►
Description
4th Annual Small Business Symposium sponsored by the City of Cupertino, Cupertino Chamber of Commerce, Cupertino Library and the Small Business Development Center.
"How to Structure Your Business Entity" by Richard Abdalah, Abdala Law Offices.
Recorded on 9/16/2016
A
A
Operate
the
business
in
there
are
a
number
of
forms
and
I
will
go
through
those
with
you
bear
wouldn't
be
here.
Why
change?
Okay,
the
first
question,
I
think
you
want
to
ask
yourself-
was
wait.
Wait
a
minute
now
do
I
need
to
go
out
and
start
a
business
from
absolute
scratch,
or
can
I
buy
a
business?
It
seemed
to
be
a
lot
of
advantages
to
buy
a
business.
A
I
want
to
distinguish
a
franchise
from
from
a
non
franchise
business,
a
going
concern
when
you
buy
a
franchise,
whether
it's
a
McDonald's
or
you
know
anything
else.
The
franchisor
tells
you
how
to
do
everything
everything
there
is
no
creativity
on
the
part
of
the
franchisee.
The
benefit,
of
course,
to
a
franchise
is
that
they
usually
have
a
very
well-established
body
of
goodwill.
Everybody
knows
mcdonalds
by
go
to
McDonald's
and
New
Jersey.
A
The
food
will
usually
taste
the
same
as
it
did
in
New,
York
or
in
California
or
in
Louisiana,
although
I
could
go
to
at
mcdonalds
and
Taipei
about
15
years
ago
and
didn't
seem
quite
the
same.
Nevertheless,
I
went
in
there
because
I
trusted
the
business
that
was
the
main
thing
same
thing
with
other
kinds
of
franchises
to
start
a
franchise.
It's
not
easy
thing
to
do
by
the
way:
I
work
for
franchise
company
for
a
short
time
and
there's
for
registration
at
the
federal
level
or
the
registration
disclosure
in
California.
A
There's
been
a
lot
of
bad
things
with
franchises
in
the
years
before
so,
they've
made
it
harder
to
start
a
franchise,
but
back
to
the
point
of
the
franchise.
If,
if
you
want
to
buy
a
going
concern-
and
you
don't
feel
that
you're
ready
to
creating
business
from
scratch,
a
franchise
can
be
a
great
opportunity.
A
The
problem
of
the
franchise
is,
if
it's
very
popular,
like
McDonald's,
Taco,
Bell
and
I'm
sure
that
I
franchises
I
haven't
thought
of
they're
expensive
to
start
with,
and
then
you
annually
pay
a
royalty
to
the
franchisor.
The
pluses
are
they
do
advertising
and
in
a
regional
basis
which
you
couldn't
afford
as
an
individual
by
and
large.
So
there
are,
you
know,
pros
and
cons,
but
as
I
say
the
you
may
not
get
a
franchise
where
you
live.
A
They
may
tell
you
well,
the
most
recent
franchises
available
is
in
Phoenix
Arizona
and
if
you
want
to
buy
franchise,
that's
the
one
that's
up
for
sale.
So
so
there
are
some
disadvantages
to
buying
a
franchise,
but
what
about
just
buying
another
business?
That's
already
existing!
Well,
let's,
let's
talk
about
the
advantages
and
disadvantages
of
buying
a
business.
I
want
to
be
in
your
way
here,
advantages
to
buying
an
existing
business,
typically
there's
already
a
generating
cash
flow
and
hopefully
profits.
A
It's
as
a
practitioner.
Who's
been
involved
in
a
lot
of
lawsuits
involving
the
sale
of
businesses
I've,
yet
to
see
a
business
being
sold.
That
really
was
making
a
lot
of
profit.
So
my
advice
to
use
be
very
careful
about
financial
documents
that
you
look
at
when
you're
buying
somebody
else's
business.
A
If
you're
going
to
be
given
financial
statements
like
a
balance
sheet
or
or
an
income
statement,
just
remember
if
its
unaudited,
those
are
just
images
on
a
piece
of
paper.
What
you
need
to
really
look
at
is
the
bank
statements.
That's
the
acid
test,
determining
what
revenues
are
coming
into
the
business
and
what
the
expenses
are
at.
The
end
of
the
day,
that's
where
it
counts.
The
other
tests
to
be
considered
is
looking
at
the
tax
returns
for
several
years,
because
people
tend
to
understate
their
income.
A
I
don't
mean
individual,
but
businesses
want
to
understate
their
income
and
inflate
their
expenses
as
much
as
possible
because
they
have
to
pay
taxes
on
the
profit.
So
those
two
sets
of
documents,
bank
statements
and
tax
returns-
are
critical.
Now
why
three
years
well
you'd
be
surprised
how
many
people
will
actually
buy
somebody
else's
business.
A
Generate
more
income
for
a
year
or
two
and
then
turn
around
and
sell
it
to
the
next
guy
saying:
oh,
my
income
was
half
a
million
dollars
the
last
two
years,
you're
looking
at
it
thinking
gee.
That
sounds
like
a
really
strong
business.
