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Lane
Lane, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 3709
Experience:  Providing Financial & Tax advice since 1986
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I am interested in circulating an offer memorandum for a business

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I am interested in circulating an offer memorandum for a business idea as well as a Real estate syndicate idea. Do you have any ideas for how to get in touch with investors? It's my understanding that accountants are a good start because you guys handle finances and planning.
Submitted: 11 months ago.
Category: Finance
Expert:  Lane replied 11 months ago.

NPVAdvisor :

Yes, accountants - especially CPAs who do taxes for businesses might be a good avenue, as they are acquainted with the business owners themselves (although I will tell you that MANY of the people will feel that keeping their money tied UP in their OWN business is the way to best control their investment)

NPVAdvisor :

Also, Angel list can be a god place to build a profile and start talking to the right people: https://angel.co/

NPVAdvisor :

AND make sure you spend some time putting yourself out there. Even if your product isn’t live, you can still generate attention for your team and your mission via thought leadership. Degreed, an educational technology company, did a great job of this pre-launch, writing guest posts for tech blogs and starting conversations on Quora.

NPVAdvisor :

I'd also become familiar with these folks: https://www.startupdigest.com/

NPVAdvisor :

Finally, don't waste your time talking to registered reps of broker dealers, they can only deal with the highly regulated world of registered investments, but you MAY want to dig up a RIA, Registered Investment Adviser (who is registered with the SEC or a state securities division, and isn't regulated by FINRA). These folks aren't afraid, sometimes, to point people your way, if your idea makes sense (as an alternative investment, for a small part f a portfolio)

NPVAdvisor :

Here's a great primer for those looking to find investors from SBA ... Getting your arms around the differences in different types of possible investore will make your search much more efficient: http://www.sba.gov/community/blogs/community-blogs/small-business-cents/five-tips-finding-and-securing-private-investor

NPVAdvisor :

Simply understnding the difference between Private Equity, Venture Capital, and Angel Investing can help you with direction, and focus

NPVAdvisor :

http://www.nvca.org/ (The national Venture Capital Association)

NPVAdvisor :

Now, angel investor aren't as organized as the venture capital folks, but there are organizations that match up angel investors and entrepreneurs. Active Capital is one national angel investor organization. Angel Capital Associationis another; it will lead you to approximately 200 regional sites across North America, including Alliance of Angels, which is based in Washington state and focused on high-tech operations.

NPVAdvisor :

Sorry for the data dump, but this is really a nebulous subject area ... I'd start with the SBA piece, for the grounding, and go from there.

NPVAdvisor :

Hope this helps

NPVAdvisor :

Lane

NPVAdvisor :

(Be sure to let me know if you have further questions)

NPVAdvisor :

Ahhh, there you are ... I'll wait

Customer:

YOU ARE AMAZING!!!

Customer:

this is the info i need. thank you. i appreciate the surplus of info rather than the lack there of :)

NPVAdvisor :

Hoped you would see it that way ... Good luck with everything

Customer:

my last question would be...

NPVAdvisor :

yes?

Customer:

i understand having to share my info, but how do i use those forums to share my info without letting someone steal it? are those just basis to connect with ppl to THEN have them sign non-disclosure or non-compete?

Customer:

btw what is a NPV advisor?

Customer:

I also see you are familiar with taxes & finance. What state do you primarily work in?

Customer:

Aside from that, from a tax and protection standpoint, i am trying to figure out the best way to set up my businesses. Here is my current circumstance:

- I own multiple pieces of income property at this time all in my name.
- I plan to own more pieces of income property. Some completely held by me and some held by me and investors
- i own a service business at this time...in my name

My THOUGHT is:
- i need to set up all of my ownership(s) to Real Estate title in one company
- my ownership + investors ownership to Real Estate title in another company
- the management of those properties in another company
- my service business in another company

What are your thoughts on which entity to choose so that i have the best protection and tax savings?

