There has been a surge of people forming Businesses within the last 6 months. Perhaps due to the pandemic causing thousands to be unemployed and needing to supplement income. But be careful, Fraud is also on the rise. There are people who are offering services at a professional capacity and are non-professionals acting outside of their boundaries of legal operations.
Consulting with the wrong person could result with you being personally responsible for business liability because they gave you poor advice or legal direction. Here are some things to consider when consulting with someone regarding Business formation:
Only a Credentialed (EA, CPA, tax attorney, or non credentialed accountant degreed in finance/accounting tax professional) can give honest tax assessment and advice or tax implications on picking a business Structure. Others may only give an opinion.
Only a lawyer or tax attorney can give legal advice on asset protection. Receiving 2nd hand information from someone who has a structure should be taken with a grain of salt. Everyone has a different Financial position, therefore advice cannot be 1 size fits all.
Choosing to consult with a non-professional will not be a legal defense in court against liability. You should not pay any non-professional more than $50 for their time. [ASK FOR CREDENTIALS]
You have no corporate veil if your business structure isn't formed or dissolved correctly.
The secretary of state cannot give you legal or tax advice or guidance regarding Business set up.
6. Each Business structure will have a set of legal guidelines that will vary state to state. It is important you understand what those responsibilities are.
7. A registered agent has to be located in the same state as the business. A registered agent can be the owner of the business or a 3rd party. The responsibility of an RA is to notify the owner when filings are due, when legal action is taking place so the owner can respond in a timely manner, and other business monitoring services. The registration service becomes a lead source for other services.
8. Websites like LEGAL ZOOM are not legal services. Their prices are low because they are a 3rd referral service that have worked out a contract with the real registering agents such, as lawyers and accountants, because they provide the volume.
Should you need consultation, which they kinda put you in that position that by offering very general information, you will have to pay additional for those services. And if you picked an incorrect business structure and/OR didn't finish all your state and local requirements, you may have to pay a hefty price for the clean up.
9. There are Financial and maintenance obligations for LLC and Corporations. If you had to appear in court and cannot prove that you had the financial means at start up, your corporate veil can be penetrated.
10. The base rate for business tax returns do not change according to your profitability. The tax preparer has to maintain their credentials by following laws and guidelines of doing due diligence to verify your business.
LLC is not the default business Structure contrary to what people are preaching. It is suggested that you start as sole proprietor if you have not established proof of concept for your start up, or not operating a business that has a potential for liability such as food industry, construction, etc. There is less legal obligation and fees associated with maintenance with sole proprietorship, and they are easier to dissolve.
****Tax Star Mobile, LLC can not only give you tax consulting, but is partnered with a national Registering Agent Service which allows us to serve nationwide to register Businesses.*****
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