property resides? In this article, I’ll provide some food...

I'm often asked if it is advantageous for a small business to hire family members. Some entrepreneurs have asked if hiring relatives presents legal issues, while others have asked if it is ethical. Whether you believe this practice is good business or nepotism, there are a lot of companies hiring relatives in full-time and contract positions. In the U.S. today, there are 5.5 million family-owned businesses, employing 63% of the American workforce. That adds up to many family business owners working with family members. These scenarios could be fraught with angst or, if done right, lead to...

A corporation has three main categories of stakeholders involved in the financial and management aspects of the company. While all play a crucial role, officers work more closely with a corporation’s managers and supervisors, arguably having a more direct impact on the company’s success. Officers - Officers are individuals appointed by the board of directors to manage the corporation. They act as agents of the board to ensure the organization carries out the directors’ decisions. Corporate officers’ roles and the number of officers can vary based on state law and the company’s governance...

If you’re starting a retail business (whether online or at a brick and mortar location), you’ll want to apply for a reseller license. A reseller license certifies you don’t have to pay sales tax when buying products on a wholesale basis for the purpose of reselling them to customers. In some states, a reseller license might alternately be called a reseller permit, resale license, resale certificate, sales tax permit, or some other term. Regardless of its name, its purpose is to identify your company as a reseller. Reseller License and Sales Tax In the United States, a business with a...

When you move from one house to another, you likely have a checklist of things you need to take care of in the process from changing your mailing address and calling your cable TV provider and your internet company. But when moving your business to another state, many business owners don’t know where to begin. There are many reasons to consider moving your business to another state. For example: Your target market has changed—economically and/or demographically. The cost of real estate (including property taxes) has risen so much that your business is at risk of going under. The state has...

Many small business owners choose to operate their companies under the LLC business structure. They do so with good reason! The LLC offers liability protection to its owners (members), tax flexibility, and compliance simplicity. However, that tax flexibility may cause some confusion for entrepreneurs. One of the tax-related topics that people often ask about is if LLC members have to pay self-employment tax. In this article, I'm going to cover that question, along with many others related to the subject. FAQs About LLCs and Self-Employment Tax Is Self-Employment Tax the Same as Income...

There are many reasons companies choose to incorporate as C Corporations. Being a C Corporation is preferred if you plan to seek investors or take the company public. Also, because the C Corporation is a legal, taxable entity separate from its owners, shareholders’ personal liability is limited to the amount they have invested in the company. In contrast, owners of Sole Proprietorships and Partnerships are personally liable for the business’s debts and legal issues. Although becoming a C Corporation involves more paperwork and continuous compliance, many business owners find the C...

Sometimes business owners want to market their services or products under a name other than their legal business name. For instance, a Sole Proprietorship, who must have both the owner’s first and last name in the business name, will want to use a fictitious name that’s more creative and compelling. They have to get permission to use that fictitious name by filing a DBA (doing business as). But other business entities, such as Nonprofit Corporations, may also have reasons for using a DBA. If you're wondering if a Nonprofit Corporation can register a DBA, the answer is yes and I’ll cover...

If you’ve decided to structure your business as a Limited Liability Company (LLC) and plan to register your company in California, it’s crucial to know how to keep your company in good standing by following the state’s compliance regulations. One regulation particularly important to California LLCs concerns their tax filing requirements. What is Form 568? Most LLCs doing business in California must file Form CA Form 568 (Limited Liability Company Return of Income), Form FTB 3522 (LLC Tax Voucher), and pay an annual franchise tax of $800. These businesses are classified as a disregarded...

The decision to change an LLC name is one not to consider lightly. After all, your business name is one of your most important brand assets. But sometimes, a name change is in order for one of many reasons. Perhaps there was a mistake in your formation paperwork, so you need to correct the name. Or perhaps the name was fine in the past, but now it's not because it includes the name of a business partner who just retired. Or maybe your business has expanded into other products or services, and the name no longer accurately reflects what you do. Another reason you might consider changing...