Babysitting a business. An easy way to keep informed of corporate responsibilities.

By Maryann Lawrence, Startup Rep, Direct Incorporation

LLC maintenance requirements, IRS corporate tax obligations, internal corporate formality requirements – managing the backend of a business is enough to make your head spin! But don’t worry, there’s help out there. A little advanced planning – and utilizing an automated reminder service – will go a long way, especially when it comes to the IRS. Here are just SOME of the things you’ll need to plan for when running your business:

Annual Report Filing
Most states require that Corporations and LLCs file a statement and pay a moderate fee on an annual or biennial basis. This filing requirement, which is generally referred to as an “Annual Report” or “Franchise Tax,” updates the state government as to the status of the company, and permits the company to continue its existence.

Licenses
Are you running a daycare or restaurant? Are you an Engineer or Attorney? In order to comply with state business regulations, most new corporations and LLCs will be required to obtain a license and possibly pay a state fee before transacting business. After formation, it is urged that you check with the appropriate state agencies to ensure that you comply with the license requirements for your particular business.

Tax issues
It is important to remember that although federal taxes are likely to comprise the most significant portion of your tax liability, certain entities will also have to pay tax at the state level. Learn more about tax filings.

Publication Requirement
A handful of states has a publication requirement. This requirement generally directs a new corporation or LLC to file a notice of incorporation (organization) in a newspaper of local circulation.

Do it the easy way – Automate!
Direct Incorporation’s Business Compliance Program will keep you informed and up to date with your corporate responsibilities so that you can focus on growing your business. We’ll help you with:

  • IRS filings
  • State reports and renewals
  • Internal corporate formalities
  • Custom notices and licenses

In addition to keeping you informed of your corporate responsibilities, the Business Compliance Program provides you with an interactive software program that will walk you through your corporate formality meetings, such as your shareholder meetings.

Head still spinning? Contact Direct Incorporation for help. Thanks!  – Maryann

 

Is your business name used by someone else? How to perform a business trademark search.

By Maryann Lawrence, Startup Rep, Direct Incorporation

So, you’ve got a great name and you want to start printing your business cards, brochures and sales sheets. But first, you’ll need to perform a trademark search to make sure no one else has nabbed your name. Why is this important? Because finding out after you’ve started using your name can have a devastating effect on your business in the form of fines, legal liability, and the lost cost of having to switch names midstream.

Performing a trademark search is free and easy.

You’ll need to perform a trademark search before you submit your application to the United States Patent and Trademark Office (USPTO). Submitting a trademark registration application blindly risks a considerable amount of time and money.

Don’t worry! Performing a Trademark Search is free and will ensure that you can use the name you want to use for your business. It also lessens the risk that your trademark registration application will be rejected by the USPTO.

When trademarking, keep expansion in mind.

Even if no one else is using the name in your state or geographic region, a Trademark Search will reveal if someone is using the name in any part of the country. This is important to businesses that plan on expanding. And we all invision growing our business, right?

Each year, thousands of business owners find out that they are practically frozen out of expanding to an area with their business or brand name, as someone in that area has Common Law Rights to that business name. A Trademark Search will reveal this scenario up front, before your put time, money and effort into building a brand.

Perform a free trademark search for your business now.

Do you have questions about trademarks? Please leave a comment below and I will try to answer them. Thanks!  – Maryann

Starting Point: Incorporate in Florida, Incorporate in Delaware or Stay Home?

By Maryann Lawrence, Startup Rep, Direct Incorporation

There’s a lot of talk about the best place to incorporate or form your LLC. Should you incorporate in a “tax haven” state with no individual income tax, such as Florida or Texas? Should you follow large publicly traded corporations and incorporate in Delaware? Or, should you consider the recent trend and incorporate in Nevada or Wyoming because you’ve read that you can remain anonymous and avoid paying taxes?

Well, for a small business, the answer is usually none of the above. It is usually makes the most sense to incorporate in your home state, where your business is domiciled and operates. This is typically the answer for a few basic reasons.