When
you
come
to
find
out,
he
bought
that
business
or
she
bought
that
business
in
order
to
create
a
very
attractive
item
cell
now,
I
may
sound
pretty
negative
about
this,
but
I
also
I
just
want
you
to
be
very
careful.
A
If
you're
buying
a
business
I
don't
mean
to
spend
so
much
time
on
generating
cash
flow,
but
that's
really
where
the
rubber
meets
the
road
is
how
much
money
is
coming
in
and
how
much
money
is
going
out
now.
I
say
boast
the
time
people
businesses
aren't
being
sold
because
they're
making
a
lot
of
money.
It's
just
it's
just
a
fact
of
life.
A
On
the
other
hand,
if,
if
the
owner
is
retiring
or
if
the
family
doesn't
want
to
do
the
business
anymore
or
the
owners,
children
don't
want
to
run
the
business
they're
not
interested
in
and
running
a
grocery
store
or
whatever
I
may
be.
A
perfect
opportunity
to
get
a
very
good
business
that
has
a
good
reputation
when
the
benefits
of
course
of
buying
a
business
is
having
an
established
customer
base,
reputation
and
employees
who
are
familiar
with
the
business.
A
By
the
way.
If
you
don't
ask
me
questions,
this
is
not
very
much
fun
for
you
and
it's
not
much
fun
for
me.
So
please
ask
any
questions
you
want.
I
would
also
say
this
if
you
are
buying
a
personal
service
business.
What
you're
really
buying
is
the
customer
list
at
the
end
of
the
day,
I'm
a
CPA
or
I'm
a
lawyer.
We
can
all
get
books
and
we
can
all
get
computer
equipment
from
the
same
place.
A
It's
the
customer
base
that
are
really
buying
and
listening
to
a
prior
speaker,
I'm
have
I
have
a
situation
right
now,
where
my
client
bought
the
business.
She
didn't
feel
that
it
was
quite
WIC
we
represented,
and
the
seller
is
saying
well
look
at
the
yelp
River
reviews
of
the
buyer
chapter
to
my
client
and
I'm,
not
very
good,
so
my
response
is
well.
If
the
reality
brews
aren't
very
good.
Why
didn't
you
sell
it
to
her
in
the
first
place?
A
A
Ok,
so
I
mentioned
that
established
customer
base.
If
I
have
a
grocery
store
and
I'm
buying
it
or
any
store
where
the
product
is
important,
then
chances
are
your
customers
are
going
to
come
back
and
try
you
three
or
four
times
before
they
say
hey,
you
know,
there's
a
change.
Have
you
ever
been
to
a
restaurant
that
you've
been
patronizing
for
years
and
then
one
day
you
go
in
and
you
say,
there's
something
different
about
the
food.
It's
not
the
way
it
was
before.
A
Irony
of
you
familiar
with
Vivi's
up
in
the
Monta
Vista
area.
It's
a
little
restaurant
up
there
anyway.
They
sold
it
about
five
or
ten
years
ago,
and
the
food
has
never
been
the
same
since
and
now
they've
gone
out
of
business.
Far
as
I
know.
The
point
is
that,
even
if
you
have
an
established
customer
base
and
they're
looking
at
your
product,
you
still
need
to
put
out
that
product
in
a
way
that
duplicates
what
the
prior
owner
was
doing,
so
that
that's
really
kind
of
a
key
key
issue
can
I
duplicate
that.
A
So,
if
I
don't
get
the
same
chef
that
they
had
before
and
that's
a
critical
element
of
the
business,
then
I
have
a
problem
because
I
have
to
find
somebody
who
can
do
the
same
thing
and
Kevin
your
next
speaker,
McClellan
spent
25
years
operating
the
restaurant
over
here
and
TGI
Fridays,
and
he
can
tell
you
all
of
the
ins
and
outs
of
operating
restaurants
and
you
might
be
taught
out
about
buying
one
after
you
listen
to
Kevin.
But
you
know
it's
a
very
good
business.
If
you
make
it,
it
can
be
very
profitable.
A
A
It's
money
that's
owed
to
the
business,
so
let's
say
right
now:
I
have
a
client
as
a
dentist
and
he's
sailing.
His
business
he's
done,
work
for
which
he
hasn't
quite
been
paid,
or
he
has
done
work
and
the
custody.
A
patient
is
paying
overtime
and
that
money
is
going
to
come
in
the
future.
So
I
as
a
buyer
want
to
know
well,
are
they
going
to
pay
and
are
they
going
to
pay
me
because
I'm,
a
new
owner
of
the
business?
How
solid
are
those
receivables?
You
can't
count
them
as
absolutes.
A
You
never
know
people
sometimes
don't
pay
their
bills
or
they
pay
for
a
while,
and
then
they
run
into
a
problem
and
they
can't
pay.
So
receivables
are
a
kind
of
speculative
if
you
will,
but
the
fact
that
there
might
be
an
income
stream
in
the
future
that
you
don't
have
to
generate,
because
you
are
already
buying
that
that
debt.
If
you
will
or
credit
that's
a
positive
thing,
it
can
be
a
very
positive
thing,
all
right
and
then,
of
course,
existing
inventories.
A
It
can
be
helpful
in
the
kind
of
product
depending
on
what
you're
looking
at
to
purchase.