NPVAdvisor :

Yes, that's exactly right ..... I would SERIOUSLY consider having an atty. draw up a non-compete letter, (for when you actually begin to engage) (and probably stating the obvious here) , but keep things close to the vest until you are actually talking with decision makes... manytime (especially in the venture capital arena, they will have these agreements readily available)

NPVAdvisor :

Ok, I'd really appreciate us getting into that on another question (at $8 per questions payout this take my hourly pay pretty low) but let me say this, to get it started ........

NPVAdvisor :

Sope Proprietorships, partnership, LLCs and S-Corps are all passthroughs ... that is to say ....

Customer:

thats fine. let me do that then. hold that thought.

NPVAdvisor :

lower rtes on capital gainsthe company itself isn't taxed everything is passed through to the owner ... this allows for use of losses against other incme,

Lane, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 3709
Experience: Providing Financial & Tax advice since 1986
Lane and 7 other Finance Specialists are ready to help you
Customer: replied 10 months ago.

I have a new question for you. I am deciding between a Deleware Series LLC, Nevada Series LLC and Wyoming LLC. In your opinion, which is the best entity for holding title to properties (will have a sep prop mgmt. co.) and why? Which is best entity for starting a business that I will take nationwide and to multiple cities per state?

Expert:  Lane replied 10 months ago.

Delaware is the most sophisticated, and allows for lots of multiple entity kinds of protection (as I think I said before... If it's been done, Delaware's done) BY FAR the largest body of business law, investment banks are familiar with them, etc., etc.

For example, Under Delaware law, a Limited Liability Company (LLC) may be composed of individual series of membership interests. This type of entity is referred to as a Series LLC. Each series effectively is treated as a separate entity, meaning the debts; liabilities, obligations and expenses of one series cannot be enforced against another series of the LLC or against the LLC as a whole.


Nevada also recognizes the Series LLC.

Wyoming does not.



All in all, given your plans and ESPECIALLY as it relates to raising capital through investors I would go with Delaware. Their laws and processes are, again, very accommodating to both raising capital through additional investors and liability protection.


Lane


Customer: replied 10 months ago.

Yes, i understand that, but maybe I should have been more specific (sorry). I agree that Deleware might be the best solution for starting a business for and raising capital, but are you also suggesting it for a title holding company?


 


Where does Nevada lack in law? Why is this so bad? What is attractive about Nevada is the fact that there are no income taxes and cost to start up is cheaper than Deleware AND i do not have to report to state the holders. It seems a bit more private.


 


Given this, you still think Deleware when Nevada has more benefits? Why? Solely because of law?

Expert:  Lane replied 10 months ago.
Simply in the size of the body of law ... Look at their corporate code (Delaware vs Nevada is a mountain vs mole hill).

You are correct that Nevada DOES not have a state income tax, but if you incorporate and mirrors Delaware in many ways.

I think because in your earlier questions, you said that raising capital through other investors was an objective, my thinking was that Delaware does SO much of this that the process itself,and the multiplicity of ways that it can be done, especially as it relates to multi-state operations.



Here's a good comparison:

Why incorporate in Nevada?

Nevada offers many advantages as a corporate haven:

  1. Nevada has no state corporate taxes.
  2. Nevada has no franchise tax.
  3. Nevada has no tax on corporate shares.
  4. Nevada has no personal income tax.
  5. Nevada provides total privacy of shareholders.
  6. Nevada is the only state without a formal information-sharing agreement with the IRS.
  7. Nevada is the only state that allows for the issuance of "bearer shares."
  8. Nevada has minimal reporting and disclosure requirements.
  9. Nevada has nominal annual fees.
  10. Nevada allows for a one-man corporation.
  11. Nevada has established case law that prevents easy piercing of the corporate veil.
  12. Corporate officers and directors can be protected from any personal liability for their lawful acts on behalf of the corporation.
  13. Stockholders, directors and officers need not live or hold meetings in Nevada, or even be U.S. citizens.
  14. Only the names of the officers and directors are on public records. No other information, listings, or minutes of meetings are filed with the State.
  15. There is no minimum initial capital requirement to incorporate.
  16. Nevada corporations may issue stock for capital, services, personal property, or real estate. The directors alone may determine the value of any such transactions, and their decision is final.