First, most small businesses will incorporate or organize as an S-Corp or LLC, which are pass thru entities. As an S-Corp or LLC, you won’t be subject to corporate tax generally, just individual income tax. As such, it won’t matter if you incorporate in a state with a high corporate tax rate, moderate tax rate, or no corporate tax at all because you won’t be subject to it. Additionally, incorporating in another state will not affect the state in which you’re subject to individual income tax. For example, if your business is in California and you are subject to California income tax, then incorporating in Delaware won’t change that fact. Hopefully you are in state with no individual income tax, such as Texas or Florida and not a state with a high tax rate, such as California, New York or Massachusetts.

Secondly, if you incorporate in another state, your fees will add up quickly. You will very likely be required to file as a foreign business entity in your home state. Foreign entity fees are usually higher than incorporating, so you will be doubling up on fees, or worse. You will also be required to file annual reports in both states and hire an outside service to be your registered agent (assuming you do not have a physical address in that particular state).

Finally, the stated benefits of incorporating a small company in Delaware, Nevada or Wyoming are often exaggerated or misunderstood. Though a plurality of all companies incorporate in Delaware, the benefits are generally geared towards larger corporations and publicly traded corporations. For example, Delaware corporate law benefits the entity in the case of shareholder derivative suits and also provides anti takeover protection, circumstances which are virtually irrelevant to a small, closely held company. As for the Nevada and Wyoming options, there is no appreciable tax benefit for an S-Corp or LLC that doesn’t operate within the state (see above). What about anonymity? In Nevada, you can take certain measures, such as hiring a “nominee director” to avoid putting the actual directors on state public documents- usually around $600 per director. However, remember that most of these companies will also be required to file as a foreign entity back home. As foreign entity, you will be required to provide the actual directors’ names and addresses.

In balance, do the benefits of incorporating in another state outweigh the disadvantages? For most small companies, the answer is probably no.   Most save time and money by incorporating in your home state.  Please consult an accountant and/or attorney for advice on your specific situation.

Do you have questions about incorporating your business? Please leave a comment below and I will try to answer them. Thanks! – Maryann

 

 

4 questions to ask yourself when naming your business.

By Maryann Lawrence, Startup Rep, Direct Incorporation
Naming your company is one of the most exciting – and challenging – things you can do as a business owner. But no worries, there are some tried and true questions you can ask yourself to aid you in your business naming journey.

4 questions to ask yourself when naming your business:

1. Is it reflective of our services?
Should I use a family name or a trade name?
How will it look written out?
Is it easy to pronounce?
Does it distinguish me from the competition?
What connotations does my proposed name evoke?

2. Is my domain name keyword rich?

3. Is my domain name easy for my customers to email, or can it be abbreviated into a domain name that is easy to email?

4. Does my proposed name exist already? (This one is complicated. Is it available as a corporate name with your state? Even if it is, the company name may still be too similar to another company name or trademark in your state, or somewhere else in the US.)

Once you’ve considered these questions, take care of the legalities by doing a trademark search. Direct Incorporation offers a Free Federal Trademark QuickSearch or a Comprehensive Trademark Search, depending on your needs.

For more tips on naming your business check out this handy resource from Small Business Trends.

If you need help with researching your trademark, or acquiring your corporate name with your state, contact Direct Incorporation.  – Thanks, Maryann.

Texas Name Search. Finding The Perfect Texas Business Name Can Be Difficult.

By Shannon Stahlin, CEO, Direct Incorporation

Finding a good corporate name that’s also available can be a difficult matter.  In Texas, the issue is more problematic than anywhere in the country.  Texas is one of the Nation’s most entrepreneurial and populous states.  In fact, Texans form over 6,000 new corporations and LLC per month- reserving that many corporate names!

To make matters worse, the Texas Secretary of State instituted the “The First-Two-Word –Rule” a few years ago.  This means that if the first to words of a corporate name are taken, it doesn’t matter what you add to it, the Secretary of State will not approve it.   The Rule even includes root words.  So, for example, “Champion Consulting of Austin, Inc.” would be too similar to “Champ Consultants, LLC”. Along the same lines, “Longhorn Truck Service, Inc.” and “Longhorn Trucking & Transport Corp” would conflict. I should point out that you can swap the first two words and it would still be a problem. So, using the former example, “Consulting Champs, Inc.” would conflict with “Champ Consultants, LLC”.

