Do that, and court will "pierce corporate veil" in a heartbeat, thereby exposing you to full personal liability on grounds that corporate structure is nothing but a sham designed to unfairly protect you from personal liability.

It is also particularly important that you follow all corporate formalities such as those set out in by-laws, passing board and/or shareholder resolutions for major decisions and holding annual meetings of shareholder(s) to elect directors and directors' meetings to elect officers.

Also, don't think "corporate veil" will protect you from criminal acts such as filing a false income tax return, because it won't.

SO HOW DO I GET MONEY OUT OF THE BUSINESS?

You are paid by corporation as an owner/shareholder in form of dividends and/or as an employee in form of a salary.

CORPORATION OR LLC?

While both corporations and LLCs limit your personal liability, there are differences between states when it comes to how other states' LLCs are treated in this regard. By contrast, corporations are treated uniformly when it comes to personal liability. Especially if you're operating an Internet-based business where you can be transacting with people from pretty much anywhere, for greatest certainty concerning your personal liability, a corporation is preferable to an LLC.

One of advantages of an LLC as a business entity is that profits and losses of LLC "flow through" to personal income tax return of members. However, if you make a "subchapter S" election when forming corporation (thereby forming an S-corporation), you can achieve same result.

S-CORPORATION or C-CORPORATION?

Although S-corporation's profits and losses flow through to shareholders (rather than S-corporation being taxed as a separate entity as in case of a C-corporation), S-corporations are limited to 75 shareholders and, generally, those shareholders must be U.S. citizens or resident aliens.

You would therefore not be able to have foreign shareholders with an S-corporation (but you can with a C-corp), which may be an issue, particularly for Internet-based businesses with shareholders from various countries.

Also, you cannot have multiple classes of shares with an S- corporation so this will not work if you want to issue preferred shares, for example. You'd need to form a C-corporation instead.

WHAT'S INVOLVED?

Forming a corporation is a relatively straightforward matter (at least for an attorney) and shouldn't cost you more than a few hundred dollars depending on complexity of corporate structure. Most attorneys would charge between $500 and $1,000 for a straight C or S-corporation.

At its simplest, a corporation can have a single director and shareholder with that same individual holding each of three required offices (president, secretary and treasurer). (If a corporation has three or more shareholders it must have a minimum of three directors but if it has fewer than three shareholders, it may have same number of directors.)

Your attorney will prepare and file articles of incorporation with your State's Secretary of State, and then prepare by-laws and organizational minutes. You'll need a Federal Employer Identification Number (SS-4) from IRS and, if you have more than one shareholder, a buy-sell agreement to ensure that shares do not pass to shareholders unacceptable to other shareholders.

Your attorney will also attend to annual filings with state (a statement of officers and directors is usually required to be filed every one or two years) and make sure you stay in compliance with state corporate requirements (such as annual minutes etc.).

Taking time and trouble to think about legal structure of your business may seem like overkill when all you're doing is running a fun little business out of your spare bedroom in your spare time. But fun little businesses have a way of becoming very unfunny major headaches when things go wrong. No matter how small or fledgling your business is, do yourself and your family a big favor and at least think about incorporating. What may seem like a pleasant past-time today could be anything but tomorrow.

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In meantime, you’re going to have to generate leads in other ways. The two primary effective methods are paid advertising (both for your network marketing business opportunity and products your business promotes) and you can pay for leads.

=> QUALIFYING LEADS

Unlike traditional, offline ways of generating leads for a network marketing business, by definition, leads you generate online are prequalified. For example, if you’re trying to generate leads offline, you’re talking to everyone you can at every opportunity. You may be speaking with someone ahead of you in line at bank or supermarket, a young mother you run into when picking up your kids from school, and any other number of people you come across in your day to day activities.

The problem is, as you have no idea whether these people are even remotely candidates for your opportunity, you can waste a LOT of time talking with people who are poor prospects for your business.

On other hand, if you’ve created a web site on a topic of relevance and interest to people who would also be interested in your network marketing opportunity, by definition your web site visitors are prequalified as, because they have sought you out, they are likely to be interested in at least learning more about your opportunity.

Placing paid advertising and paying for leads are other ways of qualifying leads. What these methods all have in common, however, is that lead COMES TO YOU, you don’t go after them. If someone makes contact with you wanting to know more about your opportunity, it’s all of a sudden a LOT easier to pick up a phone and call them isn’t it? Or to send them information via email if that’s what you and they prefer.

=> FOLLOWING UP UNTIL YOU GET ACTION

The other big, big advantage running a network marketing business online offers is ability to automate your follow-ups. Every time someone contacts you for information about your opportunity, add that person’s email address to your list of prospects and then periodically send follow-up messages to that list. By employing autoresponders (software that allows you to send prewritten follow-up email messages to defined email addresses on a periodic basis), this process can be completely automated, leaving you free to spend your time on generating leads rather than administrative tasks.

As you can see, running a network marketing business exclusively online is not an overnight project and it requires a LOT of work, consistency, persistence and commitment. But it most certainly can be done. If you’re serious about making serious money from an Internet-based business, network marketing is way to go. It’s where big, secure money is. But to earn big, secure money, you need to invest big too. You need to invest time, money and sweat equity into building your business.

Fortunately, however, network marketing online offers one other HUGE advantage over starting any other sort of online business. An upline. If you join a network marketing program that’s suited to being run online (and some aren’t, by way), AND you join up under a sponsor who is part of a team that specializes in running business exclusively (or near enough exclusively) online, you will have at your disposal a wealth of experience, expertise and tools you will be hard-pressed to find elsewhere.

So, think about it. If you’re looking for a way to make money from your computer and you had, until now, thought network marketing wasn’t for you, maybe you should think again. Network marketing coupled with Internet technology and an upline who knows what they’re doing when it comes to running a business online could very well be answer to financial independence riddle you’ve been looking for. Just don’t expect it to happen overnight. There are no magic wands in this business just as there aren’t anywhere else.

------ ** Reprinting of this article is welcome! ** This article may be freely reproduced provided that: (1) you include following resource box; and (2) you only mail to a 100% opt-in list. Here's resource box to use if reprinting this article: ------

Elena Fawkner is an attorney and editor of A Home-Based Business Online ... practical business ideas, opportunities and solutions for work-from-home entrepreneur. She offers discounted, fixed-rate legal services to her ezine subscribers and site visitors within United States. http://www.ahbbo.com http://www.ahbbo.com/legalhelp.html