Incorporate for Free or Form LLC for Free Scam

Friday, November 5th, 2010

Some incorporation and LLC formation companies have recently been advertising that they will “incorporate your business for free” or “form your LLC for free”! Of course, most sensible people know that not only is this not true, they know that no business that wishes to remain in business would offer their services for free – even in our current economy. After being contacted by a few people who were taken in by this scam (and us having to clean up a few messes left by some inexperienced competitors), I thought I would investigate further.

So let’s take a closer look at these “incorporate for free” and “form an LLC for free” offers. After reviewing a few sites that are offering this, I found:

  • Obviously this does not include state fees or publication fees. State fees can range from $20 to over $500. These companies conveniently don’t mention this in their advertising (except as a disclaimer).
  • Most are embedding significant fees within the state fee. For example, the state fee in California is $70 for an LLC and $100 for a corporation – most I checked were charging anywhere from $85 to $115 for the LLC and $115 to $140 for the corporation. This is simply dishonest.
  • They are all going to attempt to upsell you – they wouldn’t offer this without the potential to get actual money from you. Get ready for aggressive sales calls, emails and attempts to get you to buy things you don’t need (for example, a professional Registered Agent Service is not required if you live in the state where you form the company and are available during business hours). I would bet that most people who form a “free” company end up paying more than people who go with a company that tells the truth, is upfront and charges reasonable fees.
  • None of them offered personalized Corporation Bylaws or an LLC Operating Agreement. Not having these documents is dangerous, exposing you to lawsuits, owner disputes and general lack of proper organization.
  • Most are charging outrageous shipping fees which are conveniently not included in the “free” package. $29.95 for “Priority Mail” in one case. Priority Mail from the USPS is usually around $5 for corporate documents.
  • Most are charging really outrageous “Rush” or “Expedite” fees. Some are $150 or more when I know for a fact that all they are doing is overnighting the documents to and from the state (typically around $50 – $60 in real costs).

So what’s the alternative? Obviously this article is written to convince you to try our services. We believe in being honest and here’s what we’ll offer you:

  • Our service starts at only $79 + state fees.
  • We only charge the real state fee which you can view on our online order forms.
  • We never attempt to upsell you.
  • Even our basic service includes personalized Corporate Bylaws or an LLC Operating Agreement.
  • Shipping is always free, you can add overnight for $25.
  • We don’t make money on “Rush” or “Expedite” fees. If it costs $25 to expedite a filing with the state, that’s what we charge you.
  • Most importantly, we tell the truth. We would never offer a “free corporation” or “free LLC” as a sales tactic. We would never hide fees in the state fee. We never say “incorporate in 10 minutes” or other gimmicks – we tell you how long it will take to form your company right on Step 1 of our order forms.

I invite you to compare us to our competitors and decide for yourself.

Small Business Alert – The Coming 1099 Tsunami

Monday, September 20th, 2010

One of the little-known provisions of the Affordable Healthcare Act (Obamacare) is that all businesses will in 2013 be required to submit 1099’s to the IRS for every vendor/supplier for which they spend more than $600. This will affect 30 million businesses and will generate hundreds of millions of 1099’s, millions of hours of accounting and paperwork headaches not to mention the productivity-sapping effect of implementing systems to track such expenses.

There’s more detail in this Wall Street Journal article about how today (9/14/10) they will attempt to strip that provision from the bill. As of right now it has failed.

The article gives an example of the 1099 provision that should prompt all small business owners to action. A trucking business, with dozens of trucks, will now have to issue 1099’s for every gas station where each truck spends more than $600 for something as basic as fuel – truly a paperwork nightmare.

Personally, incorporates businesses in all 50 states. This typically includes us paying the filing fee for our clients to the state. Now imagine, state fees run from $25 to $500, we easily spend more than $600/year in the vast majority of states, we usually spend more than that in a day for bigger states like Texas, Florida and California. So basically we will be issuing upwards of 50 1099’s for that expense alone – that doesn’t include our dozens of other vendors.

When I started writing this alert, I didn’t even realize the effect on MyNewCompany until I wrote the previous paragraph even though I’d been aware of the law for a few weeks. Imagine the millions of businesses that have no idea of the new law, what they’ll need to track or even how to track it.

