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View Full Version : Internet based Service Business, what entity, what state?



vennardk
04-06-2010, 12:09 AM
Hello,

First I want to thank you all for coming together and forming this great site. Been reading a number of past posts! I'll try to hit all the details.

I am looking to start up an entity. The team consists of two guys in AZ, another in Washington state, and myself in MI. We all have primary jobs outside of this business. We would be providing an internet based entertainment service... Not porn I swear! ;)

Our questions are as follows:

What entity? I am partial to the S-Corps. We will likely be netting a grand total of $100,000 in 3-5 years. I want to avoid having employees! We will likely never have more than 10 employees and even that seems high. We will never have inventory. We will possibly be looking for investors. Like everyone else, we want to avoid personal liability as we will have high involvement with the public.

What state? I am favoring NV for tax reasons. What kind of additional fees am I looking at?

Do we need to go through Foreign qualification? I tend to think not because there is no tangible property or goods outside of NV. No sales of goods at all.

Do I need a business License? I believe not because we will be a home based business...

What are the advantages and disadvantages to a home based business?

Are these internet based incorporation sites really worth the moeny? ie Legalzoom, mycorporation, The Company Corporation, ect.

If so, what is your preferred one?

Does anyone have a check sheet of forms that need to be filled out so I can do it myself?

Is doing it yourself a bad idea?


Thank you kindly for any input you can provide us. I really do appreciate it!

Harold Mansfield
04-06-2010, 03:31 AM
Hello,

First I want to thank you all for coming together and forming this great site. Been reading a number of past posts! I'll try to hit all the details.

I am looking to start up an entity. The team consists of two guys in AZ, another in Washington state, and myself in MI. We all have primary jobs outside of this business. We would be providing an internet based entertainment service... Not porn I swear! ;)

Our questions are as follows:

What entity? I am partial to the S-Corps. We will likely be netting a grand total of $100,000 in 3-5 years. I want to avoid having employees! We will likely never have more than 10 employees and even that seems high. We will never have inventory. We will possibly be looking for investors. Like everyone else, we want to avoid personal liability as we will have high involvement with the public.
I can't answer which kind of corporation you should set up, that all depends on the situation of you, your partners, and what kind of return you are promising investors.
Most people opt for an LLC, but again, that is something that you and your partners need to discuss so that it is beneficial to everyone.

On the inventory statement...you will have equipment, and if you are creating entertainment, that is your inventory.


What state? I am favoring NV for tax reasons. What kind of additional fees am I looking at?
Last time I checked it was $750 to incorporate here (I live in NV). You will also need a business license (around $35), DBA (around $25), Local Bank Account which you can start with $50-$100...and an EIN which you can get online from the IRS for free.

You may also need a local office to use as a mailing address. There are companies that provide that service so that you don't need to rent office space somewhere. I don't know what they charge.



Do we need to go through Foreign qualification? I tend to think not because there is no tangible property or goods outside of NV. No sales of goods at all.

Regarding that:

Corporations or LLCs formed in one state can do business in another state. Before conducting operations across state lines, a business may be required to file for a Foreign Qualification, or obtain authority to do business in that state.

A corporation or LLC is considered to be domestic only in the state in which it was incorporated.

In all other states, a company is regarded as a foreign coorporation or foreign LLC.

If your company expects to transact business outside the state in which your company was formed, you may be required to file for a Foreign Qualification.

For example: If your company incorporated in the state of Nevada, but has an office and employees in California (in essence, based in California), then you would generally have to file for foreign qualification within the state of California. In other words - you must apply for authority to conduct business in California.



Do I need a business License? I believe not because we will be a home based business...
Yes you do. You can't form a corporation without a business license. You can incorporate personally, but you can't incorporate as a business without a license to do business.



What are the advantages and disadvantages to a home based business?
I work at home and I haven't come up with any disadvantages so far. I also live alone so I don;t have any interruptions, kids, or other responsibilities to tend to in a normal day.



Are these internet based incorporation sites really worth the moeny? ie Legalzoom, mycorporation, The Company Corporation, ect.

If so, what is your preferred one?

Personally, if I can do it myself, I usually do. There are a ton of businesses out here that do the "Incorporate in NV" thing. Actually some of my old bosses are running one. I know of one company that a friend works at, that charges $3500.



Does anyone have a check sheet of forms that need to be filled out so I can do it myself?

You can obtain all the information you need with Google and State of Nevada websites.



Is doing it yourself a bad idea?

Not if you have the time and already know what you need. If you aren't sure what kind of incorporation protection you need, you may want to consult with an Attorney. If you do, there's a company out here called Nevada Legal Forms (as well as many other online Legal Forms services), they are kind of like a legal Kinkos. I'm sure they will be able to send you the forms that you need and tell you who to submit them to.

By the way, Welcome to the forum.