What is the solution to the Texas business name search problem? I can think of three options:

1. Obtain consent. The Texas Secretary of State will allow a name with the first two words, as long as it’s not the exact same corporate name or LLC name, if the applicant obtains a letter of consent from the prior entity to use the name.

2. Add a Location. If you add a location to the beginning of the company moniker, the name will likely be approved, if there isn’t a company in existence with the first three words. Using the first example above, you could move “Austin” to the front of the business name. “Austin Champion Consulting, Inc” would likely be approved if another company name doesn’t start with those three words.

3. Search further. Keep searching and find a unique business name without any first-two-word issues.  Considering trademark concerns and complications in having a similar name to an existing business, this may be the best route.

    Need help searching a business name in Texas? Please call us and we’ll help you search your business name free at 877 281 6496.

    Or, you can submit a free company name search request online here: http://www.directincorporation.com/name_search/name_search_state=TX

    Thanks! – Shannon

     

    Timing is everything. The best time to incorporate your business.

    Maryann Lawrence, Startup Rep, Direct Incorporation

    The short answer to the best time to incorporate? Immediately. Incorporating your business generally protects your personal assets should there be a lawsuit filed against your business. It also can offer tax benefits, such as substantiating tax deductions for a wide variety of operating costs, and it enhances your image as a business owner.

    If your business is already up and running, forming a corporation immediately might make the most sense. In addition, you can potentially save money by forming a corporation before the year’s end.

    If your business is not yet operating, you could wait until the following year when your business begins operations. This might defer some of the costs and filing work until you are completely ready to pull the trigger.

    However, incorporating sooner, rather than later, is usually the best strategy. This way, once you’re ready to launch your business, you’ll be ready to go with your company name, EIN, bank account, etc…

    Also, waiting too long to incorporate could prove risky because you could lose the name you would like for your new business. In addition, it is a bit time consuming, and so the quicker you get started, the easier it will be on you once your business ramps up.

    How long will it take to incorporate?

    It only takes about 10 minutes to complete an online application. Once this is complete, it depends on your state. For example, Alabama takes four to six weeks, while Alaska takes only 15 to 20 business days. Colorado and Hawaii offer incorporation services in about four business days, while California can take up to 12 weeks.

    Do you have questions about incorporating your business? Please leave a comment below and I will try to answer them. Thanks! – Maryann

    Are you actually a B-Corporation? New type of corporation for businesses who do good.

    Maryann Lawrence, Startup Rep, Direct Incorporation

    You’ve heard of LLCs, S-Corps and C-Corps, but are you aware of the new legal entity out there called B-Corp? A B-Corp, or Benefit Corporation, is a new form of incorporation that legally recognizes companies that “do good” AND make a profit.

    Take Dansko for example. You may have seen this brand at your local department store. Dansko makes dress shoes, sandals and boots, but it does it in a way that uses a for-profit business model to affect social change. Its office building is LEED® certified, it hosts West Grove, Pennsylvania’s only Community Recycling Center, and it pays its employees to take time off to volunteer, as well as match its employees’ salary and gives that amount to the organization at which they volunteer. For these reasons, Dansko qualifies for B-Corp status.

    The benefits of a B-Corporation:

    • B-Corps enjoy the brand differentiation of being recognized as socially beneficial corporations
    • B-Corps enjoy discounts from B-Corp service partners
    • B-Corps can attract outside investors, while non-profits cannot
    • B-Corps enjoy enhanced collaboration with other businesses that share their goals
    • B-Corps can hold their directors accountable for decisions that impact their mission to meet social and environmental performance standards

    How to become a B-Corporation:

    1. Take, and pass, the B Impact Ratings System
    2. Complete a telephone interview with B Lab
    3. Amend your governing documents to adopt the B-Corp Legal Framework
    4. Put your John Hancock on the B Lab Term Sheet to make it official

    Today it’s only available in a few states: California, Hawaii, Michigan, New York, North Carolina and Pennsylvania.

    Have a question about incorporating your business? Feel free to post it below and I will try to answer it. Thanks! – Maryann

    What’s in a name? The importance of registering your trademark.

