California Eliminates Mass Mailings of Statements of Information

In an effort to save money (and to eliminate confusion with the widespread, bogus solicitations bombarding California small businesses), effective December 1, 2009, the California Secretary of State began sending reminder postcards to California corporations and LLCs rather than Statements of Information. Now, 90 days in advance of the corporate/LLC filing deadline, the Secretary of State will send out a postcard with the corporate name, corporate number, renewal date, and filing instructions. This means that California businesses may no longer simply check the box and send in a check. Instead, California corporations and LLCs must (a) file the Statement of Information online, (b) download the Statement of Information from the Secretary of State website, prepare the form, and mail it to the Secretary of State, or (c) request the Statement of Information form by phone.

Warning: California Businesses Bombarded with Bogus Solicitations

Many California business owners have been bombarded with notices suggesting that if they do not send money to the “Corporate Compliance Board”, or similarly named nonexistent government agency, their corporation or LLC will be hit with fees and fines. In response, the California Secretary of State has issued an Alert. See, http://www.sos.ca.gov/business/be/alert-misleading-solicitations.htm

These are bogus solicitations and do not require any action on the part of the company. The solicitations request that a fee be returned, along with a completed form to ensure that the company will remain in compliance with California law. The companies responsible for the solicitations are not affiliated with the California Secretary of State’s office and may not be handling the filings properly.

There are many versions of the solicitation, but they all appear very similar to the Secretary of State’s Statement of Information form. In addition to their official-looking appearance, they usually contain the company’s file number or corporate number. In many cases, the corporate number on the solicitation does not match the actual file number for the company assigned by the Secretary of State. Further, the solicitations indicate an arbitrary due date. In California, all Statements of Information are due on the last day of the month of formation. They will never be due on a date other than the last day of a month.

If you have any doubt whether a form is a solicitation, you should contact your corporate attorney. If you have remitted payment in response to one of these solicitations, you should immediately make sure that your company is actually in compliance with its filings. The Secretary of State has requested that those who received a bogus solicitation contact the California Attorney General’s office at the California Department of Justice, Public Inquiry Unit, P.O. Box 944255, Sacramento, California 94244-2550 or through the California Attorney General’s website at www.ag.ca.gov/consumers/general.php. The telephone number for the Public Inquiry Unit is (800) 952-5225 (toll free in California) or (916) 322-3360.

Why in the World Would Anyone Incorporate in New York?

One of the primary advantages of incorporating a small business is the protection that the corporate form gives to shareholders’ personal assets. In New York, however, this general rule is subject to a significant exception. Under N.Y. Bus. Corp. L. §630, the ten largest shareholders in any non-public company (except for investment companies) can be held liable for wage claims made by corporate employees. All types of compensation are covered by the statute, including (but not limited to) salaries, overtime, vacation, holiday and severance pay; employer contributions to or payments of insurance or welfare benefits; employer contributions to pension or annuity funds. Read more

Delaware: Jurisdiction of Choice for Mobile Generation

According to census figures, between 1995 and 2000, 120 million people over age 5—almost half the US population—moved to a new residence. Of the 120 million people who changed residences during that period, 8.4% moved to a different state. This high rate of interstate mobility has important implications when it comes to choosing the state in which to incorporate your business. Read more

Advantages of a Board of Advisors vs. a Board of Directors

In today’s competitive business environment, organizations frequently seek outside expertise to help the company grow and prosper. Traditionally, companies seeking external advice invite advisors to join their Board of Directors. However, the formality, liability and expense of a Board of Directors fuels the popularity of an informal, budget-friendly alternative: a Board of Advisors. Read more

Understanding the Differences between Corporate Names and Trademarks (Guest Author, Don Thornburgh)

Formation of a business entity, such as a corporation or limited liability company, entitles the owner to conduct business under that name in the jurisdiction in which the entity was formed. It is important to recognize, however, that the act of creating the company itself does not confer upon the owner any intellectual property rights in the name. Read more

The Unwitting Franchisor (Guest Author, Barry Kurtz)

Thinking of expanding your business via some sort of licensing arrangement, or perhaps by finding distributors or dealers for your trademarked product or service? Stop yourself before you go too far, because the last thing you want to do is to become an unwitting franchisor – and it’s probably more easily done than you think. In fact there is a fine line between a franchising operation and such other commercial arrangements as licensing agreements, distributorships and dealerships involving trademarked goods or services, and if you step over that line, you court a world of trouble. Read more

Debunking the “Nevada Incorporation” Myth

Radio advertisements, even scholarly print and web-based articles, tout the notion that entrepreneurs are substantially better protected from litigation, or receive other tax and financial benefits, if their corporation is formed in Nevada rather than in California or other states. These are myths. Incorporation businesses – and even the State of Nevada itself – use mass marketing and the media to popularize the concept that there is some benefit to incorporating in Nevada. This article examines California and Nevada law to analyze and debunk the most popular myths as it applies to for-profit small businesses. Read more