The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurship, start-ups and general business topics.
Our clients are the reason for our success, as over 50% of our business comes from returning clients and referrals. Harvard Business Services, Inc. is the third largest incorporator in the state of Delaware, with over 54,000 current clients.
We are thrilled and honored to have helped form more than 140,000 companies for customers since our start-up in 1981.
Richard (Rick) Bell, Chairman & CEO says, “It has been a dream come true to see such fantastic growth in the company that I started in the basement of my home 35 years ago. I can’t thank my team enough for the job they do every day.”
Harvard now employs 30 full-time people in its Delaware office, and eight of them have been with the company for more than 10 years. We have a deep bench with unmatched expertise in Delaware formations, Delaware Franchise Tax and internet marketing. We have carefully built this team in order to excel at customer service, a lost art in many service companies today.
In 2015, Harvard had the best year in its history, helping to form 14,459 new companies for our clients from across the United states and all around the world.
Michael Bell, Vice President and Director of Marketing, states, “2015 was a terrific year for us here at Harvard, and we look forward to another outstanding year in 2016. January 2016 was the best single month in the history of the company.”
So here’s to you, our customers, for helping Harvard Business Services, Inc. become Delaware’s Premier Formation Specialists since 1981. We are so pleased and proud you trust us with your businesses, and we look forward to serving you as well as our new clients for many more years to come.
These days, the term "non-stock corporation" has essentially become synonymous with the term "non-profit corporation."
But what is a non-stock corporation?
The common use of the non-stock corporation as the vehicle with which to obtain tax-exempt or non-profit status from the IRS has led to an interchangeability of the two terms, but this can be problematic.
The notion that non-stock corporations and non-profit corporations are the same has led many individuals to believe that if you form a non-stock corporation, you are forming a non-profit organization, which is not true.
In addition, individuals assume that as long as the corporation has no stock, it is a non-stock corporation and therefore eligible for tax exemption, which is also not true.
A non-profit (notice I left out the word "corporation") is most commonly an organization that has obtained tax exemption, under section 501(c)(3) of the IRS code, by filing Form 1023.
To qualify, the organization must be a corporation, community chest, fund or foundation (a trust is a fund or foundation and will qualify) that is created, organized and operated exclusively for one or more of the following purposes:
• Testing for public safety
• Fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment)
• The prevention of cruelty to children or animals
It just so happens that many states, including Delaware, have a type of entity whose articles are designed to facilitate the application for tax exemption.
Can you guess what that entity is called? That’s right, it’s the non-stock corporation.
Do not confuse this with a stock corporation that has no authorized stock.
(Yes, it is possible to have a stock corporation that does not possess authorized stock. Even though it makes no sense, Delaware does allow stock corporations to file Articles of Incorporation without authorizing shares of stock. It is rare but we have seen individuals accidentally file corporations in this manner. This error can be corrected, but it will cost you precious time and money.)
A Delaware non-stock corporation has no capital stock and is required to disclose its non-profit intentions in its Articles of Incorporation at the time of filing.
It is typically but not exclusively used by organizations that plan to apply for tax exemption under section 501(c)(3) of the IRS code. Other applications of the non-stock corporation may include:
These organizations may be eligible for tax exemption under a different section of the IRS code. For more information on tax-exempt status for your organization, refer to IRS Publication 557.
When you’re just starting out and looking for investors for your new company, forget the standard sources of capital; forget the banks; forget the Venture Capital firms; forget the finance companies; and forget the Small Business Association.
All of these sources of capital are a big waste of your time.
You see, these sources of capital exist for a company that possesses two key advantages: assets and cash flow. First, you need to have assets greater than the amount you want to borrow and second, you must have the cash flow to pay the debt service.
Without both of these important elements, you might as well be praying for it to rain money. Most new businesses possess neither of these elements, so where are you going to get money to start up your business venture.
You need an angel. Only an angel would invest in a company with no assets and no cash flow. Your angel needs to be capable of investing money into your business; therefore, you need an angel investor.
What to Look For in an Angel Investor
Where do you find an angel investor? There are only two reasonable groups of people you can count on. First, people who know you, trust you and have money and second, people with money who know the industry you’re breaking into and trust that it both needs and can support your innovation.
The first group is the easiest to find and talk to. These would be family members, mentors, former bosses and colleagues, rich kids you grew up with--anyone you know who trusts you and has money. If they know you and trust you but don’t have money, don’t bother them.