Inventories
are
things
that
you
normally
would
be
selling
now.
Some
inventories
are
very
short-lived.
If
you
will
like
food
I've
had
clients
who,
by
a
liquor,
store
/,
mom-and-pop
market
and
the
industry
standard
is
to
have
somebody
go
in
the
night
of
the
close
of
escrow
and
this
person
goes
around
and
estimates
the
value
the
food.
That's
there
now.
A
Obviously,
if
it's
a
can
of
something,
that's
probably
pretty
steady,
but
how
many
slices
of
meat
are
left
on
this
piece
of
roast
beef
and
so
forth.
So
it's
kind
of
interesting
way
to
do
it,
but
that's
inventory.
I
know
I
will
have
something
to
sell
the
next
day,
but
I
want
to
make
sure
it's
saleable.
If
you
will
it's
interesting
process,
a
market
for
the
product
or
services
already
exists.
A
Presumably
if
the
businesses
done
well
for
some
period
of
time,
there's
a
customer
base
out
there
and
you're
feeling
is
well
I
get
a
running
start
because
I
already
have
some
customers
again.
It
goes
back
to
what
those
customers
give
you
a
chance
and
when
they
come
back
or
do
you
have
to
duplicate
something,
that's
very
unique
to
the
seller
business
that
I
could
duplicate.
A
Financing
is
easier
with
an
established
track
record.
Yes,
that's
probably
true,
but
I
will
tell
you
when
we
talk
more
about
the
formation
process,
the
typically
company
to
loan
you
money
will
want
you
to
personally
guarantee
it,
which
in
essence
means
I'm
putting
my
mortgage
on
my
house
up.
That's
basically
what
it
boils
down
to
in
a
personal
guarantee,
because
if,
if
the
corporation
or
the
business
fails-
and
they
get
a
judgment
against
you,
because
you
guarantee
it,
then
they
have
the
right
typically
or
at
least
legally,
to
go
after
the
equity.
A
A
A
Another
advantage
we
talked
about
is
probably
has
a
business
plan
and
marketing
strategy
already
in
place,
and
chances
of
success
are
better
than
starting
business
from
scratch.
That's
probably
fairly
true
again,
the
variables
will
be.
Can
I
duplicate
the
product
or
service?
Is
there
a
customer
base?
That's
relying
on
my
product
that
I
can
sell.
It's
the
same,
can
of
tuna
that
the
prior
owner
sold
or
is
it
G?
A
A
Typically,
a
seller
of
a
company
or
business
wants
money
and
he
wants
he
or
she
or
it
wants
a
substantial
amount
of
money
up
front.
I
always
urge
my
clients,
if
they
ask
me
to
help
them
in
purchasing
the
business,
not
only
to
look
at
the
records
that
we
talked
about
a
little
bigger
group
bit
ago,
but
also
to
take
to
try
to
put
a
down
payment
and
have
you
know,
maybe,
five
years
or
even
ten
years,
to
pay
it
off
that
way.
We
have
a
little
bit
of
a
reserve
so
to
speak.
A
If
we
find
out
the
businesses
and
what
it
was,
my
client
hasn't
paid
everything
if
you
paid
cash
at
the
close
of
escrow
by
a
business,
you
have
lost
a
lot
of
leverage.
Now,
not
everyone
will
agree
to
do
this.
Not
every
seller
will
agree
to
do
this
and
if
they
say
no
I
want
cash,
that's
their
privilege,
I
mean
they
aren't
obligated
to
take
back
a
note.
So,
yes,
there
will
probably
be
a
substantial
amount
about
light.
Now.
How
do
I
know
how
much
to
pay
for
that
business?
Well,
that's
good!
A
That's
the
real
tricky
part!
You
should
probably
get
somebody
who
either
knows
the
business
or
as
an
appraiser
and
can
give
you
some
idea
of
what
you
should
cost.
There
are
some
formulas
that
they
use
and
so
forth
so
many
time
gross
revenues
or
whatever
that
case,
maybe,
but
that's
something
that
I
as
a
lawyer,
I,
really
can't
help
you
with
you
need
to
find
somebody
who's,
an
appraisal.
A
Guess
where
the
customer
is
going
to
go,
they're
not
going
to
give
you
a
chance,
they're
going
to
go
to
that
person,
who's
been
cutting
their
hair
or
doing
their
teeth
or
even
a
dry
cleaner,
that's
been
doing
their
clothes
they're
going
to
go
there.
So
if
it's
a
personal
service
business,
you
need
to
be
very
careful
and
buy
you.
Okay,
there
are
costs
associated
with
a
business
transfer,
attorneys
fees,
there's
a
bill
of
sale
for
the
products.
There's
a
often
a
lot
of
negotiation
about
receivables.
A
Typically,
the
seller
wants
the
receivables
because
they
did
the
work
to
justify
it.
The
buyer
wants
the
receivables,
because
it's
some
kind
of
a
cash
flow
and
if
I
don't
collect
them,
then
I'm
out
of
luck.
If
they're
my
receivables
as
a
result
of
the
purchase
of
the
business,
so
attorneys
aren't
involved
a
lot.