Why Incorporate in Delaware?

Many international companies choose Delaware because of its corporation law structure, its stability, and its reputations. Below are a few of the reasons why corporations, large and small, foreign and domestic, choose Delaware for their corporate headquarters even though few, if any, have any sales or manufacturing or office facilities located in the state.

  1. You can be all the officers of a Delaware corporation yourself. The same person can be president, vice-president, secretary, treasurer and sole director. Many states require at least three officers and/or directors.
  2. Delaware is the least costly state in which to form a corporation.
  3. No minimum amount of money is required to be in the company bank account when forming a corporation while many states require $1,000.
  4. You can incorporate anonymously in Delaware and the corporations may be operated anonymously, never revealing the owner's identity to the State of Delaware.
  5. The annual franchise tax on corporations compares very favorably with other states (as little as $50/year in most cases).
  6. There is no Delaware sales tax, no property tax or state corporate income tax for corporations that are formed in Delaware and do not transact business in the state.
  7. There is no state inheritance tax on stock held by non-residents of Delaware. These shares are taxed only in the state of residence of the corporation's owners.
  8. There is no state income tax for Delaware corporations who do not operate within the state.
  9. There is an established body of laws which protect the corporations in Delaware. Delaware is the only state to have a continuous Court of Chancery a separate business court system. This is meaningful to entrepreneurs for two reasons. First, there is a long-established body of laws relevant to corporations that has been tested in the Delaware courts over many years. In the event of any legal action, therefore, there is a high degree of predictability. Second, Delaware has a long record of pro-management decisions.
  10. Directors may fix any price on shares of stock that they wish to sell.
  11. Shares of stock owned by a person outside the state are not subject to any Delaware taxes.
  12. One can form a corporation without ever visiting the state. You can form a Delaware corporation easily by mail or by phone through firms established for that purpose.
  13. Annual meetings need not be conducted in Delaware. Meetings can be held anywhere, at the option of the director(s).
  14. The same corporation may conduct different kinds of businesses. If the corporate documents filed with Delaware have the broadest type "purpose clause", any legal business activity of any kind may be conducted. The same corporation can conduct more than one type of business without any changes in the documents filed with the state.
  15. Delaware corporations have a special "Director Shield" that permits corporations to shelter their directors from personal liability in connection with their actions as board members. Delaware statutes also help limit hostile or abusive takeover tactics.
  16. Stockholders, directors, or committee members may act by unanimous consent in lieu of formal meetings.
  17. The by-laws of a Delaware corporation may be formulated or altered at any time by its directors.
  18. A Delaware corporation is permitted to pay dividends out of profits as well as out of surplus.
  19. Delaware corporation stock can be privately owned or publicly traded on any stock exchange anywhere in the world when properly registered.
  20. The corporate headquarters and the records of a Delaware corporation may be located in any state in America or in any country in the world as long as the corporation maintains a registered agent to represent you in Delaware. Most of the owners of Delaware corporations have never set foot in Delaware. A Delaware corporation does do not need to maintain a Delaware business address except for its registered agent address which is required by law for service of process in case of legal action against your company.
Lane, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 3709
Experience: Providing Financial & Tax advice since 1986
Lane and 7 other Finance Specialists are ready to help you
Customer: replied 10 months ago.

 


NEW Question - off topic - what is the difference between salary exempt and salary non-exempt? I am confused because it was my understanding that if you are salary you do not earn over time. the benefit of salary is that whether you work 1 hour 1 day or 16 the next, it doesn't matter because you get paid the same. It's my understanding that this version is salary exempt???


Reason I say this is because my supervisor told me that I am salary non-exempt, which means I have set 40 hours week and can not work whatever time is required to do a job and still get paid (i.e. 1hr vs 16hrs etc) like above. At the same token, I fill out a time sheet--although I am salary--and I get overtime if I work past my 40 hrs a week.


Does any of this have to do with me being exempt vs non?


 

Expert:  Lane replied 10 months ago.



Thanks for the rating Arah!.