If you care about small business or are a small business owner, you need to contact your Congressperson and Senator and ask them to repeal the 1099 provision of the Healthcare Reform Act. It is a business-killing, paperwork nightmare that threatens to make an already bad economy even worse.

Is a Scam?

Thursday, September 16th, 2010

It still amuses me, after almost 10 years in business, a perfect A+ Rating from the Better Business Bureau, membership in the Las Vegas Chamber of Commerce and over 20,000 satisfied clients, people still ask “is MyNewCompany a scam?” on  a regular basis and search for “ scam” in search engines as evidenced by our tracking software.

I think this is fairly normal because when I’m researching a purchase, I usually do a google search for “COMPANYNAME scam” to make sure I’m not being hustled. I don’t take it personally as the President of, Inc. – there are incorporation service companies that are a scam, or at the least not very upfront on their prices or practices. Compare us to the competition and see what makes us different.

I’d just like to briefly list the reasons why we are not a scam:

  1. You can verify our BBB membership and A+ rating by visiting this link. Better yet, give them a call at 702.320.4560.
  2. Call us! Most online scam companies are impossible to contact. Our toll free # is 800.326.1362 and our local # is 702.362.2677.
  3. Email us to test our response time! Send an email here and see how long it takes us to respond, typically under an hour during standard business hours (9am to 5pm PST).
  4. Check our Credentials page which lists our seals from, PayPal, etc.
  5. Visit our offices! Here’s a link to our location listed on Google Maps, you can see our building too!

Hopefully that resolves the issue, if not, call me directly at 702.362.2677 x111.


Matt Knee
President, Inc.

Great Small Business Advice from Larry Winget

Thursday, September 9th, 2010

Larry Winget offers great small business and personal development advice in this recent article. He can be a bit “brusk” and in your face. He’s known as the “Pit Bull of Personal Development” so while his advice might not make you feel good, it is effective.

Specifically, his small business “truths” (each is summarized in the article)  include:

  • Apathy is killing business.
  • Attitude doesn’t matter.
  • Who cares if your employees are happy?
  • You don’t have to love your job – but it helps.
  • Not firing people is a cancer on your business.
  • Do the right thing no matter what.

And he summarizes with his “Larry’s all time best advice for business success:”

Do what you said you were going to do, when you said you were going to do it, in exactly the way you said you were going to do it.  You won’t ever get any better business advice than that.

Be there when you said you would be there.  Deliver when you said you would deliver.  Call when you said you would call.  Be a person who can be counted on by keeping his word every time.

While I don’t agree with every one of his “truths”, his summary is the absolute truth – we take it to heart here at and you should consider it as a cornerstone of great customer service for your small business.

Rwanda Has A Faster Business Registration System than Most US States

Wednesday, June 9th, 2010

In news that should be terrifying to most US states’ technology administrators, Rwanda (yes, that Rwanda) now has an online business registration system that is faster and easier than most US states. This system allows a person to form a company in Rwanda in 1 hour.

Compare this to the standard processing time of select US Secretary of States (as of June 2010):

  • California Secretary of State: 70 Days
  • Maryland Department of State: 75 Days
  • Nevada Secretary of State: 45 Days
  • New York Secretary of State: 20 Days
  • Washington D.C. DCRA: 40 Days

So if you want to file a DBA, incorporate a business or form an LLC in the United States, you will almost certainly have to wait longer than your entrepreneurial equivalent in Rwanda. This should be a wake up call to each US Secretary of State’s filing office: in the largest, most powerful economy in the world, we are now falling behind 3rd world countries (recovering from a brutal civil war) in the time it takes to register a business.

The number of new business registrations is an important indicator of the overall health of an economy and US State governments should make upgrading their systems a priority not only to make business startups faster, but to improve and streamline the internal operations of their own offices.

How to Hold an Annual Shareholders and Directors Meeting

Thursday, May 27th, 2010

A corporation is required hold an Annual Shareholders and Directors meeting, also known as the Annual Meeting, each year on the date determined in the corporation’s Corporate Bylaws. The purpose of the Annual Meeting is to elect or re-elect Directors for the next year and to discuss any business affecting shareholders and the direction of the company. Corporations are required by state law to hold an Annual Meeting and distribute meeting minutes to all Directors and Shareholders.