Yes,
sir,.
A
Dep,
your
that's
the
other
side
of
the
coin.
I
mean.
Let
me
tell
you
a
story
about
payables
I
had
a
client
one
time
who
purchased
a
business
and
they
did
everything
right.
They
checked
bank
statements.
They
they
had
me
look
at
some
of
their
employment
situations
with
their
employees.
They
did
everything
right
after
they
bought
the
business
they
found
out.
A
The
seller
had
taken
a
bunch
of
bills
and
put
them
in
a
drawer,
so
those
bills
had
not
been
registered
in
the
statements,
so
they
just
looked
like
they
hadn't
come
in
yet,
and
they
were
obviously
significant.
So
bills
are
something
to
be
concerned
about
as
well.
So
that's
why
you
need
to
take
a
look
at
everything
yeah,
but
it
is
a
major
concern.
A
You
may
inherit
inept
employees
for
employees
loyal
to
previous
owner,
but
not
to
you
if
they're
inept,
employee,
probably
wasn't
a
very
good
business
in
the
first
place,
so
be
very
careful
if
the
employees
are
very
critical
part
of
the
business
be
careful
if
the
nature
of
the
business
is
that
the
employees
would
go
out
to
the
customer.
Instead,
the
customer
coming
into
a
place
of
business,
be
careful
because
here's
what
happens
I've
done
this
for
30
years
now
you
hire
an
employee
and
we'll
talk
about
that.
A
A
little
bit
later
and
you
say:
hey
I
can't
do
it
all
the
only
way
I
can
expand
my
business
to
get
another
employee.
Here's
what
I
want
you
to
do.
I
want
you
to
go
out,
make
sales
they
go
out
and
they
make
sales
and
they
have
a
they
build
a
relationship
with
the
customer.
You
don't
have
that
relationship
because
you
have
you've
already
been
out
there.
Then
they
decide.
Hey
I
can
make
more
money
if
I
start
up
my
own
business,
these
customers,
all
trust
me
and
know
me.
A
They
don't
know
the
owner
and
I'm
going
to
open
up
my
shop
down
the
street
so
depending
on
the
nature
of
the
business.
If
the
connection
between
the
customer
and
the
employee
is
critical
to
the
business,
be
careful
because
those
people
can
leave
maybe
go
elsewhere
if
they
want
to.
So
that's
an
important
thing
to
consider.
A
Probably
the
lease
is
the
biggest
contract
you
have
to
worry
about,
but
there
are
other
kinds
of
leases
too.
If
you
have
a
copy
machine,
if
you
have
a
machine
that
does
some
of
your
work
and
you
have
a
long-term
lease
on
that
machine
and
it's
about
to
expire.
That's
another
thing
to
be
worried
about
all
right.
How
we
doing
on
time,
all
right
now
we're
going
to
go
to
all
right.
A
A
You're
doing
the
business
yourself
and
you
run
the
business.
You
don't
have
any
business
for
okay.
Obviously
there
are
a
lot
of
advantages
to
that
and
there
are
sole
proprietors.
You
know
all
around,
but
we
have
this
other
thing
called
corporations
and
limited
liability
companies
and
even
limited
partnerships.
A
The
legislature
decided
many
years
ago,
100
years
ago,
that
look
in
order
to
encourage
people
to
be
entrepreneurs.
We
can
create
this
legal
fiction
called
a
corporation
or
a
limited
liability
company,
which
is
a
fairly
new
form
in
California.
It's
only
been
around
about
five
years
now,
but
the
idea
would
be
that
if
you
properly
form
the
corporation
or
the
LLC
and
the
business
went
under
and
I
owed
people
money,
the
corporation
would
be
the
only
thing
that
the
creditor
could
come
after,
not
my
house,
not
my
you
know
my
home
over
in
tahoe.
A
You
know
I
could
protect
my
personal
assets.
That
is
not
illegal.
It's
it's
it's
to
do
the
very
thing
the
corporation
is
intended
to
encourage
you
to
take
that
risk
because
we
talked
about
that
risk.
So
if
I
buy
a
business-
and
I
have
a
functioning
corporation,
I
followed
all
the
rules
and
after
a
year
or
two,
it
goes
bad
your
assets,
your
personal
assets,
should
be
protected
and
there's
nothing
illegal
about
that.
It's
not
a
problem.
A
Let's
talk
about
corporations
a
little
bit
the
benefit
of
corporation
is
the
profits
are
not
subject
to
Social
Security
and
Medicare
taxes.
It
is
a
widely
accepted
form
of
a
business,
although,
as
I
said
before,
most
lenders
will
want
a
personal
guarantee.
So
if
you
go
in
and
say
well,
gee
I'll,
you
know
get
this
loan
business
loan,
but
the
corporation
will
be
liable
and
I
won't
have
a
problem.
Well,
typically,
I
can
tell
you
lenders
always
wanted
personal
guarantee.
What
does
that
mean?
Well,
the
corporation
can't
pay
they'll,
look
to
you.
A
Then
they
can
go
after
your
personal
assets.
