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27Feb 2020

What are corporate minutes?

Corporate minutes memorialize actions voted on and authorized by the corporation’s shareholders and directors at duly noticed meetings. Keeping these minutes up to date is critical to maintain the corporation’s liability shield, because without them, a claim could be made that the corporation as an entity separate from its shareholders wasn’t being treated seriously and […]

27Feb 2020

Are my expenses in setting up the corporation or LLC deductible?

Yes. But depending on what stage the business is at, they may not be immediately deductible as an operating expense, but may need to be treated as a start-up expense. This can get complicated; you should consult a tax advisor.

27Feb 2020

Do I need a separate bank account for my corporation or LLC?

Remember, one point of the entity is to keep your business separate from your personal affairs, thereby protecting your personal assets. So, the answer is going to be yes. As such, that will also involve obtaining a tax identification number.

27Feb 2020

Do I have to pay directors and officers?

No. But depending on the directors‘ background, level of experience, and the value they bring to your business, you may want to consider some kind of compensation or even equity. Not only are they worth it, but you’ll get a commitment from them that won’t otherwise exist if they’re just donating time and expertise. Specifically […]

27Feb 2020

What’s the difference between a member in an LLC and a shareholder in a corporation?

I’m proud of you for asking such a clever question. Makes me wish the answer was just as thoughtful. Alas, it’s not: there’s no difference. A shareholder in a corporation, and a member in an LLC, are both nomenclature for defining owner. In fact, LLCs are flexible enough such that they can be structured to […]

09Apr 2020

I want to discontinue my LLC in California. How do I do that?

Terminating an LLC in California is a pretty simple affair. I wouldn’t blame you if this is the one thing you choose to DIY, since you can do it online. There are legal issues, though, in terminating an LLC or any entity. For example, you need to make sure that the LLC’s debts are paid […]

09Apr 2020

Can I operate as a DBA instead of operating through a corporation/LLC to save the $800.00 per year that I’m paying to the California Franchise Tax Board (FTB)?

Yes, of course. You lose the advantages of operating under the auspices of an entity, but that increased risk may be minimal. See this FAQ for a fuller discussion of pros and cons.

30Oct 2020

Is it ok for me to use the same entity for both businesses? It feels more efficient to put my new business into the same corporation as my other business. The businesses are similar to each other, and I can’t afford the overhead of a new entity.

Though I appreciate your need to be thrifty when it comes to starting a new business, this sort of money-saving approach is inadvisable. Occasionally a company will have a “division” or some other kind of structure that makes sense by way of keeping all things under one umbrella. For example, a hardware store may open […]

06Aug 2020

What’s a limited partnership (LP)? When should I use one?

Limited partnerships (LP) have been the go-to entity for certain kinds of industries for years. The most prevalent use has been in real estate, where the ownership is usually made up of one person who manages the operations and the cash flow, and the rest of the partners are silent partners, or “limited partners”. Why […]

06Aug 2020

What’s a general partnership? When should I use one?

A general partnership (GP) can come in very handy when you want to be in a joint venture or some other enterprise, and liability is either not an issue, or each “partner” has their own entity for liability protection. In fact, people who start “doing something” together can find themselves in a general partnership without […]

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