This is forum where you can submit business and legal questions directly to Jeff Unger. Please submit your question below in the comment field. Please note that all matters discussed here are not to be used as professional legal advice.
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Julia, unfortunately, the exemption from publication only applies to live theatre and music. See, http://www.eminutesonline.com/llcs-formed-for-web-productions-short-films-not-exempt-from-new-york%e2%80%99s-absurd-publication-requirement/
Hi Jeff,
I just created an LLC in NYC for microbudget film and web content production. I partially incorporated in NYC to potentially take advantage of tax incentives. Do I fall under the N.Y. ACA. LAW § 23.03 exemption for theatrical production companies?
Thanks for your help!
New York law (and the law of all states) requires a company to qualify to do business if the company is engaged in more than just an isolated transaction in the state. In your case, if you have moved to New York, the law does indeed require that you qualify to business in New York. Regrettably, this means that you will be liable for franchise tax to both New York and California for 2010. When restructuring your company, you might consider forming in Delware and qualifying to do business in New York, so that you can avoid this problem in the future if you leave New York. For more information on forming in Delaware to achieve mobility, see this video http://www.eminutesonline.com/what-is-the-benefit-of-incorporating-in-delaware-watch-video/
I have an S Corp created in California a couple years ago and I recently moved to New York. I have been told I should dissolve the corporation in CA and recreate it in NY but I missed the date to do so without paying the annual $800 tax for 2010. I don’t want to just throw that money away and was hoping I could just ride out the year and change it end of 2010 as the company really isn’t profitable yet. I just got a new temporary consulting gig and now I’m in NY so not sure what to do in regards to payment. Thanks.
HI,
I have been in the US for 13 years, the first 6 years I had a student visa, thereafter I have been residing in the US with the TN visa. I was just granted a new TN visa for 3 years. I have a social security number and I pay taxes. Can I become part of an american S corporation by meeting the IRS’ “substantial presence test”?
With a few limited exceptions, only individuals can be “S” corporation shareholders. In other words, a corporation (foreign or domestic) cannot be a “S” corporation shareholder. See IRC Sec 1361(b)(1)
I know a foreigner can not be a shareholder, but can a foreign corporation be a shareholder of a “s” corporation?
A lawyer can and will help take over the process, but the first question is whether it made sense to select a LLC (rather than a corporation) as the business structure in the first place. A lawyer and/or a CPA should be consulted to make initial decisions regarding the choice of entity and the choice of jurisdiction. If in fact a LLC is the right choice, an experienced lawyer could certainly take over the process. In our firm, we believe LLCs should be used as an entity of last resort due the the high “junk” fees many states have imposed on LLCs. See, http://www.youtube.com/watch?v=MpT774KgPMU
I have done just as you stated: I’ve begun the process of filing the articles for my LLC and now I have realized there is much more to be done. Will/can a lawyer take over once the process has already begun? Do I have to start over?
It’s so easy to jump online and form a new company without a lawyer, but the initial steps of forming a company (filing the Articles) set the wheels in motion for all sorts of ramifications. That one little act – filing the Articles, which consists of one piece of paper and a nominal filing fee – is a decision that sets a business down a path. A path that is very hard to change without delay, inconvenience, and expense. It pays to learn exactly what decisions are being made when the Articles are filed. I’m not suggesting that every entrepreneur in America should use a lawyer to form a new company, but if you don’t, I would suggest that you speak with a CPA or some advisor to learn the ramifications of filing Articles. Without a lawyer, you can easily get the process started, but first educate yourself on the right entity choice, jurisdiction, structure, etc. Doing so will avoid unbelievable inconvenience later.
Do I need a lawyer to start a LLC?
I was laid off recently, and I am starting a new construction company. I’ve heard that Nevada is the place to set it up. What do you think, Jeff?
From Jeff: The idea of forming a corporation in Nevada is one of the biggest myths of the business world. Unless you are actually planning on doing business in Nevada, there is no benefit to forming a corporation there. If you do so, you would also need to “qualify” to do business in California, which subjects you to the same fees, taxes, and laws that would apply if you form the corporation in California in the first place. Plus, you would have to pay Nevada annual fees, a business license fee, satisfy annual filing requirements, as well as incur the cost of a Nevada resident agent.
I have just written a treatment for a new project, and my accountant tells me that I need to incorporate. I’m excited, and I hope I get an offer that moves to Los Angeles. Should I form a NY corporation?”
From Jeff: How exciting, Annabelle! It sounds like forming a New York corporation would work for you today, but if you move to Los Angeles, you would be stuck paying New York franchise taxes and filing a New York tax return. I suggest you consider forming a Delaware corporation and “qualifying” the corporation to do business in New York. You might incur a little bit of extra expense to maintain the corporation in Delaware, but it wouldn’t be much, and the good news is that you could pick up and move the corporation to California very easily if your career takes you to LA. To do that, you would “surrender” the right to do business in New York and simply qualify the corporation to do business in California.
Wow. I just paid my California gross receipts fee for the apartment building I own. It was $2500, and the building isn’t even cash flowing any more. What should I do?
From Jeff: I feel your pain. The California gross receipts fee is out of control, and it’s especially painful now that vacancies are rising. An alternative would be to convert to a limited partnership. Limited partnerships pay a flat $800 annual fee, but the downside is that the general partner gets no liability protection, so you would need to form a second corporation or LLC to act as the general partner. That means it would take two entities to get the job done – the limited partnership and the corporate general partner, so the real cost of the structure would be $1600 plus the cost of the additional tax return. A decent savings nonetheless.
I am starting a small production company to film a web series. My friend has told me that I should form a LLC to protect myself.
From Jeff: Congratulations on your new web series. Both a corporation and a LLC would protect you in the same way, but a LLC can be considerably more expensive to operate. In California, a LLC must pay a “gross receipts fee” on gross revenue. The fee kicks in once you have $250,000 in gross revenue (even if there is no cash flow), and ranges from $900 to nearly $12,000 annually. There is no such fee for a corporation. However, if the gross revenue from the web series is anticipated to be less than $250,000, a LLC would be just fine for new company. Plus, unlike a S-corporation that can only have individuals as shareholders, LLCs can have any sort of owner. This means that LLCs are considerably more flexible if you are going to raise capital from investors in the future.