Money is essential for an angel investor. Compile your list and then call and make an appointment to meet with them. Don’t tell them the whole story over the phone; just tell them you are seeking their advice on a business matter.
When you show up for your appointment, it is important to have an engaging presentation ready to show them. PowerPoint is great, but it could also be a booklet or a business plan or some other form of presentation. Create something you can give to them, so they don’t forget about you the moment you leave.
Nobody says “yes” in the first meeting, so don’t be discouraged if you walk out of the meeting without a check in your pocket. If they exhibit interest in your business plan, make a second appointment in order to discuss details.
Remember, even though these folks are your friends, don’t be casual about your presentation or the image you project. Impress them with your appearance, your research, your preliminary drawings, your start-up plans and your knowledge of other attempts to solve the same issue you’re out to solve.
Carefully plan your proposal time beforehand; don’t take too much time getting to the point. Start with the executive summary, not the historical genesis of the whole idea.
People you don’t know can also be excellent angel investors. This second group is harder to find, but easier to convince to invest in your company. Wealthy people with money who know a particular industry are often looking for a better way to accomplish something specific in that industry.
If your idea is brilliant, they will recognize it as such and want to invest in your company. However, you must also impress them with your research, your knowledge, your preliminary plans and your integrity. They will have to believe in you before they will invest.
Once again, don’t be discouraged by rejection. If they aren’t convinced your idea is great and your ability to execute it is apparent, just learn from them and move on to the next prospect.
It’s important to remember that for both groups of potential angel investors, rejection is the norm. Your potential angel investors are the unusually intelligent people who are willing to trust you and see your vision.
You may have to meet with 20 or 30 people to find just one who is smart enough to take the necessary leap of faith to invest in you, so keep searching until you find the ideal angel investor.
One final word of advice: always ask yourself “what do they want?” before presenting your business plan. Most people do not want to invest in an idea.
They want to buy stock in a company that is going to someday be valuable. So before you set up your first appointment, you should form your company and be ready to sell stock to your potential angel investor. Be ready to say, “I want to sell you xx percent of my company for xx amount of dollars.” That will impress them.
Notice I did not say raising money will be easy. It will test your resolve. Rejection is hard to take but it hardens you and makes you more determined.
Once you find angel investors, treat them like angels. Contact them often with updates on your progress. Ask their opinion on important matters. Send them your promotional material.
Always keep in mind that they are investing in you because they trust you. Earn their trust repeatedly and they will continue to invest in your company, which is really an investment in you and your future.
Photo Credit: Bill Davenport
Until recently, the word “coaching” was only connected with sports; next, it came to be associated with a way in which to improve one’s personal life, without delving into the emotional foray of psychotherapy, via a new type of self-help called “personal coaching.” For the past few years, however, the way in which the word can be utilized has expanded once again, this time to the business world.
Executive coaching (an extension of personal coaching) has become so popular that, according to the ICF 2012 Global Coaching Study, the total annual revenue from professional coaching in 2012 was nearly 2 billion dollars; that same report stated that the number of professional coaches working throughout the world had increased from 2,100 in 1999 to 47,500 in 2012.
So what is an executive coach and why do people—especially zealous entrepreneurs and successful CEOs— employ them? Executive coaches are people who are trained (yes, both personal coaches and executive coaches undergo extensive training in order to earn one or more coaching certificates, so don’t work with one who isn’t certified) to help people grow—emotionally, intellectually, internally.
Almost all of us will, at some point in our adult lives, hit a plateau; for those of us who are used to feeling both motivated and productive, when we slam into that plateau the feeling can be extremely disconcerting. An executive coach helps people get un-stuck, so to speak, and in the process, points out areas of potential we may never have explored or pursued.
Skilled executive coaches recognize the strengths within us that we may have overlooked, taken for granted or just never even noticed.
As an entrepreneur, you can likely be described as energetic, motivated and focused; however, entrepreneurs are often so busy and overwrought that they don’t dedicate enough time to strategic thinking, which is crucial for long-term success.
Entrepreneurs and CEOs who don’t slow down long enough to think strategically often wind up losing (or confusing) their vision of the company; they may also:
An executive coach teaches you not only the necessity of strategic thinking but also the tools you will need to utilize in order to think strategically throughout your career and life. In addition, by helping you eliminate your own self-limiting beliefs, an executive coach teaches you how to define your vision, confront obstacles, develop a work-life balance and sustain motivation, accountability and responsibility.
