From: the_dojang-owner@hpwsrt.cup.hp.com To: the_dojang-digest@hpwsrt.cup.hp.com Subject: The_Dojang-Digest V6 #360 Reply-To: the_dojang@hpwsrt.cup.hp.com Errors-To: the_dojang-owner@hpwsrt.cup.hp.com Precedence: The_Dojang-Digest Tues, 20 July 1999 Vol 06 : Num 360 In this issue: the_dojang: RE: Red Tape ......................................................................... The_Dojang, serving the Internet since June 1994. ~725 members strong! Copyright 1994-99: Ray Terry, California Taekwondo, Martial Arts Resource Replying to this message will NOT unsubscribe you. To unsubscribe, send "unsubscribe the_dojang-digest" (no quotes) in the body of an e-mail (top line, left justified) addressed to majordomo@hpwsrt.cup.hp.com To send e-mail to this list use the_dojang@hpwsrt.cup.hp.com See the Korean Martial Arts (KMA) FAQ and online search the last two years worth of digest issues at http://www.MartialArtsResource.com Pil Seung! Ray Terry, PO Box 110841, Campbell, CA 95011 KMA@MartialArtsResource.com ---------------------------------------------------------------------- From: "Joel Martin McTague" Date: Tue, 20 Jul 1999 09:13:33 -0400 Subject: the_dojang: RE: Red Tape >Wow, I was just looking on to how to go about registering a small business >in my state, and I ran across so many types of businesses my head is >spinning.... >Inc., LLC, LLP, LLLP..... hmmmmm. >Anyone research the pluses and minuses of each of these types for your >school? I know each has strength and weaknesses, especially for liability >purposes.... and advice from those of you who have recently made the >decision? John? >Greg Giddins >ggiddins@corp.webb.net Wow, a subject that I can speak authoritively to, having to take the bar exam next week and this being one of the major subjects. First, remember that every state has different rules regarding business associations, so what follows are general comments about pluses and minuses. Regular Incorporation - A regular incorporation usually insulates you from liability from what your company does. The corporate shield can be pierced if you don't regard it as a seperate entity (you share your personal bank account with the corporation, the company makes "loans" to you for no interest, etc.) The main disadvantage with this form of incorporation is that you are subject to double taxation - you get taxed on the corporate level and then any dividends paid to you is taxed additionally. Additionally, in most states, you have to maintain a lot of corporate norm stuff, like paperwork, meetings, board of directors, corporate officers, etc. S Incorporation - It's pretty much the same as the regular incorporation, but with the difference that any distribution made by the corporation is considered a "pass through" and taxed as a partnership, a significant advantage. The main disadvantages are you have to deal with the IRS on getting this status and you are limited to the number of shareholders you have (I believe the number is now somewhere around 100, but it's been awhile since I had to look this up). LLC - Similar to the S Incorporation, the main advantage is that you don't have to have the IRS give you your tax status as a partnership, and you don't have to follow the corporate norm as such. It's perhaps the most flexiable of all the incorporation devices. The main disadvantage is that in many states you need to pay a higher filing fee and a higher maintaince fee. In Florida, the basic incorpration filing fee is $35 (plus all the other mandatory niceties), where an LLC costs $52.50. Also, being relatively new (I think Washington was the first state with an LLC statute in 1978), most states don't have a nice coherent body of law yet to fall back on. LLP - This form is basically a partnership except that one member is not liable for the partnerships obligations caused by somebody else in the partnership. There are numerous exceptions to this rule, and they vary from state to state. Many states also require you to maintain liability insurance on the LLP. LLLP - I haven't heard much about this type of entity because it's new and rarely used. I'm not even sure if Florida accepts this form of incorporation yet. It's similar to the LLP except that only the general partners are liable for the partnership liabilities, and the limited partners are not liabile except to the extent of their capital contributions. I hope this helps as a basic primer. My old BA teacher throught that the LLC is almost a default incorporation status in some states because of liabilities and the taxation. If I were a practicing lawyer (which until I get my result this September I'm not), I would generally suggest an LLC status for a martial arts school. If you have any further questions, I suggest talking to a lawyer who specializes in incorporations. Your local bar association should have a good referal service available. Joel Martin McTague, J.D., M.B.A. D.B.A. (Finance) Candidate, Nova Southeastern University 1st Dan, WTF; 4th Gup, WTHF http://www.geocities.com/collegepark/library/1769 (My Home Page) http://members.theglobe.com/mctague (CropCircles.Com) ------------------------------ End of The_Dojang-Digest V6 #360 ******************************** Support the USTU by joining today! US Taekwondo Union, 1 Olympic Plaza, Ste 405, Colorado Spgs, CO 80909 719-578-4632 FAX 719-578-4642 ustutkd1@aol.com http://www.ustu.com --------------------------------------------------------------------- To unsubscribe from this digest, the_dojang-digest, send the command: unsubscribe the_dojang-digest -or- unsubscribe the_dojang-digest your.old@address in the BODY of email (top line, left justified) addressed to majordomo@hpwsrt.cup.hp.com. Old digest issues are available via ftp://ftp.martialartsresource.com, in pub/the_dojang/digests. All digest files have the suffix '.txt' Copyright 1994-99: Ray Terry, Martial Arts Resource, California Taekwondo Standard disclaimers apply.