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FAST CLASS: Legal Survival Guide

Lesson 3 of 17

Four Types Of Business

 

FAST CLASS: Legal Survival Guide

Lesson 3 of 17

Four Types Of Business

 

Lesson Info

Four Types Of Business

Alright, strap in, buckle in, put your helmet on, we are going to pick up the pace and we're gonna rock this thing out. We're gonna form some companies, we're gonna do a trademark search, we're gonna get a domain name. We're gonna make it happen now. Let's think about what company, what do I need? A company? I'm doing just fine. If it ain't broke, don't fix it, leave me alone, It's awfully easy to do nothing. Why would I even want to do that? Let me tell you why you'll get the protection of the corporate veil. It is not like the wedding veil, it is the corporate veil. It is this veil of protection that comes over and protects the owners of the company from the liability incurred by the company. So if the company breaches a contract, they can't come take your personal assets. If the company hires somebody and gets into an employment related dispute, they can't come take your personal assets. It's a veil of protection where it limits shareholder liability, Remember liability in the busin...

ess. That's what it is and that's why it matters. So if you are doing business, daria as a sole proprietor and you breach a contract, I'm gonna come take your car and if you hire an employee and you discriminate against them because of a disability, I'm gonna come take your car and and and if you um if you uh agree to show up for a gig and you don't show up on time, I'm gonna come take your car, right, here's what the corporate veil doesn't protect if Dari is working for daria photography LLC and she's driving down the road drinking her malt liquor from her brown paper bag as she does from time to time. No, I'm just kidding and she runs over a little timmy walking across the street with his scooter and he's killed dead on the spot. Dari is not going to have a lot of luck saying, I'm not responsible. Don't come take my car. It's personal liability that she would have incurred by running over timmy while drinking and driving. Does everybody get that? So if you do the bad thing personally, not wearing your corporation had, you're still gonna have personal liability. But the corporate veil gives us protection. And that is why we need to do business in an entity. You're just doing business in your own name. It's simple. It's easy. I don't have to think about it too much. It's perfect for creatives. It's right. Brain friendly. It feels good. I like it. No danger. Don't do it. Partnership. Maybe you're in business with someone else. The saying goes, the only ship that won't sail is a partnership. It's sure to sink. It's not when the part, it's not if the partnership's gonna split up it's when the partnership is going to split up. So if you're gonna go into a photography business with someone else, please don't do it as a partnership. Do it as a limited liability company. A couple of different kinds of limited liability company. You can be a single member limited liability company. Limited liability companies have members, not shareholders. It's kind of a weird way that lawyers say it, but actually the state legislatures created the limited liability acts and more members. This is the best way to do business. It's simple. There are also corporations bob for instance his company is a corporation but he's made an s corp election. So the corporation is taxed like a partnership that's passed through taxation. Or you can be a c corp like coca cola coca cola as a c. Corp. Um That's just a general corporation. General corporations have taxi taxation, double taxation so they pay tax at the corporate level for corporate profits if they give dividends out to their shareholders, if you're a shareholder of coca cola, you pay tax on your dividends, right? Um So corporations have double taxation and see corpse generally are a bad idea for service oriented businesses. These are the four types of businesses. Now. The bonus material includes a chart of all of the tax forms and the drawbacks of each type of business, including sole proprietor LLC partnership. See corporate escort Here are some thoughts about taxes in your structure. Just this is just a quick 10,000 ft foot overview. Llcs are taxes, partnerships partnerships have passed through taxation so all of the income and expenses they show up on your 10 40 either through what's called A. K. One. If the partnership has more than one member or the LSC has more than one member or just straight onto your schedule. See if you're the only member of the loc partnerships get taxes, get passed through a single member. LLC doesn't even have to file a separate tax return. Who wants to file more returns? I don't So if you're a single member LLC, you don't have to file any additional tax returns. See corpse are subject to double tax S corpse. Again, our taxes a partnership but you have to pay annual maintenance fees. You have to file a separate form 11 20 S. Right bob 11 20 S and the 11 20 s. Then you have to issue some K. Ones and then the K. Ones get reported on the 10 40. I'm trying to make things simple, creatives. Okay, an escort might be the right thing for you, but a lot of formality with the s. Corp that we don't have with the L. L. C. Setting up your LLC. It's simple. This is all you gotta do. Okay if you can watch the desperate housewives of Orange County or the real what are the real housewives or you can watch the uh if you can watch the Voice or all of these, you know reality shows that suck you in, you can do this in the time it takes to watch not even one of those shows on the DVR skipping all the commercials. We're gonna do all these things today. So we're gonna do some articles of organization. We're gonna do an operating agreement. We're gonna pick and pay a registered agent. We're gonna do that all