The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurship, start-ups and general business topics.
The answer is one of the most common traits among failing businesses today: the dedication (or lack thereof) to provide a friendly and helpful customer service experience to every customer. Every customer, every day.
No matter what type of business you’re in, customer service is the key to sustained success and longevity. Every potential customer, client, subscriber and end-user represents the future of your business. In essence, your clientele controls the fate of your business.
Companies that provide excellent customer service experiences, not only before and during the sale but long after, are the ones that thrive.
Here at Harvard Business Services, Inc., all of our helpful customer service representatives strive to provide top-of-the-line customer service to every potential client. We go out of our way to ensure that each client that we work with feels as if he/she is our most important client, and it shows.
After all, one of the best forms of advertising is still by word of mouth, so if your business is providing anything less than top-notch customer service, it shows, and there’s nothing worse for your marketing department than negative online reviews, which can be accessed and read by anyone, including potential clients.
Have you ever dealt with a company that is virtually unreachable? If I can’t reach a company, the company has lost my business forever.
That’s all it takes for me to walk away and find another company with the same services. Companies exist for our convenience and they should be doing everything they can to earn our business and our trust.
At Harvard Business Services, Inc., we take customer service and customer satisfaction very seriously. All of our pleasant, professional customer service representatives genuinely want to help you. We do our very best to explain the business formation process, costs and timeframes rather than merely close the sale.
This is because we aim to please. If for any reason you are unhappy with our customer service, we’ll do whatever it takes to correct the situation. This is yet another example of what separates us from the competition.
We can be reached by phone at 1-800-345-2677 or by email at email@example.com.
We’re also available during normal business hours on our website by Live Chat; on Skype via Delawareinc; or if you’re in the area, we invite you to stop by our office at 16192 Coastal Highway, Lewes, Delaware, 19958.
At Harvard Business Services, Inc., we pride ourselves on customer service and our helpful customer service representatives are eager to help you any day you’re ready to start your business.
When forming a Delaware corporation, one significant detail you will need to consider is the number of shares the entity will have authorized, and the corresponding par value of those shares.
The values that are chosen will affect several structural aspects of the entity, including equity, capital and ownership. Furthermore, the amount of Delaware Franchise Tax your company must pay is based on the number of authorized shares and par value.
Most start-up companies are typically formed with a small number of authorized shares and a low (or zero) par value.
However, some entities want to have a greater number of authorized shares while maintaining a zero par value for the stock. This may not be an ideal option for most companies, and you should take into account how this can potentially affect your company’s annual Franchise Tax each year.
For reference, the state of Delaware has two methods to calculate Franchise Tax: the Authorized Shares Method and the Assumed Par Value Capital Method. The Franchise Tax amounts due range from a minimum of $175 to a maximum of $180,000 per year, plus a $50 Annual Report Fee.
The varying amounts can be contributed to an endless array of options of authorized shares, issued shares, par value and gross assets. Fortunately, the entity only has to pay the lesser amount yielded by the two methods.
How does this pertain to an entity with no par value? Well, a minimum stock company (generally an entity with less than 5,000 authorized shares) with zero par value typically pays Franchise Tax under the Authorized Shares Method. This will usually end up to be the minimum of $175, plus the $50 Annual Report Fee, for a total due of $225.
However, the calculations and resulting amounts due can be different for a maximum stock entity (typically a company with more than 5,000 authorized shares) that has zero par value. This type of business entity must file and pay Franchise Tax under the Authorized Shares Method.
Here are examples of the differences:
Due to example number 2 above, clients typically consider placing a par value on their company’s stock, especially when there is a large number of authorized shares. The par value set for the authorized shares can be a very low rate, anything greater than zero.
This will allow the entity to file annual Franchise Tax under the Authorized Shares Method and potentially pay a lower amount. In addition, since stock must be sold at higher than par value, it gives the entity more choices when issuing shares to investors.
Welcome to the Successful Entrepreneurs Blog Series. In this monthly blog series, Harvard Business Services, Inc. will interview a variety of successful entrepreneurs whose companies’ range from small to large and local to international.
Disclaimer: Some of the featured companies are clients of Harvard Business Services, Inc., and we will disclose this information. If you have a suggestion for a Successful Entrepreneur blog post or would like your company to be featured in this series, send us an email.
A Public Benefit Corporation is a business entity with a dual purpose—to profit shareholders as well as benefit the public. Every Public Benefit Corporation includes a declaration that it will attempt to maximize shareholder value as well as provide a social benefit. It is an excellent option for entrepreneurs who want to form companies with clearly defined social contributions. We spoke with entrepreneur James Stuber about Alltham, P.B.C., his Delaware Public Benefit Corporation.
