One of the primary benefits of incorporating or forming an LLC is the protection of the business owners personal assets from lawsuit. The main problem is that most entrepreneurs simply file the initial paperwork and then completely drop the ball on properly maintaining their corporate veil. This same rule applies whether you have a domestic, Delaware or Nevada Corporation or LLC.

In this article are listed ways to maintain the corporate sheild:

• Be sure that you always conduct business through and in the name of your entity rather than in your own name (unless you are a sole proprietor). Failure to follow the rules for the entity allows creditors to try to deny you liability protection because you did not really conduct business as an entity.
• Always have the entity adopt resolutions to authorize action, even if there is only a “ratification” after the fact.
• Use the proper form of entity signature by always signing documents in representative capacity as an agent of your entity: “XYZ LLC, by John Q. Smith, Managing Member.”
  Use proper signs, advertisements and business cards showing an entity rather than an individual (e.g., “John Smith, President, ABC, Inc.” rather than “John Smith, Owner/Proprietor”).
• Use proper fictitious name filings.
• Avoid commingling your business and personal funds in the same bank account.
• Pay business and personal bills from separate accounts.
• Maintain separate personal and business bank accounts.
• Prepare notes and other documentation of all loans between the business and its owners.
• Your entity must have a minimum capitalization reasonably adequate for the business to be conducted. Insurance counts.
• Don’t sign contracts or make commitments for the business until you have filed the correct papers to organize it, since you will be personally liable. The liability shield of the corporation or LLC does not exist until the entity exists through a filing in the state capital.

Of course, our clients would already know this as a ”compliance checklist” is included in the free handbooks included with every formation of a corporation or LLC that we handle. We also offer QuickRecords which automates corporate/LLC record keeping of minutes and resoulutions (even if you’ve forgot to do them in the past).

Of course we believe there are many advantages to incorporating that are not all noted in this article from the Wall Street Journal.

According to a survey, more than 50% of California small business owners think the State is headed in the wrong direction and are not optimistic about the future.  Excessive regulation, health insurance prices and workers compensation insurance premiums are frequently cited reasons. I believe this is why about 30% of our clients who incorporate in Nevada are actually from California.

(Via Biz Opportunities) 

The Tax Foundation has released their annual report ranking the tax burden and complexity of each State’s tax system.  The best 10 States for business are:

1. Wyoming
2. South Dakota
3. Alaska
4. Florida
5. Nevada
6. New Hampshire
7. Texas
8. Delaware
9. Montana
10. Oregon

The Worst 10 States are:

41. Arkansas
42. Iowa
43. Nebraska
44. Kentucky
45. Maine
46. Vermont
47. Ohio
48. Rhode Island
49. New Jersey
50. New York

Hmmm…sounds like a great reason to incorporate in Nevada or any of the other business friendly states!

via The Entrepreneurial Mind.