Entrepreneurs, Don’t Forget To Incorporate!
You've got it! Your million dollar idea has finally come to you. The best thing since sliced bread. You've told everyone you know and everyone loves your portable music player idea called Apple Pear A-Pod or maybe it's your new operating system called Windows Curtains Vista.
Regardless of where your entrepreneurial spirit leads you, there is a vital step that every entrepreneur must take to protect their business and their personal assets from liability.
Nellie Akalp the entrepreneur behind CorpNet created her latest document filing company focuses on providing exceptional customer service, honesty and ethics. Also, Akalp is very aware of the increase in start-ups (Inc. Magazine reports that the start-up rate is at an all-time high with approximately 565,000 new business created per month in 2010).
According to their website, CorpNet, “provides document filing services required for a variety of business needs such as forming your own Corporation or Limited Liability Company (LLC), filing a DBA/Fictitious Business Name, Foreign Qualification Filings, Registered Agent Representations, Corporate Compliance services and supplies in all 50 states.”
Hearpreneur.com spoke with Akalp about the legal industry, entrepreneurship and her company CorpNet. Excerpts from the interview are below:
Tough Hard Hitting Question: Who gave a better performance as a lawyer Julia Roberts in Erin Brockovick or Calista Flockhart in Ally McBeal?
A: In my opinion, I have to say Erin Brockovich; I actually happen to be friends with the real Ed Masry’s daughter and like his lawyering style and I thought Erin in that movie did a phenomenal performance as a lawyer.
Q: What was the coolest/most interesting business that you helped incorporate?
A: You know we’ve had some pretty crazy ones; however, one of my favorites, since I’m a mother would be an online website similar to Facebook but for Kids with heavy parental control.
Q: Because you started other successful online legal document filing services in the past, and now have your new company, CorpNet.com, where do you feel your “entrepreneurial bug” came from?
A: Ever since the age of 13, I have been managing and running my parents’ businesses (from ice cream parlors to restaurants…always a service-based business) and liked being my own boss; I never liked working for others (although had to for necessity at some points in my life) and always excelled at growing the business when I was managing a team and working for myself.
Q: Incorporating a business can be a scary thing for entrepreneurs. Some might want face-to-face interaction, how does CorpNet maintain that close relationship with customers even though they may not be face-to-face with a lot of them?
A: First of all, we create that personal face-to-face feeling with our clientele even though we are on the internet by having our pictures on our website, by videos, and on our email signature cards and correspondence so our customers know who they are corresponding with at any point in time. In addition, during our business hours of 7:00 a.m. until 5:30 pm PST, we always answer the phone; it never goes to an automated recording. That I think is crucial to any type of online business.
Q: On a scale from 1-10, how important is it for entrepreneurs to incorporate their business?
A: I would definitely say a 10; any small business owner or entrepreneur running a business should consider incorporating or forming an LLC for their business for liability protection thereby separating their personal assets from their business.
Q: We know there are numerous nuances to incorporating a business, could you give a list of a few things that entrepreneurs should ask before they make that step?
- Why should I Incorporate or Form an LLC?
- Should I Incorporate or form an LLC?
- What is the difference between the S-Corporation and the LLC?
- Where should I incorporate or form my LLC?
- When should I incorporate or from my LLC?
- I already have a tax ID number for my business, do I need to get a new one after I form my corporation or LLC?
- Once I incorporate or form my LLC, is my name protected in all 50 states?
Q: What are the big differences between a sole proprietorship, a LLC and a Corporation?
A: The Sole Proprietorship is the simplest form of business entity. However, without the protection of a corporate shield, personal assets are exposed to business liabilities. And, even where a small business owner doesn’t have assets today, a judgment against that business owner can last up to 22 years. The LLC and the Corporation (C Corporation or S Corporation) protect the owner’s personal assets from any liability of the company. That is, if your company happens to be sued, your personal assets (i.e. property, savings accounts) are shielded from any judgment. Of course, lawsuits are worst-case scenarios and there’s a slim chance you’ll ever run into legal problems. However, if you’re sued as a sole proprietor, you’ll be sued personally. The difference between the two is that the LLC offers the liability protection that a corporation affords an individual but without all the legal formalities and paper filings to maintain the corp.
Q: Are there any big changes in the legal industry you expect that entrepreneurs should keep their eye on?
A: You should always be ready to expect change in any industry. As far as the legal industry goes, I don’t know of any specific changes, but I do know that many of the legal filings that were once handled by a lawyer or a law firm can now be handled at a fraction of the price by a reputable filing service such a CorpNet.com so that being said, my advice to any small biz owner would be that before they contact a lawyer for any business filing needs, they do the research and make sure it’s not something that could be handled by a document filing service such as CorpNet.com so they can save their money and spend it on legal fees when they really need to.
Q: Any additional advice?
A: Start small and make sure you have a budget. It doesn't have to be formal. Always be prepared for change, and if you are in a service industry such as myself, make customer service the #1 priority of the entire company, not just a department. Make sure happiness and a good work environment is part of your company culture and in running and growing your business (i.e. get rid of bad seeds or toxic people that bring down company morale). As a new business owner, come up with an idea that will add to or change the world in a better way…and learn to say no when needed!!!
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