So
it's
not
perfect,
but
it's
a
much
better
way
of
dealing
with,
especially
if
you
have
suppliers
and
vendors
to
sell
you
things,
be
it's
a
very
good
way
to
protect
your
personal
assets.
It
is
a
widely
accepted
form
of
business.
You
can
do
a
greater
variety
of
fringe
benefits
and
there
are
fewer
taxes
and
lower
taxes
through
income
shifting.
So,
for
example,
in
a
corporation
at
the
end
of
the
year,
most
corporations
are
on
fiscal
puppy
on
calendar
years.
Others
are
on
fiscal.
A
You
can,
of
course,
let's
say
you
had
a
very
good
year
and
you're
about
to
end
the
tax
year
and
you
go
gee.
I
want
to
get
this
profit
out,
pay
yourself
a
bonus.
There's
nothing
wrong
with
that,
and
you
show
the
profits.
Let's
say
is
close
to
zero
because
of
your
expenses.
So
there's
nothing
illegal
about
that.
You
do
have
a
couple
of
concerns.
You
do
have
to
do
a
corporate
return
every
year
and
then,
of
course,
you're
still
up
to
your
own
personal
return.
A
Nevertheless,
though,
the
protection
that
I've
talked
about
is
worth
worth
the
money
and
the
inconvenience
of
doing
a
preparing
and
creating
corporation
alright
limited
liability
company.
You
know
it's
another
form
of
corporation,
it's
a
little
less
taxing
in
terms
of
what
you
have
to
do
to
maintain
it.
But
the
point
at
the
end
of
the
day
is
the
same,
and
that
is
I
want
to
start
my
own
business.
My
my
kids
are
in
school
I'm,
going
to
start
a
business
and
I.
A
My
husband
is
said
yeah,
but
you
know
I
don't
want
to
expose
us
to
liability
and
what,
if
your
business
fails,
this
is
when
you
explained
it
well,
I
went
to
this
class
and
the
speaker
said:
I
could
form
a
corporation
now,
do
you
have
to
be
Apple
Inc
form
a
corporation?
Do
you
have
to
be
Oracle
to
form
a
corporation?
What
do
you
think
you
think
there
are
any
requirements
that
say
that
you
have
to
have
a
certain
basis
or
business
forum
to
start
with?
A
A
A
Alright,
my
business
is
basically
trying
to
deal
with
situations
in
which
there's
been
a
problem.
The
business
owes
money
and
you
know
we're
trying
to
either
protect
the
person
who's
built
a
business
or
typically,
what
a
creditor
will
do
is
still
they'll
file,
an
action.
If
you
let's
say
you
can
file
bankruptcy,
of
course,
which
is
a
and
I
don't
mean
to
sound
negative,
but
I
mean
it
is
an
option
and
the
benefit
of
filing
bankruptcy
by
the
way
is
that
your
creditors
can't
start
pounding
you.
A
On
the
other
hand,
if
you
signed
a
loan
as
a
personal
guarantee,
they
can,
they
can
still
come
after
you
a
couple
of
things:
it's
not
that
hard
to
fall
flat
file
a
corporation
really
get
on
the
internet.
They'll
tell
you
how
to
do
it
right,
just
give
us
two
hundred
dollars
and
fill
this
out
and
send
it
up
to
the
state.
Well,
that's
that
is
easy.
A
First
of
all,
you
have
to
make
an
application
and
they
recommend
that
you
have
more
than
one
name
available
as
corporate
name,
and
then
they
will
tell
you
whether
or
not
that
name
is
available.
So
you
want
to
have
priorities
and
by
the
way
one
of
the
ways
of
one
of
the
benefits
of
forming
corporation
is.
Is
that
name
in
California?
If
it's?
What's
your
name,
Kelly
Kelly,
Kelly,
okay,
Kelly
wants
to
do
business.
As
you
know,
kids
greatest
toys,
you
been
you're
able
to
get
its
greatest
toys
ink
as
your
name.
A
That
name
is
protected
throughout
the
state
of
California.
Now,
if
Kelly
wants
to
do
this
at
kids
greatest
toys,
but
she
doesn't
want
to
bother
the
former
corporation.
What's
her
alternative,
have
you
heard
a
fictitious
business
name
statement?
Okay,
that's
when
I
want
to
form
a
business.
I
want
to
operate
a
business,
but
I
want
to
use
a
fictitious
business
name.
I
want
to
use
something
like
kids
greatest
toys,
so
I
file
a
form
in
santa
clara
county
where
I'm
opening
the
business
and
I
go
down
to
the
courthouse.
A
Apparently
the
courthouse
or
I
know
I
think
it's
the
courthouse,
but
I
file
it
it's
good
for
five
years,
but
here's
problem
you're
good.
Only
in
the
county
in
which
the
form
has
been
filed.
Now
some
people
will
tell
you
well
I'll.
Take
care
of
that
I'll
follow
violate
in
San
Francisco
I'll
file,
it
now
a
media
file
in
the
Santa
Cruz.
Some
businesses
are
some
registrar's
permit.
Some
courts
will
tell
you.
