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The HBS Blog


The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurship, start-ups and general business topics.

The HBS Blog Has a New Look!
By Michael Bell Tuesday, January 20, 2015

In 2009, Harvard Business Services, Inc. launched “The HBS Blog”—a useful site full of news about incorporating an LLC or corporation, with tips and tricks to empower you and your business. Now, five years later, we've relaunched the The HBS Blog with a new URL and a fabulous new look. We will continue to post two articles a week and send out our weekly announcement on Wednesdays.

Since our HBS Blog is now a subdirectory of www.delawareinc.com, you will be able to find all the information on the topic you are looking for even faster than before, and you will no longer have to go from one tab to the next--you can easily navigate between our delawareinc.com website and The HBS Blog.

Everyone at Harvard Business Services, Inc. looks forward to continuing to provide you with all the information you have come to expect from us as an industry leader, and we wish you much success in 2015.

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How to Convert a C Corporation to an LLC
By Paul Sponaugle Tuesday, January 13, 2015

how to convert C-corp to LLCThe two questions below are from clients, and they illustrate the power of the LLC.

 

One client wants to convert his C-corp to an LLC; he must file a conversion with the state of Delaware and then notify the IRS.

 

The other wants to change his LLC in order to be taxed like an S-corp; he doesn’t need to change his company filing with the state of Delaware. He simply files two forms with the IRS, electing S corporation tax status, and remains an LLC in structure.

 

Convert C-Corp to LLC

 

Question:

I currently have a C-corp with Harvard Business Services, Inc. There are only 1,000 shares of stock and I own them all. I don't have any employees and my wife is the corporation's secretary. Can I convert my C-corp into an LLC? Can Harvard do this for me? Is it easy to do? Will it be expensive? Do I need to change the name? I assume I need to revise the EIN.

Thanks,
Mitch
Maryland

 

Answer: Mitch, if you have a Delaware C-corp, we can easily convert it to an LLC for you, officially, with the state of Delaware and the IRS. The filing is called a conversion. Harvard's service includes all document preparation, filing, Delaware filing fees, a new LLC minutes book with company seal and membership certificates and we will also file the IRS notice. Our package even includes shipping. The ending of your company name will change to LLC.

 

 

Convert LLC to S-Corp

 

Question:

I formed an LLC with Harvard Business Services, Inc. and now my accountant wants me to convert it to an S-corp. Can I do this? Can Harvard do this for me?
Let me know.

Tyrone
Colorado

 

Answer:

Tyrone, the federal government does not recognize the LLC as an entity for tax purposes; therefore, LLCs have the opportunity to elect their desired tax classification. By default, a single member LLC is classified as a disregarded entity; the LLC is ignored for the purpose of filing a federal tax return. 

 

Multiple-member LLCs are considered partnerships for filing purposes, by default. Bear in mind, these designations are for federal tax purposes and do not change the fact that the business is a limited liability company. An LLC not accepting its default status must file Form 8832 to elect the entity’s classification.

 

This form allows an LLC to be recognized as a corporation for the purposes of filing taxes. Once an LLC files Form 8832 with the IRS and elects to be recognized as a corporation, it becomes eligible to file Form 2553 and elect sub-chapter S tax status. Ideally, an LLC seeking S-corp status will file Form 8832 and Form 2553 with the IRS simultaneously.

 

 

If you have questions about converting your company from one entity type to another, or electing different tax status, give us a call at 800-345-2677 or drop us an email. We can't advise you on what to do, but we can help you change from one form of entity to another, if you'd like to.

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How Many Companies Incorporated in Delaware in 2014?
By Brett Melson Monday, January 12, 2015

companies incorporated in delawareThe close of 2014 predicts good news for the year to come! Delaware’s Division of Corporations recently released news that the year broke a nearly decade-old record for the number of new business formations in the state. How many companies incorporated in Delaware in 2014? Last year there were 169,000 new entities formed, almost four percent more than during the economic boom of 2007.   This increase reflects economic growth for the rest of the nation.

“Our numbers are a bellwether of the national economy,” said Deputy Secretary of State Richard J. Geisenberger. “As goes the rest of the country, so goes Delaware.”

As the economy improves, more people venture out to become entrepreneurs, form businesses, and look into incorporating. Delaware set records for the number of businesses formed in eight out of 12 months last year. In fact, there has been a steady increase since 2009. International business is also contributing to the growth, and the state is continuing to work on world- wide outreach. We have noticed the trend of clients from outside of the U.S. wanting to form a Delaware entity and conduct business here in the U.S.; currently 16 percent of our new formations come from non-U.S. clients.