Sorry, take so long t get back ...

I just got back from teaching a Continuing Education class down in Atlanta (I live in a northern suburb).

Exempt, DOES relate directly, to the requirement to pay overtime.

The Fair Labor Standards Act (FLSA) requires all sorts of things from employers, (enforced by the U.S. Department of Labor), sets the minimum wage, hour standards, and overtime requirements of most private and public employers.
29 U.S.C.A. § 201, 29 USCA § 201



If an employee is classified as exempt (vs. non-exempt) their employer is not required to pay them overtime pay.

Administrative, executive, and professional employees, outside salespeople and certain computer employees may be classified as exempt if they meet the following criteria:

  1. Employees are paid on a salary rather than an an hourly basis.
  2. Employees earn at least $455 per week.
  3. Employees are paid full salary for any week they work, regardless of how much time they work.

In addition, to qualifying for exemption from overtime, employees generally must also meet certain tests regarding their job duties and responsibilities.

In general,NON-EXEMPT employees earning less than $455 per week, which is $23,660 per year, are guaranteed overtime pay by the Fair Labor standards Act.

 

So, it sounds like you are in the category that the Department of Labor would call Non-Exempt, Overtime - Eligible, which means, among other things, that overtime may be worked only with prior approval of the supervisor/ manager.

 

 

Here's an excellent article on this:

http://hrweb.mit.edu/compensation/job-evaluations/exempt-vs-nonexempt

And here's the DOL page on FSLA conpliance:

http://www.dol.gov/compliance/laws/comp-flsa.htm

 

 

Hope this helps

 

Lane

 

 

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.

HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

Customer: replied 10 months ago.

Thank you! Is there any difference between the way witholdings (i.e. taxes/sdi/etc.) are deducted with exempt employees vs non-exempt for state of CA?


 


I guess where I am confused with my employer is because I am classified as non-exempt, receive a salary well above the $23k figure you described, but since i keep a time sheet, if i do not work 40 hours, they pay me hourly--meaning they deduct those hours not worked. Same with holidays. If i dont have pto but miss a holiday i do not get paid for it. That's odd because i thought salary is paid regardless. It seems to me that I should be an hourly employee???


 


Side note, I really think you give great advice and are very knowledgeable. Are you for hire outside of justanswer? What is your EXACT profession and services provided outside of this forum (if any)?

Expert:  Lane replied 10 months ago.
Thank you! Is there any difference between the way withholdings (i.e. taxes/sdi/etc.) are deducted with exempt employees vs non-exempt for state of CA?

No, the exempt/non-exempt (from FSLA requirements) is a totally separate issue from taxation. (State federal or other payroll issues). Those issues all come down to whether it's WAGES (can be be either salary OR hourly wages) ... as opposed to say self-employment income.

Labor dept is not as concerned with how they treat non-exempt because non-exempt ARE held to the standards of minimum wage and if their is overtime, and the company have to pay it because you are NOT exempt from the standards.

It's the exempt (from overtime standards) where the salary is the salary and that's it.

Because you are non-exempt NOT-exempt from the rules, that they monitor so closely...Honestly it's like they a "Calling it a salary" but in reality (as with MOST non- exempts) it ends up being treated as hourly.

I think that sometimes (with non-exempt salary) that's a misnomer... what they are really saying is that its a salary base, but with exceptions.

On the individual hiring issues, right now it's completely against the Terms of Service here.

JA used to have something called "offer more" where we could negotiate for a more project based (rather than answer based) fee, and I have hear that they may be bringing that back.

Let's cross our fingers.

In the mean-time - I really appreciate your asking for me.

Thanks,
Lane
Lane, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 3709
Experience: Providing Financial & Tax advice since 1986
Lane and 7 other Finance Specialists are ready to help you
Expert:  Lane replied 10 months ago.
Thanks for that!

I'll let u know if I hear anything ... Would like to work with you

By the way you asked about credentials.

I am CFP, have an MBA in Finance/tax specialization. And am final term law student, concentration there is business law, taxation, and wills trusts & estates.

Lane

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