A
We
won't
accept
your
fictitious
business
name
statement
in
this
county
unless
you
do
business
here,
so
it's
it's
not
nearly
as
protecting
of
your
business
name
as
filing
corporation
now,
if
you
form
a
corporation
in
California,
of
course,
it's
not
a
national
protection.
You
have
to
do
other
things
become
an
apple
there.
You
go
once
you
get
that
national
reputation,
I
mean
Apple.
Corporation
is
based
I
believe
in
California,
but
they
have
a
national
reputation.
So
if
somebody
in
Florida
wants
to
start
an
Apple
Inc,
they
can't
do
it
because
of
the
national
corporation.
A
If
you
get
to
that
level,
come
see
me
all
right.
Here's
what
people
do,
though,
that
really
destroy
the
benefits
of
the
corporation.
They
form
the
corporation.
They
do
the
paperwork,
they
get
the
name
and
they
get
this
book
Makka
this
notebook
and
they
put
it
on
the
shelf
and
that's
all
they
do.
They
don't
do
what
are
called
corporate
formalities,
which,
in
the
case
of
corporation,
you
have
to
have
gone
by
laws.
You
have
to
issue,
stop
I,
see
this
all
the
time
they
just
don't
do
anything.
A
They
think
that,
just
by
forming
a
corporation-
and
you
know-
that's
all
I
have
to
do.
That's
one
of
the
things
that
you
need
to
be
very
careful
about
is,
and
you
can
get
this
on
the
internet.
It's
it's
enough
to
go
to
a
lawyer,
but
what
do
I
need
to
do
each
or
you
need
to
have
an
annual
shareholders
meeting
now
Omni
always
share.
Multiplying
just
have
the
meeting.
Do
the
minutes
put
it
in
your
notebook?
You
know
you're
good,
to
go.
A
There's
also
an
annual
fee
of
eight
hundred
dollars
to
the
state
for
the
privilege
of
owning
corporation,
ironically,
whether
your
Apple
Inc
or
your
Joe
Smith
local
corporation.
It's
800
bucks
either
way.
That's
just
the
rule.
We
also
find
in
the
formation
of
corporation
people
commingled
funds,
and
you
know
what
that
means.
Commingling
of
funds.
What
do
you
think?
A
Okay,
I'm
running
my
corporation
I'm,
the
only
owner
and
I'm,
going
to
pay
my
nanny
that
takes
care
of
my
kids
at
home
through
the
corporation
I'm,
going
to
create
that
I'm
going
to
take
money
that
the
corporation
earned
and
I'm
going
to
use
that
to
pay
the
nanny
who
doesn't
come
into
the
business.
It
doesn't
do
any
work
for
me
or
I'm,
going
to
buy
things
with
corporate
money
that
our
personal
items
that
I
don't
use
in
the
business.
That's
co-mingling
corporate
funds
and
buying
personal
luxuries.
A
If
you
will
that
happens
a
lot
because
who's
going
to
catch
you
well,
what
happens
is
if
there's
a
problem
than
the
creditors
start
looking
at
your
books
and
they
find
out
what
wait
a
minute.
You
didn't
treat
the
corporation
as
a
separate
entity.
So
that's
the
one
of
the
things
that
it's
a
little
bit
of
a
complication.
You
have
to
do
a
separate
tax
return
for
the
corporation.
You
have
to
have
separate
books.
A
You
have
to
have
a
separate
bank
account,
I
mean
once
you
get
it
in
process,
you're
good
to
go,
but
the
idea
of
paying
for
personal
items
through
the
corporation
well
I'll
reimburse
them
later
on,
which
doesn't
typically
happen.
That's
something
to
be
aware
of
the
third
thing
I
mentioned
the
first
ones:
failure
if
our
little
corporate
formalities,
the
second
one,
was
commingling
corporate
funds
with
your
personal
funds.
A
The
third
thing
that
they
look
at
as
to
whether
or
not
your
corporation
is
property
filed
a
predator
decide
to
come
after
you
personally,
and
this
is
called
piercing
the
corporate
veil
going
through
the
corporation
to
you
personally.
They
will
also
look
at
whether
or
not
the
businesses
quote
undercapitalized.
What
do
you
think
that
means
Kyle
Kelly
Kelly
right?
What
what
do
you
think
it
means
right
exactly
now,
how
do
I
know
it's
underfunded?
Well,
it's
going
to
vary
depending
on
the
nature
of
the
business
right.
A
If
I
do
a
personal
service,
business
and
I
met
and
I'm
the
business
I,
don't
have
to
go
out
and
buy
a
lot
of
equipment.
Let's
say
it's
just
I.
Do
my
CPA
work
and
I
have
my
computer
and
so
I
don't
have
to
have
a
big
capital
investment
into
products,
but
I'm
in
debt
from
day
one
I
didn't
put
really
I
put
a
dollar
in
to
the
corporation
and
I'm.
A
That's
not
an
undercapitalized
business.
You
don't
stick
around
or
you
don't
exist
for
20
years
in
the
business
world
unless
you're
doing
something
right,
but
if
you're
in
trouble
from
the
very
beginning,
if
you're
behind
on
your
bills,
if
you're
taking
credit
for
everything
or
using
credit
for
buying
everything,
you
may
very
well
be
considered
undercapitalized,
which
means
that
your
creditors,
if
your
corporation,
goes
into
bankruptcy,
you
can
go
after
your
personal
assets.