    Maryann Lawrence, Startup Rep, Direct Incorporation

    A Trademark is one of the most valuable assets of any business. It distinguishes you from your competition and generates an indisputable record of your use, which is vital in defending your rights if another business were to come along and try to use your mark. It also gives your trade name and brand names more credibility with the public and with other business you deal with.

    What is a trademark?

    A Trademark is a word, name, symbol, design, phrase or sound that identifies a business organization and distinguishes it from other business organizations.

    What can be trademarked?

    Logos, names, taglines and packaging can be trademarked if they meet certain qualifications. You can’t trademark a word or phrase that’s commonly used or that is already trademarked by another company. For example, “hot tub” cannot be trademarked because of its common use, while “Whirlpool” is already trademarked and owned by the Whirlpool Corporation.

    What’s the difference between a trademark and a service mark?

    A trademark identifies and distinguishes the source of the goods, while a service mark identifies and distinguishes the source of a service.

    How long will my mark last?

    The registration is valid as long as you timely file all post registration maintenance documents. You must file a “Declaration of Use under Section 8” with the United States Patent and Trademark Office between the fifth and sixth year following registration. In addition, you must file a combined “Declaration of Use and Application for Renewal under Sections 8 and 9” between the ninth and tenth year after registration, and every 10 years thereafter.

    Do you have questions about registering your business? Please leave a comment below and I will try to answer them. Thanks!  – Maryann

     

    A war of weiners. How to protect your intellectual property.

    By Maryann Lawrence, Startup Rep, Direct Incorporation

    This month, Vienna Beef brought a lawsuit against its founder’s grandson for trademark infringement of its ‘Chicago-style hotdogs.’ The grandson, who is no longer affiliated with Vienna Beef, is accused of claiming that his hotdog company, Red Hot Chicago, makes its hotdogs with a century old Vienna Beef recipe.

    Red Hot Chicago’s tagline? “A family tradition since 1893.” Strange, since Red Hot Chicago has only been around for a quarter of a century.

    So, who will win this hot dog debate? Only time will tell. But it brings up a point I want to make, which is that you must be proactive in protecting your company’s intellectual property. Intellectual property protection is important because without it you would not reap the full rewards of your inventions, creativity, ideas and hard work.

    What is considered intellectual property?

    Intangible assets, such as musical, literary, and artistic works; discoveries and inventions; and words, phrases, symbols, and designs, are all considered intellectual property. They come in the form of trademarks, copyrights and patents.

    How can I protect my business from intellectual property theft?

    The U.S Department of Commerce predicts that US companies lose 250 billion dollars a year due to intellectual property theft! But there are things you can do to protect yourself.

    According to Inc.com’s article, How to Protect Your Trademark From Infringement:

    • You must first choose a trademark that you will be able to protect.
    • Secondly, you will need to use your mark correctly.
    • Third, you’ll want to monitor your mark for potential infringements.
    • Last, crack down on trademark thieves.

    For more information on intellectual property protection, read Inc.com’s article, and then visit stopfakes.gov.

    Do you have questions about intellectual property rights? Please leave a comment below and I will try to answer them. Thanks!  – Maryann

     

    Dot…Dot…Dot… New web domains could add complications to trademark enforcement.

    By Shannon Stahlin, CEO, Direct Incorporation

    The Internet Corp. for Assigned Names and Numbers (ICANN), just made an announcement that they are opening up an infinite number of domain endings for purchase.

    In addition to .com, .org and .net, people will soon have the opportunity to buy .travel, .soda, .whatever…

    This new announcement made me think of all the trademark issues this new age of Internet could open up. Take Coke for example. Anyone, including competitors, may just be able to buy www.coke.soda for use, complicating Coke’s ability to detect infringement and protect its trademark, not to mention the potential confusion to soda consumers.

    ICANN will take applications for the new domain endings in January of next year, and it assures us that there will be ample time for companies to enforce their trademarks if something like the above happens. Not to mention that the cost of these new domain endings starts at $185,000 with a $25,000 maintenance fee each year.

    AdAge.com wrote a terrific article about ICANN’s announcement. You can find it here.

    I’d love to know your thoughts on this new announcement from ICANN. Post away and I will try to answer any questions that come up. – Shannon