Alltham PBC At-a-Glance
|Incorporation Date||October 4, 2013|
|Products/Services Offered:||Alltham, PBC is multi-channel marketplace where consumers can discover, share and purchase a wide selection of American-made products|
|Incorporation Type:||Public Benefit Corporation|
What inspired you to start Alltham PBC?
I actually had an entrepreneur’s light bulb moment that involved a light bulb. I unscrewed a light bulb and when I looked at it, it struck me, it had the GE Logo, but in all caps it said [made in] CHINA.
Soon after that, I went to the Boy Scouts store and everything was made in China, Vietnam and Bangladesh. The Boy Scouts are illegal in China and Vietnam.
I heard a Chaplain for prisoners speak and I thought, ‘Wouldn’t it be easier to keep young men straight if jobs were available in their communities?’
These experiences set me off on this journey to answer the following questions:
Why does it seem like everything is made somewhere else? Isn’t that causing problems? What can we do about it?
It is logical to think that consumers can solve this problem: We are 70% of total spending. But it turns out that it is hard to buy American-made products. The internet should be able to help us with this, but it doesn’t. Why not? Efforts-to-date have fallen short and so, there is an unmet need. This is where Alltham PBC gets its mission.
What is Alltham’s mission?
Alltham’s mission is to build healthy communities, to help people buy things that were made in America. Alltham stands for All Things American-made. We make it easy to buy American-made goods and what we are offering are products of excellent quality and design that are safe and durable.
We give a portion of each sale to training veterans in manufacturing jobs.
Why did you choose the Public Benefit Corporation over a General Corporation or a Non-Profit Corporation?
Two reasons—the first is a legal reason. We incorporated as a PBC so that we can legally pursue this public mission, in addition to a profit, and we are not limited to always and only doing what is most profitable. Also, I am thinking about the exit. There is something called the Revlon Rule, whereby you must always sell a company to the highest bidder. The PBC releases the company from this legal obligation.
The second reason we chose the Public Benefit Corporation was to position the company so that people know that Alltham is committed to making a difference and to having an impact. By incorporating as a PBC, we put it right out there that we are pursuing the public good through our mission.
Alltham PBC is one side of what I am doing—the commerce side. I have also formed a non-profit 501(c)(3) educational organization to raise awareness of the problem of offshoring jobs and how consumers can solve it. I have also incorporated a non-profit 501(c)(6) legislative advocacy organization. Its mission is to seek clear country of origin labeling in product descriptions on packages, in catalogs and on the Internet so people can make an informed decision.
You operate out of Pennsylvania; why did you choose to incorporate in Delaware?
We operate out of Wayne, Pennsylvania. I am an attorney, so I may be more cognizant of legal issues, and a Delaware corporation makes sense for a number of legal reasons. First, I chose to incorporate in Delaware because being a Delaware corporation can certainly help to facilitate an Initial Public Offering. If we go public, being a Delaware corporation could prove to be very important. Second, I have experience as an entrepreneur and in early stage companies, and Delaware has well-developed corporate law that can protect and help a company and make investors more comfortable in investing in it.
Why did you choose to incorporate through Harvard Business Services, Inc.?
I have had a very good experience with Harvard Business Services, Inc. I was helping to lead a turnaround of a publically traded company and Harvard was there as the Registered Agent, and I came to experience Harvard’s level of service, which I thought was quite high.
You see, there was an error in the company’s filing of the initial Articles of Incorporation. It was the company’s fault. The company had intended to file a more wholesome version, but they did not do it. We had to find some case law that might allow them to go back. Harvard’s Chairman and founder, Rick Bell, helped us in this process—of going back and doing that which the company should have done originally. This is an example of how Harvard Business Services, Inc. and Delaware’s well-developed corporate law and Court of Chancery can make a difference down the road.
I have incorporated several companies with Harvard since then and I continue to be delighted with the service.
Has having a PBC helped you to raise mission-aligned capital? Has it helped you to attract the attention of venture capitalists or social investors?
On the investment side, I have certainly seen that being a Public Benefit Corporation creates receptivity to our concept. It makes it easier for me to tell a clearer story. I have raised $200,000 out of $2 million so far and I think ultimately it will attract social investors and consumers who know that we are in it for a higher purpose.
Do you have any advice for other entrepreneurs?
Try to engage in a network of other founders whom you can bounce ideas off of. I can give you a specific example: I had breakfast the other day with a fellow entrepreneur. I was picking his brain about issues related to infrastructure and IT. I was able to ask him where he buys computers, how he does payroll, if is he leasing or buying certain equipment. We even discussed what it is like to hire and manage Millennials. We talked about strategy. I have always found one or more ways to engage with other founders and this has been helpful.
What is next for AllthamPBC?