So
those
are
the
three
things
to
think
about.
A
Just
make
sure
you
follow
the
corporate
formalities
that
you
don't
commingle
and
that
you
try
to
borrow
enough
money
into
the
business
to
make
a
go
for
a
couple
years.
What
do
you
all
think
is
the
amount
of
time
it
takes
to
build
a
business
from
scratch.
Just
give
me
give
me
ur
an
idea.
What
do
you
think
I'd
say?
That's,
probably
a
pretty
good
estimate
three
to
five
years.
I'm
also
surprised
at
the
number
of
people
who
start
a
business
and
expect
to
make
it
success
in
a
year.
A
It
isn't
likely
to
happen
unless
you
have
something
very
unique
and
you
are
able
to
market
it
and
the
demand
is
pinned
up
in
the
you
know
in
the
economy.
Alright,
so
why
do
I
form
a
corporation
to
protect
my
personal
assets
so
that
I
don't
have
to
worry
about
losing
my
house
if
the
business
goes
under
the
speaker,
the
business
that
all
I
have
to
do
is
form
the
corporation
and
follow
the
business
practices,
including
having
a
separate
bank
account
separate
texts,
not
commingling
funds.
A
If
you
do
all
those
things
which,
by
the
way,
don't
don't
require
a
lot
of
effort,
it's
just
a
matter
of
bookkeeping.
You
are
going
to
have
a
strong
corporation
now,
if
you
follow
all
of
those
things
and
you're
in
debt
from
day
one.
That's
not
going
to
probably
be
very
helpful
to
you.
Okay,
alright.
A
What
are
the
legal
and
tax
implications
of
each
type
of
structure?
Ira
strongly
recommend
that,
if
you're
going
to
form
a
business-
and
you
want
to
use
the
entities
that
I've
described
like
a
corporation
or
a
limited
liability
company
or
limited
partnership,
that
you
talk
to
a
CPA
if
you've
been
using
one
for
your
personal
business
and
they
can
probably
recommend
the
tax
benefits.
A
My
job
is
to
try
to
tell
you
what
I
think
the
asset
protection
benefits
are
of
a
corporation
and
to
assure
you
that
forming
a
corporation
or
LLC
for
the
purposes
of
protecting
your
personal
asset
is
perfectly
legal.
There's
nothing
wrong
with
that.
That's
why
the
legislature
created
these
legal
fictions
in
effect
to
allow
you
or
encourage
you
to
engage
in
forming
new
businesses,
but
by
the
way
you
can
also
buy
businesses
in
one
of
these
core.
You
can
buy
a
business.
A
As
far
as
the
tax
circumstances
are
concerned,
you
should
talk
to
a
CPA
or
to
a
tax
attorney
I,
and
they
will
help
you
decide
in
advance
whether
or
not
that's
the
best
way
to
go.
For
example,
I
have
a
subchapter
S
corporation
from
my
business
I'm,
the
only
attorney
in
the
business
and
I
have
staff.
There
are
benefits
to
me
because
the
I
don't
have
to
pay
a
double
tax.
If
my
business
has
money
at
the
end,
it
just
quote
passes
through
to
me
and
it
becomes
a
part
of
my
income.
A
Sometimes
that's
a
disadvantage
because
more
than
I
anticipated,
but
that's
again,
something
that
the
CPA
can
suggest
to
you
and
you
ought
to
get
good
advice
before
you
go
into
it.
Don't
get
on
the
internet
and
grab
the
first
thing
you
see
and
say:
hey
I'm,
just
going
to
form
a
corporation.
Yes,
sir,.
A
Okay,
let's
talk
about
that.
That's
that's
a
fair
question.
The
city
license
like
I
have
to
have
a
Cupertino
license
every
business,
and
that
is
in
cupertino
has
to
have
a
business
license.
That's
the
way
they
raise
revenue
that
license
is
depend
upon
the
city
that
you're
in
it
has
nothing
to
do
with
the
korma
corporation
or
the
LLC.
It
makes
no
difference
if
you're,
a
sole
proprietor.
You
still
need
to
have
a
city
business
now
what's
become
interesting.
A
If
you
will
some
cities
try
to
make
everyone
who
does
business
in
the
city,
even
though
they
may
not
have
their
the
business
entity
in
the
city
to
pay
because
they're
doing
business
in
that
city,
so
the
answer
to
question
is
the
city
license
fee
or
the
city
license
is
has
nothing
to
do
with
whether
or
not
you
have
a
particular
form
of
business?
Okay,
so
you
got
to
pay
that
anyway,
it's
usually
not
very
much.
It's
usually
very
reasonable.
Okay,
we
talked
about
name
preservation
and
now
we're
doing
on
time
about
15,
more
minutes.
A
Okay,
okay,
I,
don't
know
if
you
want
me
to
go
into
this
or
not,
but
you'll
get
to
a
point
where
you
think
well,
gee
I'm
not
going
to
where
I
can't
work
12
hours
a
day.
