Odds Are You’d Be Better Off Forgetting About Incorporating in Nevada

Q: We have registered our home-based business as a partnership and plan to incorporate soon. Should we get it incorporated in the state of California or in Nevada? We would really appreciate if you could help us make an informed decision.

--Titu Singh, Alhambra

A: Persistent rumors to the contrary, there was never a compelling reason for a small California-based business to incorporate in Nevada. Although the company would pay a lower annual franchise tax in Nevada, it had to qualify to do business in California anyway, a process that winds up costing about the same as the California franchise tax of $800. So for small businesses not in a position to take advantage of certain pro-management laws in Nevada, it was never a good idea to incorporate outside the state.

But now there is even more reason for you to choose incorporation in California. A new law, AB 10, enacted last July, waives the minimum franchise tax altogether for two years for companies that incorporate in the state between Jan. 1, 2000, and Jan. 1, 2001. The California Franchise Tax Board estimates that approximately 18,500 new corporations will benefit from the incentive, which was designed to attract new business to the state. There are a set of relatively simple formalities that go along with setting up a corporation, so be sure that you get an attorney’s assistance in filing the proper forms and deciding which business structure best suits your needs. You can get more information about business structures on the Internet. The California secretary of state’s Web site (https://www.ss.ca.gov) is a good starting point for general information.

--Jeffrey Unger, real estate and business attorney,

Beverly Hills

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Q: I am currently employed and will continue to be, but I’m interested in working on the side as a computer consultant. I would like some information as to where I need to go to get a license or to register as a consultant. I also need information on the legal and tax issues involved in being a computer consultant.

--Ricardo Martinez, San Pedro

A: For the basic information on starting any kind of a business, including consulting, the SBA’s Small Business Development Centers are great resources. They have all the information you’re asking for in one form or another, along with classes, one-on-one consultations, books and more. From your point of view as a start-up, the questions of legalities look huge, but one trip to one of these centers should get you all the answers you need.

A complete listing of all the centers in California, along with contact information such as telephone numbers and e-mail addresses, can be found at the SBA Web site (https://www.sba.gov). Click on “local SBA resources” on the home page, then follow the links to California offices, and click on “Small Business Development Centers.”

The more important issues that you will face in starting up your consulting business are those of marketing, sales, communicating with the client (defining expectations, making progress reports, measuring successes and failures, taking care of additional needs, etc.), administration of the account (billing, collections, scheduling, etc.) and customer service. These questions take a little more work to answer, and you should do your homework and decide how you’re going to manage them before you spend time and money setting up your consulting practice.

If you have consulting clients already, you’re off to a good start. If not, then you need to look into developing a marketing and sales plan, making contacts in the industries you’ll be serving, and following up on leads and making presentations designed to attract clients. Later, when you get some jobs in the pipeline, you’ll want to make sure that you continue to market and sell your services so that when your first project is completed, you will have another job ready to go.

--Pauline Field,

chief operating officer,

International FieldWorks Inc.,

Glendale

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If you have a question about how to start or operate a small business, mail it to Karen E. Klein, Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016, or e-mail it to [email protected]. Include your name, address and telephone number. This column is designed to answer questions of general interest. It should not be construed as legal advice.