Holding an Annual Meeting is an important procedure you must complete to ensure that your company maintains corporate compliance. Without proper compliance, a company puts itself at risk of losing its “good standing” status and may not be allowed to legally continue operations. By documenting company decisions in the meeting minutes, your corporation is essentially shielding itself against potential disputes, audits or lawsuits. Also, the meeting minutes keep your investors apprised of their venture and provide a written summary of business activities for reference purposes, both internally and for outside sources such as financial institutions and government entities.

If your corporation is small or even a 1-person company, the most common way to conduct your Annual Meeting is to hold a “Paper Meeting.” You can begin a Paper Meeting by having the Directors and Shareholders sign a “Waiver of Notice” to avoid sending a written notification of the meeting. Generally, small business are operated with ongoing communication between Directors and Shareholders so they are all on the same page about the direction of the company at the time of the Annual Meeting. If this describes your business, all you need to do is complete your meeting minutes, print a copy of the minutes and distribute them to your Directors and Shareholders. Then, once the minutes have been approved, simply place them in your Corporate Minute Book and your Annual Meeting has officially been completed.

Larger companies may choose to hold a real meeting in which Directors and Shareholders attend in-person or participate by conference call. A real meeting will require you to send out notices of the meeting and also, to modify the meeting minutes according to what is discussed and decided during the meeting. Prior to the meeting, you will need to distribute, along with the meeting notice, the following to your Directors and Shareholders: copies of any proposed resolutions, company reports, background materials and minutes of the previous Annual Meeting (if your company was in business during the prior year). At the meeting itself, the company secretary will record attendance, count votes during important procedures such as electing or re-electing Directors for the next year, and take notes of every meeting activity. Once the meeting has been concluded, the secretary will then formally document all activities in the meeting minutes and distribute copies to all Directors and Shareholders. The signed original copy of the meeting minutes will be placed in your Corporate Minute Book and your Annual Meeting will be done.

No matter which version of the Annual Meeting is right for your company, it is crucial that you hold your Annual Meeting every year to stay compliant and keep your Directors and Shareholders up-to-date on any and all decisions affecting the company.

Though these tasks can be difficult, our ComplianceLock™ Service automates corporate and LLC meeting minutes in one click! ComplianceLock™ is the peace-of-mind service that 1) sends email and text alerts (SMS) for important compliance due dates, 2) generates meeting minutes/consents with one click and 3) monitors the status of your company. It’s 3 products in 1 for total entity protection – all for less than one hour of attorney advice!

How to Hold a Corporate Board Meeting

Thursday, May 20th, 2010

There might be times during the year when you need to hold a corporate board meeting, or Directors meeting, to discuss and resolve any pending issues that affect your company. Perhaps you have an urgent matter that needs immediate attention, such as a financial issue that requires action in advance of your annual meeting, or you need to amend your Articles of Incorporation or make changes to your Corporate Bylaws. Regardless of the reason, you can hold a corporate board meeting at any time to ensure that all your Directors are involved in determining the best course of action for the good of the company and its Shareholders.

If your Directors have regular communication and a decision or action has unanimous agreement, you can make changes or resolve issues using a “Written Consent” in place of a meeting. Essentially, a Written Consent acts as legal proof of unanimous agreement and only requires the review and signatures of your Directors. Once all the Directors have signed the Written Consent document, simply place it in your Corporate Minute Book.

A small business or 1-person company in need of a corporate board meeting might choose to hold a “Paper Meeting” for convenience. The most common way to start a Paper Meeting is by having the Directors sign a “Waiver of Notice” to avoid having to send a written notification of the meeting (which is required by many states). Then, complete the meeting minutes and distribute a copy to each Director, along with an approval form. Once each Director has approved the minutes and any company decisions noted within them, file the minutes in your Corporate Minute Book. Paper Meetings are common among companies with good communication between Directors, who are usually in agreement of the direction of the company at any given time.