Companies near and far are learning why Delaware is the best state in which to register your company. Delaware has long had the well-deserved reputation as the best place to incorporate. Thousands of start-up companies make the choice each year to join the 69 percent of Fortune 500 companies that are incorporated in Delaware, despite the fact they operate completely or partially in other states or countries. Business leaders all over the world recognize that the state of Delaware has some of the most business-friendly laws and regulations for starting and running a business. The residents of the state of Delaware are grateful for the strong corporate law structure their state has created, because it benefits every resident. Almost 1/3 of Delaware’s income can be attributed to the Division of Corporations.

Since 1981, Harvard Business Services, Inc. has helped more than 120,000 people from the United States and all over the world form Delaware corporations and Delaware LLCs. Based on the record-breaking success of 2014, we see a great reason for optimism in 2015, and look forward to helping many more businesses meet success. For more information, view the recent article in the Delaware News Journal.

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How to Take Credit Card Payments On Your Phone
By Michael Bell Monday, January 5, 2015

how to take credit card payments on your phoneHere at Harvard Business Services, we are always looking to give tips to help our clients. If you are a business owner always on the go and want a quick and easy way to get a payment without having to drive to the bank to deposit checks, then Square is a great option that is easy to sign up for. Here's how it can help you take credit card payments on your phone or tablet.

What is Square?

Square has been around for quite a few years now, but is still one of the coolest technologies out on the market. It is an easy way to get a U.S. merchant account. When you sign up, they send you a mini credit card reader that plugs into the headphone receptacle of your smart phone or tablet. To use it, you need the Square App and the reader. If you are a business owner who is always on the go it is an easy and safe way to take credit card payments via your iPhone, Android, or tablet. That’s right, swipe the credit card directly to your phone or tablet and the money is instantly deposited into your company bank account.

How can you get Square?

To activate a Square account in the U.S. you will need to provide the following information:

  • Your full legal name
  • Your social security number
  • The street address associated with your social security number

For a complete list of everything you need to register a Square account visit the company's sign-up page.

Who is Square available to?

Square is currently only available in the United States, Canada, and Japan. They are beginning to look into other markets, but there is no timeline for further international roll out.

For more detailed information, visit Square.com.

Image Attribution: Chris Harrison

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Doing Business in Arizona with a Delaware LLC
By Devin Scott Tuesday, December 30, 2014

doing business in arizona with a delaware llcFor most clients, Delaware is the popular choice when it comes to incorporating their business. This is due to Delaware's strong legal climate which has been ranked No.1 in the U.S. many times. Delaware is known for legally separating members of an LLC from the debts of the LLC, thus protecting their personal assets. By incorporating your business in Delaware, your business is considered domestic to Delaware and foreign to every other state. This blog will offer information for clients who will be doing business in Arizona with a Delaware LLC.

The process in which a Delaware LLC will get permission to operate in a foreign state is called foreign qualification. To foreign qualify your Delaware LLC in Arizona, you will need to follow Arizona's application process, pay their state fee, and obtain a certificate of good standing from Delaware. This certificate of good standing must be current within 60 days. Often clients will reach out to their Delaware registered agent for help with this qualification, however Harvard Business Services is able to assist with this service regardless of whether they are the registered agent in Delaware.

When using Harvard Business Services to qualify your Delaware LLC in Arizona, the turnaround time is often about a week. Harvard Business Services will prepare the documents, obtain the certificate of good standing from Delaware, and send the appropriate documents to you for signature. Often the managing member will sign these documents. The signatures will not need to be original, so you are able to simply email the forms back. Harvard Business Services will then file the documents with Arizona along with the certificate of good standing, pay the state fee, and send you the certificate of authority to operate in Arizona as soon as it is approved. Harvard can also act as the registered agent in Arizona for $99/year!

Arizona does not have a publication requirement unless specifically required by the county of your registered agent. There is also no annual reporting requirement for Arizona. Please keep in mind that once registered as a foreign entity in Arizona, your Delaware LLC will still be responsible for staying in good standing in Delaware by maintaining a registered agent and paying the annual Delaware franchise tax before June 1 each year.

For more information on foreign qualification in Arizona, registered agent service in Arizona, or to get started with these services, please contact Harvard Business Services at 1-800-345-2677 x6130 or email devin@delawareinc.com.

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