Too Late for California Corporations?


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12-08-2010-1

December’s always a crazy time for me. We’re working through all the last-minute strategies with clients, and trying our hardest to get everything implemented before the end of the year. After all, having a tax strategy completed, and showing you the $XX thousands in savings won’t happen unless you actually take the follow-through steps needed.
In many cases that involves getting a business structure set up. The only problem with that is that we’re simply running out of year to get it done.

Take the great State of California, for example. Last week I received a file-stamped document back from the state. It had a processing date of November 30th. “So what?” you say. November 30th isn’t bad, if you got it on December 2nd.
That’s true. The only problem is, I mailed that document to the CA Sec of State on May 1st. Yeah … May 1st. In other words, it took the state 7 months to get the document back to me.

California’s the worst offender, but it’s by no means the only state facing lengthy filing delays. So, how are you going to get your corporation formed before the end of the year, given that kind of turnaround?

You’ve got a couple of options:

  1. You can shortcut the system. In California that means hiring a runner to walk in your documents to the Secretary of State’s office in Sacramento, paying an extra counter-filing fee, a runner fee, and of course your regular filing fee. Hand-filing will jump you to the head of the document processing queue. That’ll take your wait down to 10-14 business days in regular months. But all bets are off come the middle of December … there are just too many things that can go wrong.
  2. You can shortcut the California system further by paying an expedited filing fee of $300 on top of your agent walk-in fee and the counter fee (and your regular document filing fee). That’s going to speed things up further, and you should get your documents within 1 days. Unless of course something is wrong … then you’ll get your incorrect documents back and have to resubmit them with another $300 fee, another counter-fee and another runner fee to get the filing done.

t’s a similar process in other states, unless you’re lucky enough to live in a state that does online filings and processes in real-time.

Or, you can try a different route: the Nevada option.

This is something Diane and I implemented a few years back. We created about 20 blank shell LLCs (we call them shelf company LLCs) – they’re already formed, they have Tax ID numbers, registered agent, and they have existing bank accounts. Just change the name (or not) and off you go. (Besides the speed and convenience, there are some possible tax advantages to using a pre-formed company, too!)

If you don’t live in Nevada, that’s no problem. We can take the company into your home state, or just qualify it to do business in your home state. But those steps can happen after the fact. They won’t impact your implementation, even if the registration into another state doesn’t happen until 2011.

At this point, if you’re sitting on the fence regarding incorporating for 2010, it may be too late, depending on your state. The Nevada option could be the thing that saves your 2010 tax strategy. If you’re in a bind and need to get something done before the end of December, why not drop me a note at megan@ustaxaid.com? We can go through your options and see what will – or won’t work for you.



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