A large company may opt to hold a real meeting with all Directors present or participating by conference call. If holding a real meeting, you will need to notify your Directors in advance of the date, time and location (if they have not waived these requirements). You will also need to provide each Director with any paperwork that will be referenced during the meeting such as proposed resolutions or background information regarding any issues that need to be discussed and resolved. At the start of the meeting, take attendance to make sure that all Directors are present either in person or by phone. During the meeting, the company secretary should take notes, tally any votes related to business changes and organize all paperwork. After the meeting, the secretary will document the meeting and distribute copies of the meeting minutes to all Directors. As with any meeting, the minutes of your completed Corporate Board Meeting must be filed in your Corporate Minute Book for documented proof that the meeting took place and was conducted properly.

Holding Corporate Board Meetings and keeping documentation of all meeting activity will help your company remain compliant according to state laws. These meetings, when necessary, also act as a safeguard for your company.

Though these tasks can be difficult, our ComplianceLock™ Service automates corporate and LLC meeting minutes in one click! ComplianceLock™ is the peace-of-mind service that 1) sends email and text alerts (SMS) for important compliance due dates, 2) generates meeting minutes/consents with one click and 3) monitors the status of your company. It’s 3 products in 1 for total entity protection – all for less than one hour of attorney advice!

Small Business Now Most Trusted Group in the USA

Tuesday, May 4th, 2010

Small businesses are now more trusted than churches, colleges, the Obama Administration, Congress and the banks (no big surprise there). In fact, small businesses are now the most trusted group in the United States.

Small business is respected by at least 70% of Democrats, Republicans and Independents – there seems to be no political group that doesn’t overwhelmingly trust small business.

However, the poll also shows a striking lack of attention for small business from the Federal Government coming in as the most neglected group, just ahead of the Middle Class.

Of course this is not news to us, we’ve been singing the praises of small business for 9 years! We’ve also been keenly aware of the lack of Federal attention to the issues important to small business: too many rules and regulations, an out-of-control tax code, a health care system that still unfairly punishes small firms (health care reform or not), anti-competitive cooperation between big business and the government (including outrageous subsidies to large firms) and a laundry list of state and local issues.

In short, though small business is the most respected group in the US, it is the most neglected by government. This is a sad state of affairs considering most innovation and job creation comes from small business. It will ultimately be innovative startups, those brave few who actually start a company, that drag our country out of the current recession. The government should act like it cares.

How Venture Capitalists Want Your Company to be Formed

Thursday, March 25th, 2010

Many entrepreneurs and startups are very concerned when they go to start their company because they’re not sure what type of business entity (Corporation, S-Corporation, LLC, etc.) a venture capitalist (VC) would want their company to be formed as, which state they should incorporate in and the types and number of shares.

However, many entrepreneurs and startup advisors believe that this should not be the primary concern. For example, if you incorporate in California when you start out, you can then “re-incorporate” in Delaware later should your investors require this. Or if you don’t authorize enough shares, then you can amend your original articles of incorporation later to reflect more shares, or different classes of shares (common shares vs. preferred shares).

There may be an exception in regards to the LLC – sometimes this entity is more difficult to modify for a venture capitalists needs – VC’s almost always prefer to work with the C-Corporation.

So, in essence, many companies start out in one structure, based in one state and eventually end up being changed considerably later. Instead, it might be advisable to work on working on your product or service, getting the company going in whatever form and then worry about these corporate formalities later – if you are at the point where they are modifying your company, you will probably receiving significant funding and these formalities will be handled by seasoned lawyers.

If you want to do the Delaware option at startup, see how a lawyer would set up a Delaware company now if were a startup. Almost always this is a Delaware C-Corporation.

If you’d like to see some of the typical venture capital agreements or how they typically modify the articles of incorporation, then view these “Model Series Seed Agreements“. This includes documents like Investors Rights and a “Term Sheet”.

Long story short, it’s ultimately up to you how you want to structure your company in the beginning, but the links mentioned above will show how a VC or startup lawyer might eventually structure your corporation.

How a Startup Lawyer Incorporates in Delaware

Thursday, March 18th, 2010

The Startup Lawyer has a fantastic post detailing exactly how he would setup a company in Delaware (like he does for his clients). This includes:

He details other issues like the appropriate amount of stock he would issue to the founders, vesting schedules and even how he would raise capital. Highly recommended.

The only thing I would add is that a startup doesn’t have to start by issuing that many shares, you can save money by starting with a smaller amount, for example, one thousand shares and then if you get to the point where you need to raise money or venture capital, you can amend your “Articles of Incorporation” for higher share amounts later.