I decided to put up a small business education thread for those intending to start their own businesses.
I just entered into the corporate world. Although Aabidah and I have owned and run our own businesses in the past we have decided to jump into the corporate world. We chose to incorporate for many reasons, mostly for the tax advantages.
After a lengthy search at the various corporate laws we chose to incorporate in Nevada. Our DBAs are in Minnesota, South Dakota and North Dakota. We got our corporate seal and charter in the mail today and now looking at it we are saying "Gads, what did we jump into?"
I will share our experiences and tell the errors we make in this thread. Our goal is to help others who are thinking of incorporating their own businesses. Hopefully they will learn from both, what we do that works and what errors we make.
Right now we are thinking on how to divide our stock. We have an initial issuance of 75,000 Shares. since Aabidah and I desire to assure we have full control we are keeping 37,501 shares to ourselves. We will divide 18,500 among some people that have been working for us the remainder will be used in the future as bonuses for any future employees we hire. We do not desire to go public and offer any stock for sale on the open market, our goal is to have all employees as part owners of the corporation. Our corporation is basically one of profit sharing among all workers and staff. The company makes any profit, we all share in the profit.
One of the key things I am finding is to delegate authority and hire a good business manager. In time I will need at least 4. One as a general manager and one each to manage the separate sections in North Dakota, South Dakota and Minnesota.
For my General Manager I hired a young person who has skills in Sales, production and personnel management. What I expect of him is to keep operations within budget, hire appropriate managers for each section as needed and have the ability to open and close divisions as the budget requires.
At the moment I am still learning specifically what it is I need him to do.
Could you please provide the reasons that you chose to file your corporationin Nevada and then proceed to register it in North and South Dakota and Minnesota?
Were you looking for a tax benefit?
Did you believe that there was added liability benefits?
Could you please provide the reasons that you chose to file your corporationin Nevada and then proceed to register it in North and South Dakota and Minnesota?
Were you looking for a tax benefit?
Did you believe that there was added liability benefits?
Both, but the main issue was the tax benefits.
Also another reason is that we do our best to work with the Native American tribes at the moment we are closely connected with the Sioux in South Dakota and the Chippewa Nation in MN. Our current goal is to set up a working relationship with the Paiute tribes in NV and get a Date orchard started. Eventually we plan to move to NV to the Moapa area.
The corporation will be required to pay taxes in each state that it operates. While South Dakota has no state tax rate, both of the others do. The corporation will be required to file tax returns in each state that it has a business presence. That business presence can be defined as a physical location, a telephone, a bank account, an employee, or even by market share.
Please understand that I am an advocate of operating a properly structured corporation in Nevada, I'm in that business. However, the mass marketing of corporations in Nevada usually misinforms and encourages people to make errors.
From your description, you have a single business entity (a corporation) that is provably operating in Minnesota (9.8% tax) North Dakota (2.6 - 6.5% tax) and South Dakota you do not yet have a provable business opeartion in Nevada? Unless you have a real business address AND a real phone number AND a bank account in Nevada.
So, it would be expected (by those states) that you pay the taxes on ALL of the business that is generated from those states. AND regarding the business that is generated from out of state? it would normally be apportioned at the same rate as the in state sales.
For example, if 70% of the "In State" revenues were from Minn, and 20% of the In state REvenue was from North Dakota and 10% was from South Dakota, then 70% of all the sales that originate from California would be taxable in Minn, and 20% taxable in ND and 10% would be free from state tax because they would be attributed to SD.
You have no sales in Nevada, so 0% would be attributed to Nevada for state income tax purposes.
If on the other hand, you had talked to someone that was willing to inform you completely, you would have probably done it differently. The successful solution is more complicated to explain and probably more expensive. But you would have gotten the benefit you were looking for.
You can contact me directly. I'd be happy to give you some direction, and ways to accomplish your goals without throwing away what you have already started. then you may have a little better info to provide to others.
The liability issue is also not solved since any lawsuit in SD will involve the entire business (in all states) and the owners of the corporation (you).
Personal identification removed by Admin
Last edited by Woodrow; 08-11-2009 at 12:02 AM.
Reason: Personal Identifying information is not permitted on the open forums.
You can contact me directly. I'd be happy to give you some direction, and ways to accomplish your goals without throwing away what you have already started. then you may have a little better info to provide to others.
The liability issue is also not solved since any lawsuit in SD will involve the entire business (in all states) and the owners of the corporation (you).
Personal identification removed by Admin
That is very good advice. I will consider contacting you.
I had to remove your name and phone number from the post as we do not permit personal information on the open forums.
At the moment we do not have any direct personal sales what we do in sales is online with the exception of 2 distributors we have in Fargo, ND. What we have in SD and MN is production from Redlake Chippewa Nation in MN, Lower Brule Sioux Reservation in SD, Pine Ridge Oglala Sioux Reservation in SD and Cheyenne River Lakota Sioux Nation in SD. When we move to NV we will have an actual face to face sale outlet off the rez. Currently most of the laws I need to watch are related to the Bureau of Indian Affairs and local tribal laws. But, I am trying to prepare things for when our operation is off of the rez and in a brick&morter store in NV. Although our primary production will still be on the Sioux and Chippewa rez's plus imports from Malaysia, India, Pakistan and Saudi Arabia, which are the locations we currently get our products.
I should clarify further that at the moment when I refer to my production being on the rez's they are service providers I buy from and not employees. I purchase from their Companies, Much like I purchase my importd goods.
I spoke with Owelesstax on the telephone. He is quite knowledgeable and hopefully he will post more here. If any member has any questions regarding personal business questions he is receptive to getting PMs about them.
There are many marketers that make blanket statements and then sell on the line of least resistance. I have always taken a different tact. We would rather that our clients have a well rounded knowledge of the issues so they can make an informed decision than sell them what they want even if it is wrong. We tailor solutions for specific needs.
It seems that everyone from your tax preparer, to your brother-in-laws next door neighbor all know the right entity to use, and it is always a one-size-fits-all solution. It doesn't seem to matter to them if you are a Successful health food store with 15 employees, a roofing contractor with 150 and plowing all the income into growing the company, or a computer consultant working alone and barely making ends meet; They will give the exact same answer.
Specifically, to this line of discussion. Woodrow chose to set up his corporation in Nevada. But that may not be best for everyone (And I am in the business of setting up corporation in Nevada). It can be a great benefit under the right conditions, but it has to be properly structured and correctly implemented to be effective. I think we can all agree that the One-Size-Fits-all answer is not going to fit you.
Woodrow's plan did not actually solve a couple of his primary concerns as he had set it up, but he and I discussed how something could be structured to get him the benefits he was looking for.
John Kennedy once said:
"The great enemy of the truth is very often not the lie -- deliberate, contrived and dishonest -- but the myth -- persistent, persuasive and unrealistic."
I'm involved in this thread not as a marketing tool as much as to quash the myths. I welcome any questions.
I have no involvement in the management of this forum and I have no control over topics, but, I imagine that if this thread becomes of interest to a large enough group and there is a enough activity, it could be expanded into a topic.
I have no involvement in the management of this forum and I have no control over topics, but, I imagine that if this thread becomes of interest to a large enough group and there is a enough activity, it could be expanded into a topic.
I suspect there is at least one administrator thinking of doing just that. However, Ramadan will be here in 3-4 days depending on where you live. It will be best to wait until after Ramadan as we will be closing a number of the sections for Ramadan.
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