An executive coach offers support and helps you learn why you’re hiding behind your own self-limiting beliefs; the goal is for you to accept and then conquer these beliefs, and subsequently let them go so you can move ahead with both confidence and mindfulness.
A good coach will also ensure you are clear about your own core beliefs. Jerry Anathan, a Certified Personal Coach and owner of Inner Guru Coaching, explains that “core values are not ethics or morals. They are the truest representation of our authentic selves. Without an honest alliance with our own personal set of values, we lack the foundation to make powerful decisions at every moment.”
Ms. Anathan says that a great executive coach “digs deep,” and focuses on illustrating the importance of the life-work balance to industrious, dynamic business leaders. “Work-life balance” doesn’t merely mean leaving the office before 8 PM. Work-life balance includes:
If this sounds difficult and challenging, it is—that’s the point. Change will not just happen by itself; transformation takes work. However, the work is easier with the help of an executive coach, whose job it is to keep you motivated and accountable to your own plans for self-improvement.
Ms. Anathan describes the coach-client connection as one “based on trust, progress and celebration of accomplishments. Coaches teach you how to measure your progress, so you actually feel good about where your energy is spent.” The stipulation, then, seems to be the self-dedication and motivation required to effect real change in your life, but this caveat exists in all methods of self-help, most especially psychotherapy.
With an executive coach, however, you typically have more access to your support system as well as actual homework to do between sessions, which keeps you focused and determined while you break negative patterns and create more positive, healthier ones.
So how does a busy entrepreneur find an executive coach? The same way you do everything else these days—research via Google, personal references and/or word of mouth. Three things you should think about are:
Executive coaches are usually quite understanding of an entrepreneur’s demanding schedule, and most have embraced technology when it comes to meeting for sessions. Many offer a free consultation in which you have a phone conversation so both of you can gauge your comfort level and decide if it feels like a good fit.
The individual executive coaching will likely be presented in a variety of ways: a one-day, intensive session; a month-long package; a 3-month package; or a 6-month package, all of which will include:
At Inner Guru Coaching, Ms. Anathan emphasizes to her clients that they remain proactive, open-minded, committed to the process and, of course, willing to change their belief systems—all vital aspects of the coaching process.
At the end of the day, even the most passionate entrepreneurs and world-famous CEOs need to shut down the computer, hang up the phone, leave the office and go home. Whether that home is full of warmth, love and personal fulfillment or it is a hollow, unsatisfying part of your journey is completely up to you—help is available if you should need it.
Do you own or operate a Delaware corporation? (Not an LLC.) The deadline for the annual corporate Franchise Tax report is March 1 of each year. Have you filed and paid for your Delaware corporation’s annual Franchise Tax report yet?
If not, Harvard Business Services, Inc. can help you stay in compliance and complete the filing by the impending due date. [Please note that LLC/LP entities have a different deadline, which is June 1.] If you do not file and pay your company’s Franchise Tax by March 1, you will incur a $125 late penalty as well as a 1.5% monthly interest fee added to the overdue balance.
Your corporation will also lose its Good Standing status in Delaware.
The annual corporation Franchise Tax report must be filed and paid every year. Do not be fooled into thinking your company does not have to pay the Franchise Tax for any reason. This annual obligation is required, even if:
To put it simply, if you own a Delaware corporation, the annual Franchise Tax report must be filed and paid by March 1 of every year.
Harvard Business Services, Inc. has the expertise to assist with the filing of your annual Delaware Franchise Tax report. The fastest and easiest way to get this accomplished is online.
Once we have received your online order, we will submit your corporation’s Franchise Tax filing to the state of Delaware. You will then receive a copy of the documentation for your records.
We are happy to help you file your annual Delaware Franchise Tax report; however, please keep in mind that our office processes thousands of Franchise Tax reports, so in order to make sure all the filings are processed on time, we must enforce a cut-off time for accepting new orders. Therefore, please take note of our office schedule for March 1, 2016:
After 8 PM EST on March 1, 2016, we will no longer be able to accept any Franchise Tax filing requests of any kind. You will need to contact the state of Delaware directly in order to make payment arrangements. The state of Delaware’s contact details are:
Don’t wait until the last minute to submit your annual Franchise Tax report filing. Let Harvard Business Services, Inc. take care of it for you today.