On forming a corporation

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nocturnalhostin

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One of the things that many hosting providers do today is setup a DBA as opposed to an actual corpoartion. There are many reasons for this, such as the high cost of corporations and the legal/accounting issues invovled.

To be honest, as the owner/ceo of a corporation, I don't find it that difficult to maintain all of the legal requirements - just more tedious and time consuming that anything else.

Rather than hiring an attorney, we used the services of MyCorporation.com (again, we have an affiliate program with them, and I'm not posting the link ;-). MyCorporation.com is MUCH cheaper than having a laywer file the paper work for you an they do a great job.

The only thing that they did not do was getting our corporation listed with Dunns and Bower(sp/name?) - which is a must for corpoartions [I felt kind of stupid that I didn't know this and only found out about it when applying for an SSL certificate].

The main advantages to a corporation over a DBA are that you (as the owner) aren't personaly accountable (meaning that if we were to get sued, that my car is stying my car). Another advantage is that it looks more "trustworthy" and professional to prospective customers.

The other important thing is to get your business name registered as a trade mark. Legally this isn't required because you have a defacto trade mark on your business name just by forming the corpoartion - but for knoweldgable customers it is nice for them to be able to see the nice little R next to the name...

Of course, the main problem with only doing a DBA is that with all of the webhosts out there that dissapear or provide poor service - almost all of them are DBAs (or not even a licensed DBA which is scarry). So, as customers become more and more knoweldgable - they are going to start looking for "incorporated" or "corporation" - once corporations (well, smaller ones) flood the market - thats when customers will start researching things like the dunns numbers and even digging through corporate documents (which are public knoweldge - such as financal reports, etc) to make their choice in a provder.

I guess many of us should be thankful that customer's havent started doing that - but with the numebr of here today gone tommarow hosting providers, I honestly belive that its only a matter of time.
 
You may be right in how customers start choosing, but you were wrong on one aspect.

Private Corporations are not liable to release any of their financial records to the public, nor are they required to release Bylaws and other documentation not directly filed with the state.

Public Corporations are required to release all of those, but you will almost never see a Public Corporation with a net worth less than 1 Million.
 
True, sorry, meant as to what was filed with the state - i need to stop posting when I haven't slept long enough - too hard to maintain stream of consciounnenene-something i mean thought when one hasn't slept for two days....thank you for the correction =)
 
A few thoughts...
Depending on the state, hiring an attorney, or a third-party company, to file your formation documents is not really necessary. You can, in many states now, file your incorporation or formation documents online yourself. You should, however, still speak with an attorney or CPA about questions that you might have. I saved myself $300 by filing the paperwork myself after doing a couple months research on the subject. The knowledge gained is worth more than the $300 I saved.

Regarding trademarks, there is no such thing as a defacto trademark, technically. You can always sue someone and claim that they are infringing on a trademark that, though you have not filed for, you have a right to use. You can always lose that suit as well, depending on the circumstances. If you want to protect your company name, which is an asset (or should be thought of as one), file for trademark/servicemark protection.

I also think that someone should mention Limited Liability Companies, which many people and organizations find easier to manage and cheaper to run. They are also the easiest (and usually the cheapest) to form, and provide the same liability protection as a corporation. I had considered creating an S-Corp prior to speaking with a few attorneys about it and being told that, especially in my state, forming an LLC would be the best move. The liability protection and lack of corporate tax in my state (and with the IRS) made it an attractive solution.

Going to a third-party to have them file your incorporation papers for you will not get you any advice. Speak with an attorney, even if you submit a question to one on LawGuru.com, or get a free consultation with one from the phone book. When the third-party filing company takes your money, they will not tell you that you should be doing this or that, and they will not act in your best interest. If they did, there would be a screening process and most people who are filing for corporations would be directed to consider an LLC. And believe me, I never considered an LLC until I learned more. I was corporation all the way.

Talk to an attorney. Check your state tax laws.
 
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