The soft launch of the Alltham internet site will be Fall 2015. The hard launch is scheduled for early 2016 and this coincides with the publication of a book I am writing to raise awareness on American-made products.
What are your big dreams for AllthamPBC?
I believe that Alltham can be the Wayfair of American-made products.
Harvard Business Services, Inc. would like to thank Jim Stuber for taking the time to let us interview him. If you are interested in learning more about the Public Benefit Corporation or you are ready to form your company today, our friendly and experienced customer support staff is ready to assist via phone (1-800-345-2677), email, live chat or Skype (Delawareinc).
You have an amazing idea for a new business. You’re ready to incorporate in order to protect yourself and your personal assets, and you’ve decided it’s time to take the next step and form a Delaware LLC for your new entrepreneurial endeavor.
Then the confusion swirls:
Delaware LLCs can conduct any lawful business activity anywhere in the world. Some people explore the low-cost series LLC when they want to operate several different businesses, which is very enticing since there is only one annual Franchise Tax payment to the state of Delaware and one annual Registered Agent Fee.
However, the structure of this business entity is relatively new and unproven, so there are often many hurdles that arise when dealing with a series LLC. It is generally considered safer and smarter for people to keep their business ventures completely separate from one another by forming an LLC for each aspect of a business; in essence, what you are doing is creating one Delaware LLC as a holding company, and other, individual LLCs within it yet separate from it.
Many people consider setting up DBAs for numerous, different business operating under the umbrella of one LLC. A DBA (Doing Business As) or fictitious name registration is simply assigning the LLC another name, or multiple other names, that may better fit the spectrum of services or products offered.
However, DBAs do not provide any type of legal separation between the different aspects of the business. If anything should happen to any one segment of the LLC, the LLC as a whole, as well as every other aspect of the business, could potentially be affected and held liable.
As it stands today, the battle tested, proven practice of creating individual LLCs that are formed for every variant of a business is traditionally still the most highly recommended strategy by tax professionals, attorneys and business consultants all over the world.
This means that for every sector of the business, for each product line, for every service provided, for each piece of real estate held, clients will often consider creating separate, traditional LLCs. Doing so ensures that the assets, debts, and liabilities of each LLC are completely disconnected and shielded from one another in the event of any possible litigation.
When establishing multiple LLCs, it can be extremely helpful to develop a blueprint hierarchy that will coincide with the relationship of the respective LLCs. For example, people typically set up numerous LLCs for real estate development.
This framework often consists of one parent LLC at the top of the hierarchy—let’s call it ABC Holding Company, LLC. People then typically create multiple sibling LLCs, one for each piece of actual real estate—let’s call them ABC Real Estate 1, LLC; ABC Real Estate 2, LLC; and ABC Real Estate 3, LLC.
Each LLC may own, manage and be responsible for a single piece of property; thus, while all the LLCs share the same holding company—ABC Holding Company, LLC—and may possess similar structures, ownership interests, assets and liabilities, they are insulated and shielded from one another in order to protect the properties and resources of each individual LLC.
This is also considered a smart, strategic way to further protect your personal assets from your LLCs.
Once you form your new LLC or corporation, you’ll need to open a bank account in order to do business.
What do I need to open a business bank account?
Typically, when opening a bank account in the United States, the bank requires the company's approved Certificate of Incorporation/Formation, the company's Federal Tax ID Number (also known as the EIN) and lastly, for an individual from the company to appear at the bank in person.
Although banks are regulated by the federal government, they are also regulated by state banking laws.
Different banks require different documentation, so be sure to contact the bank of your choice to ascertain its requirements for new business bank accounts. Other items that banks may ask for are:
Foreign Qualification is important because the bank account is the point to which revenue is channeled, and thus it is considered part of a company’s operations. Since every state has its own requirements for Foreign Qualification, we are happy to take care of this detail for you. Our specialists can assist you with the entire Foreign Qualification process.
Many banks require a Certificate of Good Standing when a company applies for a loan, a line of credit or wants to open a merchant account. A company may also be asked to present a Certificate of Good Standing before signing a large contract.
You can order a Certificate of Good Standing for your company online.
If I form a Delaware company, do I have to open a bank account in Delaware?
No. Delaware company owners often open a bank account wherever it is most convenient for them, generally the state in which they are doing business. It is common for Delaware companies to operate all over the world, and banks typically understand this reality.
This is where your Certificate of Authority becomes significant; it lets the bank know that even though the company was formed in Delaware, it is legally registered to operate in your home state as well.
If you have any other questions about business bank accounts, our experts will be happy to assist you. While we do not actually open bank accounts for our clients, we can assist in obtaining the documents the bank will request from your company.
Feel free to call us at 800-345-2677, email us or Skype us at delawareinc.