May 7, 2010
I Got Those College Reunion Blues Again
I Got Those College Reunion Blues Again Cliff Ennico www.creators.com Just got back from my 30th college reunion (sob), and was amazed by the number of my 50-something classmates who have abandoned the corporate track to start their own businesses. Must be a trend, no? Anyway, here are some interesting questions I was asked during the reunion #147;keggers#148; (at least, the ones I remember . . . ) #147;I live in State A but want to open a business in State B. I don#146;t want to open an actual office in State B, but I want to be incorporated in State B for tax reasons. Is there any way to do that legally?#148; Generally, you don#146;t have to be a citizen of a state in order to set up business there. You do have to be a little bit disciplined, though. When you set up your company in State B, you will need to hire a #147;registered agent#148; to collect important mail from State B government agencies and forward it to you. A number of corporations, such as The Company Corporation ( www.incorporate.com ), offer this service for about $200 a year. I would also recommend opening a #147;private mail box#148;, such as those offered by The UPS Store, PakMail and other franchises, using that as your business address in State B, and having the franchise outlet forward all mail from your box to you on a weekly basis. Now for the tough part. When doing business, only your State B address must appear on all your business stationery, correspondence, advertising and address labels. If anyone sees that you are really operating out of State A, you will be subject to all of State A#146;s laws, taxes, etc. I would even suggest forwarding all of your outgoing mail to your #147;private mail box#148; in State B each week, and having them post it there so the return postmark is a State B postmark. #147;I#146;m employed full-time now, but am likely to be laid off in the next year or two. I#146;m thinking of starting a consulting practice in my field, and want to write and publish a book right now so I can #145;hit the ground running#146; when the time comes. How can I do this legally?#148; First, you should make sure that you haven#146;t signed an agreement with your present employer giving them ownership of any creative work product you generate while working for the company. If you have, then all the royalties and other income from your book legally belong to your employer; of course, they may let you keep it out of the goodness of their hearts . . . Your book should not make use of any confidential information you received only because you are a corporate employee, and please, please avoid using actual company employees in your examples and #147;war stories#148;. If you do, be sure to change their names and enough other details so that they (and you) won#146;t be embarrassed. Finally, realize that corporate employees rarely write books as a way of advancing within the corporate hierarchy. Once your book is published, your bosses will wake up to your plans to #147;strike out on your own#148;, and your future there may well be nasty, brutish and short. #147;I have been working as office manager for a private investigation firm for the past 8 years. There are two partners who started the company 10 years ago, but I am just an employee, and have been looking for #145;greener pastures#146; for some time. The partners got wind that I was thinking about leaving the company, so they recently offered me an equity stake of 1% of net profit (about $4,000 before taxes last year). I declined politely (I was actually insulted, but I didn#146;t let them see that), but then they asked me to make them a counteroffer. What should I do? I made about $111,000 last year, and generate approximately $280,000 in billable hours, while the company#146;s gross revenue is about $2.8 million.#148; You#146;re generating about 10% of the company#146;s gross revenue, but you have absolutely no control over the amount of profits the company makes each year. That all depends on your bosses#146; ability to keep costs under control. I would ask for a percentage of the company#146;s #147;pretax earnings#148; (gross revenue less operating expenses, but before taxes and compensation to owners) in a service business like this. Keep in mind, of course, that your bosses don#146;t have any legal obligation to give you any sort of equity compensation, and may well consider 1% of profits to be quite generous. Since the company has only $400,000 in profits to divvy up at the end of each year, each additional $1,000 you ask for is asking the partners to cut back their standard of living . . . something all of us are reluctant to do these days. Cliff Ennico ( cennico@legalcareer.com ) is a syndicated columnist, author and host of the PBS television series 'Money Hunt'. This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com . COPYRIGHT 2005 CLIFFORD R. ENNICO. DISTRIBUTED BY CREATORS SYNDICATE, INC. Permission granted for use on DrLaura.com

Posted by Staff at 1:47 AM