Category: Incorporation

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

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

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

 

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

 

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

By Shannon Stahlin, CEO, Direct Incorporation

One of our Facebook friends posted a great question on the Direct Incorporation page this week asking whether she should incorporate her business.

Here’s her question:

“ So – I write a blog but have not done anything about actually registering a business name or incorporating. I make a little money through advertising, not a lot. Should I make things formal? Wondering about pros and cons, especially cost-benefit tradeoff.”
– Erika Kerekes, who writes the food blog In Erika’s Kitchen

Here’s my answer:

“That’s definitely a great question and I’m happy offer some help. (Read our disclaimer and keep in mind that we are not a law firm and cannot offer legal advice.) There are definitely benefits to incorporating a business that is generating any amount of revenue.

One needs to balance the benefits with the cost. Not just the cost of incorporating but the cost to keep the LLC/Corp going – particularly, more administrative work and annual fees. The annual fees vary by state. For example, the annual fee is just $15 in Michigan, but $800 in CAL. Which state are you in Erika? As for the administrative work, we have a program to simplify and assist you with “corporate formalities” and deadlines: businesscomplianceprogram.com. We make it pretty easy for our clients to knock down these requirements.

On the other hand, there are numerous benefits to incorporating or forming an LLC, but there’s a few that stand out. To start, there can be tax benefits, sometimes significant, depending on your choice of entity. You will also legitimize your operation with an official corporate name – In Erika’s Kitchen, LLC. The name also gets locked in with the state, so no other entity can apply for that particular name, which can also kick-start potential trademark rights in the name.

Another key benefit is the liability protection that an entity offers. The general rule is that if the business is ever sued, you can collect against the business, not the owners of the business. Peace of mind for any business, don’t you think?”
– Shannon

We love hearing from clients on our Facebook page. If you have questions, please don’t hesitate to post them on Facebook or right here on our blog. I’ll do my best to answer them. Thanks. – Shannon

By Shannon Stahlin, CEO, Direct Incorporation

Don’t take a wrong turn when starting your journey as a business owner. To properly protect yourself and your assets, you must incorporate your business. Whether you’re a Limited Liability Company, an S-Corporation, or a C-Corporation, incorporating your business offers you the following benefits:

1. Protect your personal assets. When you incorporate your business, you’re essentially forming a separate legal entity. This means you are limiting your personal liability should there be a lawsuit filed against your business.

2. Lower your taxes. When you incorporate your business, there are tax deductions for a wide variety of operating costs, which will substantially cut back your company’s overall tax liability. These deductions may include the cost of materials, employee wages, the cost of insurance, the cost of retirement plans, as well as business travel and entertainment expenses.

3. Raise your capital. A corporation can raise capital from investors easily through the sale of stock, while a sole proprietor cannot.

4. Leave a legacy. The life of a corporation is not dependent on the life of a particular individual. It can continue indefinitely and is not affected by the death or withdrawal of shareholders, directors or officers of your corporation.

5. Enhance your image. Another essential reason to incorporate your business is that it adds credibility to your operation. The perception of a business is improved by its incorporation and use of “Inc.,” “Co.,” or “LLC” following the name of the business. Customers are more likely to trust and deal with a business that has this positive image. More importantly, your business will be more attractive to banks and investors if and when you seek outside financing.

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