together today. How much does it cost? We're gonna do a Missouri LLC today which is gonna be the whopping price of 50 bucks online. Okay so if you can't afford 50 bucks maybe we need to think about our cash flow of our business. How much does it cost to get a registered agent? If you register in your own state you can be your own registered agent and it won't cost you a penny. If you want to register in another state it's gonna cost you between 52 to 50 a year for somebody to serve as your registered agent. That's just a person who gets the correspondence from the secretary of state or the corporations division that has a presence in that state. So if you guys follow along with me and create a Missouri LLC you have to have a Missouri registered agent which I'll be happy to do for you because you have to have a registered agent in the state. I'll show you how to do that again. If you do it in your own state, you can be your own registered agent nationally. There are some choices for registered agents, including ct corporation, that's the gold standard for registered agents. That's who walmart would use, that's who coca cola would use, that's who Sony would use. Um you can use the corporation services company or CSC. So if you're riding down at home, registered agents, who could be my registered agent, write down C T C S C N R A I. And then I S I C T C S C N R A I and I S. I. Um they have national presence. If you have a Missouri LLC, you can use Craig Heidemann. I've got a registered agent service. If you go to Craig Heidemann dot com and click on it, you can get registered agent services for a year or three years depending on what you want. There is a form that I have to email you for you to sign before it's legal. So if you do pick me today is a registered agent, it won't be binding until you fill out that form and send it back in. But again at Craig Heidemann dot com, there's registered agent services there as well and that just means I get mail for you and if a lawsuit gets served on me, it's the same as it gets served on you. This is true for any registered agent, so you always have to keep your registered agent updated of your address because if I get served with your lawsuit and I don't know how to find you. It's kind of hard for you to respond to that lawsuit, isn't it? You have to have a registered agent to do business in your home state, cost of course varies. Um So if you create a Missouri LLC like we're gonna do today, you have to take that foreign company and register it back in your home state piece of cake. It's just a form you can fill out online. Here's what it costs. If you register in Missouri a foreign corporation to pay 105 that would apply to really anybody today. If you registered in Washington, you pay 180 California to pay 50 bucks to bring a Missouri LLC into California florida. Pay a buck 25 new york would pay 2 50 Nevada you'd pay 75. So anywhere between 50 and 250 bucks is what it costs to register your foreign corp company back in your home state. But you have to do it. If you were to form a Missouri company, if you form in your own state, if we do a Washington LLC and you're doing business in Washington, you just pay the Washington filing fee and you're done how much business goes on in Delaware A ton. What gets done in Delaware? Not much everybody registers in Delaware. For instance, Creativelive inc is a Delaware corporation, but yet I'm here in Washington state and maybe I'd be at the studios in san Francisco. Uh Creative life is registered to do business in Washington and California, but they're a Delaware corporation. Why is that? Because Delaware is business friendly? What does it mean to be business friendly? Well, we have low fees, we make it hard to sue businesses. We have business friendly laws that favor businesses over consumers. You know, you can, you can argue about the fairness of that, but that's the law. So we want to pick a business friendly climate with low costs Missouri would qualify, hiring a lawyer in the midwest is cheaper than hiring a lawyer in san Francisco or um new york or Washington or Denver or anywhere else. The rates are simply much lower and you can pick a legal venue that's unattractive to lawsuit happy folks. So if you're doing business in Seattle in your contract, excuse me. Your contract has a choice of law provisions, which is legal. You'd have to have that checked out in Washington because generally you can pick any venue anywhere in which people have to sue you. So you say any lawsuits that my client files against me regarding my services have to be filed in Greene County Missouri, That's in southwest Missouri where I live, so that would mean anybody that wanted to sue you would have to come to Missouri and file suit in Greene County. And if they sued you here in King County, that lawsuit would be immediately dismissed because that they sued you in the wrong venue because you picked where the lawsuits had to be brought. Now there are a couple of nuances, but you can pick legal venues unattractive to lawsuit. Happy folks.

Class Description

Ready to turn your creative side project into a thriving business? Join Craig Heidemann for an introduction to the business and accounting principles every creative professional needs to know. 

In this class, Craig will take you step-by-step through the process of setting up, running, and growing a small business. You’ll learn how to use QuickBooks to manage your finances, including managing client contracts and invoices. Craig will also help you navigate the potentially confusing tax, legal, and copyright issues surrounding small businesses. You’ll also learn how to contract and/or hire people to do the tasks you can’t do yourself. 

Whether you’re just starting out as a business owner or you’re a longtime entrepreneur ready for a refresher course, this course will give you a roadmap to business success.

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