Dream The Impossible Dream - Turn Your Ideas Into Reality.

Written by Noel Peebles


I'm sure you can recall having a sudden inspiration, a brainwave, a "bolt fromrepparttar blue", a brilliant idea striking you like a light being switched on inside your head. But for some reason you never developed that idea or brought it to fruition.

Maybe you have lain awake, unable to sleep, with your mind "racing" through numerous possibilities. "What if I did this? What if I did that?" Maybe you initially thoughtrepparttar 117758 idea was so original or brilliant, and at last, it wasrepparttar 117759 answer you have been looking for. But still nothing came of that brilliant idea. You are not alone. Every day millions, probably billions, of ideas pop intorepparttar 117760 minds of people all aroundrepparttar 117761 world. In reality though, only a small percentage of ideas are worthrepparttar 117762 time it took forrepparttar 117763 thought. Most ideas are fleeting "sparks" of inspiration that go nowhere, and get forgotten about, before they ever seerepparttar 117764 light of day.

Ofrepparttar 117765 ideas that are worth pursuing, very few are followed through to become a worthwhile development inrepparttar 117766 market place.

Incorporating You

Written by Elena Fawkner


Incorporating You

2002 Elena Fawkner

Running a business involves risk -repparttar risk thatrepparttar 117757 business may either succeed brilliantly or fail miserably. Or neither. The upside is high -- financial and (perhaps) time freedom; independence; unlimited earning capacity. The downside is equally steep, just inrepparttar 117758 wrong direction -- potential financial ruin if you've staked everything you own on your business's ultimate success and thrown your career down repparttar 117759 proverbial to boot. If you're running your business as a sole proprietorship or a general partnership, make no mistake -- everything you own is onrepparttar 117760 line.

There's a lot that can go right and wrong in a business. A lot of it out of your control. Butrepparttar 117761 extent of your personal financial liability for what goes wrong is one thing you can and should control.

The answer is to form an entity separate from yourself to run repparttar 117762 business.

WHICH BUSINESS ENTITY?

As you probably already know, you have several choices when it comes to your business entity. The most basic is a sole proprietorship, followed by a partnership (general or limited), a limited liability company ("LLC") and a corporation (either a general "C" corporation or an "S" corporation - more about these later).

Although sole proprietorships and general partnerships are relatively straightforward and inexpensive business entities to establish and maintain, hence their popularity, neither of them protects you from personal liability.

If you're a sole proprietor, you've probably made this election by default - by doing nothing other than starting a part-time Internet business out of your spare bedroom, most likely.

A limited partnership will protectrepparttar 117763 limited partners from personal liability beyondrepparttar 117764 extent of their capital contribution torepparttar 117765 partnership, but limited partners cannot participate inrepparttar 117766 management and control ofrepparttar 117767 business so that's not a good option for most of you reading this article. Needing to control and manage your own business is most likely non-negotiable.

As an attorney, I generally recommend that small business owners, including (especially!) home-based and Internet entrepreneurs, incorporate at least as soon as they are generating sufficient profits fromrepparttar 117768 business thatrepparttar 117769 amount of tax payable on such profits equals or exceedsrepparttar 117770 minimum franchise tax payable inrepparttar 117771 state in whichrepparttar 117772 business is being conducted. In California, for example, one ofrepparttar 117773 most onerous states inrepparttar 117774 U.S. when it comes to taxes,repparttar 117775 annual minimum franchise tax is $800 per year. Therefore, as soon as you're generating profitsrepparttar 117776 tax on which is $800 or more in a year, there is no tax disadvantage to incorporation and every advantage.

HOW DOES INCORPORATION PROTECT AGAINST PERSONAL LIABILITY?

Quite simply, when you form a corporation (or an LLC), you're forming a separate legal entity. This separate legal entity hasrepparttar 117777 power to enter into contracts, own and dispose of assets, hire and fire employees and generally do anything that a sole proprietor could do. The difference betweenrepparttar 117778 corporation andrepparttar 117779 sole proprietorship, however, is that onlyrepparttar 117780 corporation's assets are at risk, notrepparttar 117781 owner/shareholder's (beyondrepparttar 117782 shareholder's contribution to share capital, that is).

Let's take an example. You run a part-time Internet business. You're still working a day job and this is really just a way to make a little money onrepparttar 117783 side to save for your annual Hawaiian vacation and even more expensive spa stay for your dog while you're away. To you, this is only a pocket-money venture and so you don't really think of it as a business at all, really. So you don't give a second's thought torepparttar 117784 fact that you're running a business as a sole proprietor.

You register a domain name that, unbeknown to you, violates a Macrohard trademark. You create a website for that domain and, lo and behold, overnight (of course, because this isrepparttar 117785 Internet) your business becomes successful beyond your wildest dreams due, in no small part, to site visitors mistakenly believing they are doing business with Microsoft's arch-rival.

Macrohard, meanwhile, sees all of this and figures your gain is its loss and sues you for an account of profits based on your misuse of its trademark. And wins. It gets a judgment for $100,000. Then it executes on its judgment. And you lose your house, your savings and your business.

Now let's look at a slightly different scenario. You're fortunate enough to have read this article before you established your business and formed an S-corporation, Hawaii Here We Come, Inc. The only asset of HHWC, Inc. isrepparttar 117786 domain name and website. So, when MarcoHard gets its judgment against HHWC, Inc.,repparttar 117787 only asset it can touch isrepparttar 117788 domain name and website. That's bad enough, of course, but you did, after all, violate their trademark. But get this. Because they're in your name, not HHWC, Inc.'s, you still have your house and your savings.

HOW LIMITED PERSONAL LIABILITY CAN BE LOST

Merely incorporating is not enough to avoid personal liability, however. As a director and shareholder, you must run your corporation or company (if an LLC) as a separate legal entity, NOT your alter ego! This means you can't just siphon off cash fromrepparttar 117789 corporation's bank account to pay your house mortgage.

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