What is an Indemnification?

Ok, now we will talk about how to protect the officers in your corporation or LLC. This next bit of information can also be found on the order forms of http://www.nickspradlin.com .

"When you incorporate or organize your business you are protected as a Shareholder or Member (owner of a company); however, when you act as a director, officer or manager you have to understand there is no personal protection if you are sued. Therefore, it is strongly recommended to have us draft a contract between the corporation/LLC and the the directors/officers for an important layer of protection. "

This protects your president, vice president, secretary, and treasurer of your corporation, or, for your LLC, it protects your CEO (Chief executive officer), VOM (Vice operating manager), your secretary and your CFM (Chief Financial Manager).

Again, I must say I am not an attorney so you should always seek legal counsel.

When I set up my company I made sure that I set up an Indemnification Agreement so that I could have my personal assets protected in case something wrong were to happen. (such as being sued for negligence)

No one wants to lose their personal assets to a business loss. Imagine if you have your own house or your own car and your business gets sued. Without this indemnification, you would place all of those assets into an unnecessary risk.

An indemnification is a document that goes into your corporate kit and acts as a contract between the officers of the company and the company itself.

My opinion, I also don't know why anyone would want to set up a business without this level of protection.

Setting up an S elected company

Just to let you guys know, I am not an attorney.

Now, on to this topic. Setting up a sub chapter S apparently can help you pay less taxes because you are set up as a small busienss. Originally you would pay 15.3% in taxes, but if you make your company a Sub Chapter S Company, you can actually pay half of those taxes. Now, I know some people are on a higher tax bracket so I wouldn't know what level you would be placed on in this case. In order to set your business up as a Sub Chapter S, or S elected company, you must be a citizen or permanent resident of the United States.

This next bit of information can be found on http://www.nickspradlin.com on any of their secure order forms.

"The Sub-Chapter S Corporation allows the Shareholders to avoid having their profits taxed twice because there are no corporate taxes with a Sub-Chapter S Corporation. This type of Corporation also allows the owner to avoid the majority of his/her profits from being hit with a self employment tax. Lastly, the Shareholders of an S-Corporation are able to write off their losses on their personal taxes, even against separate income (money from other employment or a spouses income on a joint return.) If you want your business to have these major tax advantages the cost is only an additional $60. We will complete the Federal requirements and draft the Corporate articles, bylaws, resolutions and stock certificates to reflect the companies status as an S-Corporation. "

Honestly, I don't know why ANYONE would want to set up a business without one of these, but like all things, there must be reasons.

To set up an S-elected business you have to submit a form to the IRS (www.irs.gov) . You can submit it through the mail. The Law Offices of Nick Spradlin will fill this form out for you and make it ready for you to mail. You simply mail it in and wait for a response from the IRS. This will turn your corporation or LLC inro a 1120s 2553 instead of the original 1120 corporation or Schedule C \ 1065 partnership LLC.

Again, all of this information can be found online in their site on their forms and under the more information pages.

I will keep trying to find more information that I can post on this blog.

Thanks for viewing!