Six
days
a
week
or
my
my
my
spouse
is
saying
this:
isn't
a
marriage
you're
not
here
very
often,
I've
got
to
find
somebody
else
to
help
I
want
to
hire
an
employee.
Let
me
just
go
through
this
quickly,
but
when
you
hire
an
employee,
the
first
thing
most
people
say
is
well
I.
A
Don't
want
to
have
the
hassle
of
hiring
an
employee,
so
I'll
just
I'll,
just
I'll
just
call
them
an
independent
contractor.
Why
do
I
want
to
call
them
and
append
a
contractor,
because
I
don't
have
to
worry
about
paying
their
taxes
I
just
give
them
a
check
at
the
end
of
the
week
or
at
the
end
of
the
month,
and
they
take
care
of
all
that.
Well,
it's
not
that
easy
and
I'll
just
say
that.
A
Don't
think
that
you
can
hire
somebody
to
work
for
you
full
time,
even
if
they
work
away
or
even
if
they're,
a
sales
person
that
works
on
commission
or
somebody
that
never
comes
into
the
office,
they
work
at
home.
For
you
as
long
as
they're
doing
the
kind
of
business
you're
doing,
that's
probably
going
to
be
considered
an
employee,
and
there
are
a
lot
of
problems
if
you
treat
somebody
as
an
independent
contractor.
Typically,
what
happens
is
this?
A
They
you,
let
him
go
or
whatever
reason,
and
they
go
to
the
Labor
Commissioner
and
they
explain
the
Labor
Commissioner,
how
they
were
not
an
independent
contractor.
They
wear.
In
fact,
an
employee
and
the
Labor
Commissioner
says:
yes,
you
were
and
then
that's
when
the
problems
start.
You
have
major
problems
and
I
don't
want
to
go
into
too
much
detail.
A
Cause
you're,
probably
not
ready
to
think
about
hiring
an
employee
or
an
independent
contractor,
but
I
have
clients
who
don't
ask
first
about
whether
or
not
the
person
I'm
going
to
hire
is
in
the
pentacon,
cracked
or
an
employee.
They
treat
them
as
an
independent
contractor,
which
means
they
hand
on
the
check
which
they
haven't
taken
out:
income
tax
or
other
taxes,
Social,
Security
and
so
forth.
The
employee
are
probably
the
independent
contract.
A
So
I
don't
want
to
go
into
a
lot
of
detail
because
it's
a
very
sophisticated
and
taxi
determination
about
whether
or
not
somebody
is
independent
contractor
or
a
worker.
My
advice
is
that
you
get
to
that
point.
You
know
give
me
a
call
or
talk
to
any
employment
attorney
and
it's
not
worth
taking
a
risk.
If
you
in
fact,
I
do
have
on
here.
I'm
almost
done
I
explained
to
you
how
the
government
will
find
out
that
the
person
has
been
treated.
It
happens
every
time
they
go
down.
A
A
Labor
Commissioner
labor
commissioner,
says
yeah
you're
in
the
work
you're
an
employee
you're,
not
independent
contractor,
and
then
we
have
major
problems
as
an
employer.
Here
are
some
of
the
penalties
from
misclassifying
workers,
an
independent
contractor.
There
are
state
and
federal
penalties,
there
can
be
fined
between
ten
and
twenty
five
thousand
dollars
and
if
Labor
Commissioner
is
angry
enough
with
you,
they'll
look
for
all
of
these
and
I'll
try
to
seek
the
maximum
penalty.
A
Furthermore,
sometimes
they
a
notice
can
be
required
as
a
part
of
the
resolution
of
a
dispute
that
you
put
on
your
website
for
a
year
that
you
were
found
guilty
if
you
will
of
not
treating
someone
correctly
as
an
employee,
but
rather
as
an
independent
contractor,
there
are
other
way
other
problems
that
come
about
I'm,
sorry
about
the
slide
here
anyway.
My
point
is
this:
it
is
not
worth
it
to
make
the
mistake.
It's
treating
somebody
as
an
independent
contractor
contractor
because
it
looks
like
it's
a
better
deal
for
you,
fewer
taxes
and
less
hassle.
A
That's
just
basically
a
problem
waiting
to
have
them,
so
I
will
close
with
that
and
I
hope.
You've
got
some
information.
The
main
thing
I
want
to
leave
you
with
is
forming
a
business
entity
is
perfectly
legal.
Do
it
from
day
one
or
you
can
do
it
after
you
start
your
business,
maybe
I'd
be
a
little
bit
before
that
buying
a
business
is
a
great
way
to
get
rolling,
but
be
careful
if
you
form
a
corporation.
Remember
those
things
I
mentioned:
gotta
have
enough
money
got
to
follow
the
corporate
formalities
and
not
combing.
A
All
your
funds
and
then
when
you're,
ready
to
hire
a
worker
than
you
maybe
give
me
a
call
and
don't
do
it
yourself,
because
it's
very,
very
difficult.
There's,
like
20
different
criteria.
The
government
looks
at
German
whether
somebody's
a
worker
or
an
employee
anyway,
I
hope
you
got
something
out
of
this
and
I'm
glad
you
came
this
morning
and
thank
you
very
much
all
right.