X-Banker

Five Mistakes People Make When Incorporating

July 30th, 2008

By The XBanker

1. Choosing the Wrong Entity

Problem: Many incorporating companies are not run by lawyers but by promoters, people who have no experience and training in corporate law. These companies are geared to sell you something, not to assist you in carefully selecting the right corporate entity. Choosing the wrong corporate entity can cost you hundreds of thousands of dollars in extra taxes and can fail to protect your assets. It is so crucial to make the right choice.

Solution: Corporate Direct is owned and operated by lawyers, Our staff is trained to work with you to select the correct corporate entity, be it a C corporation, S corporation, LLC or LP, for your specific situation.

2. Creating Too Many Entities

Problem: Many incorporating companies are staffed by commissioned sales people. Their goal is to sell you as many entities as possible in order to earn a higher commission. We have seen situations where as many as six entities have been formed where only one was needed. Creating too many entities is costly upfront and costly on an annual basis.

Solution: Our staff is trained to protect you with the right amount of entities, not an overabundance of them. Our staff is not on commission and thus has no incentive to sell you more than you need.

3. Paying Too Much Money

Problem: Many companies will lure clients in with promises of low cost incorporations only to have high pressure sales people upsell them into products and services they do not need or want. We have seen cases where services that should have cost under $1,000 have been inflated to over $10,000 in fees. The clients may never know they have been cheated, or learn only when it is too late.

Solution: Corporate Direct charges a flat fee per entity and provides you with an upfront statement of what your specific strategy will cost. There are never any hidden fees or surprises.

4. Bogus Office Packages

Problem: Many companies will tell you that state law requires you to have an office in your state of incorporation, for example, Nevada. They will then sell you on a $3,000 annual office package to keep you in compliance. In truth, there is no such law requiring a fully staffed office and you have been ripped off for $3,000 a year.

Solution: Corporate Direct does not sell bogus packages. If you need mail forwarding and the like we can assist for as little as $360 per year. But we will not misrepresent state law to take money out of your pocket.

5. Incomplete Formations

Problem: Many companies will file articles with the state and then only provide you with forms to fill in for the bylaws, minutes, and stock certificates. Do you know how to fill in these forms? Will they ever be filled in once you receive them? Of course not. And by not having complete documents you open yourself to having the corporate veil pierced and thus exposing all of your personal assets to creditor claims.

Solution: Corporate Direct provides a complete formation package in your own corporate binder. All of the bylaws, minutes, and certificates are completed and you are protected.

This entry was posted on Wednesday, July 30th, 2008 at 4:06 pm and is filed under General Financial. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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