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Incorrect: Your worst mistake was not talking to a lawyer and an account before doing your incorporation. The value of these professionals isn't their ability t

Incorrect: Your worst mistake was not talking to a lawyer and an account before doing your incorporation. The value of these professionals isn't their ability to file paperwork but to give you advice that's customized to your situation. Too many geeks think they can reverse engineer what goes into passing the bar or getting a CPA, but the reality is that the smart ones really know enough to know what they don't know...

deleted 16y ago
[deleted]
- rosenjon 16y ago
  "Regardless of if I talked to a professional, I'd actually have to pay the same amount to dissolve this entity." Really? There is a reason companies like G.E. (http://online.wsj.com/article/SB10001424052748704530204576235090332473366.html http://online.wsj.com/article/SB1000142405274870453020457623...) legally pay essentially no federal taxes. Because there are sophisticated lawyers and accountants (a.k.a. professionals) who figure out how to shift the law to their advantage. For example, there may be laws in place that allow you to write-off of the dissolution of your business against your personal income taxes. Or perhaps there is a way to file a grievance with the state to prevent having to pay the dissolution fees, based on some statute pertaining to small companies. However, you won't ever know, because you don't want to talk to a professional. Recognize that you're in this situation in the first place because you didn't want to talk to a professional. Now, as the situation has escalated, you still don't want to talk to a professional. This does not bode well for your future business dealings. There are law firms that do work for free for start-ups. I'm guessing one of your friends from high school or college is a lawyer at one of these firms. Reach out to the people you know, and figure out how to leverage your connections to get some professional advice. Remaining ignorant is not the solution to this problem.
  - bugsy 16y ago
    GE is incorporated in New York not Delaware. GE pays NY state franchise taxes not Delaware. Overall, GE paid $2.7 billion in income tax in 2010 and over $1 billion in payroll, state and local sales and property taxes.
    - rosenjon 16y ago
      Ok, but what's your point? On $19 Billion in profit, they paid no federal income tax. I made substantially less than $19B last year, and I paid both state and federal income tax. Also, if you read the article I posted on G.E., it talks about how you can write off up to $10,000 in start-up costs on your taxes. I think this may be for the company, not the individual, so maybe that doesn't help in a dissolution. However, my overall point was simply that professionals know about all these loopholes, regular Joe start-up guy does not. So go see someone who knows what they're talking about.
nethsix 16y ago
Consulting a lawyer/accountant would have set someone back even before they started. I asked for the price to consult a lawyer before and it cost around $2500 just to have a chat regardless of the outcome. There is an unwritten guideline "do first, ask for forgiveness later" among people trying to blaze new trails. (NOTE: felons need not apply =) ).
- jamesjyu 16y ago
  There are some law firms that defer all legal fees until a startup raises money; that way, you can get the legal advice until you have some money in the bank to afford paying their hourly rate.
  - ams6110 16y ago
    How do they deal with the "call-girl effect" (perceived value of services rendered declines rapidly after the fact)?
- michaelpinto 16y ago
  "do first, ask for forgiveness later" applies to software design, but it doesn't apply to the IRS. Firstly you could have spoken to a personal accountant for next to nothing, and there is such a glut of lawyers out there that it's easy to get one for much less. As with any other pros pick these helpers via recommendation from other that have had good results. PS I say this as someone who did a DIY incorporation and had to un-do it at a later date when it didn't make sense...
  - nethsix 16y ago
    I think "do first, ask for forgiveness later" may apply generally to any institution/community where the authority are people who wants the institution to function in the spirit it was setup rather than based solely on the rules that were implemented to govern it. If the IRS was run in that spirit, then such abnormal cases can be dealt with by 'taxing' the person for IRS wasting resources to deal with it but not the rather astronomical figure of tens of thousands of dollars.
bugsy 16y ago
Worst mistake I ever made was consulting with a lawyer in setting up a business. Nearly everything he said and advised was completely wrong, and he came highly recommended. Never accept the word of a lawyer on anything.
- chris_j 16y ago
  Could you expand a little on what happened in your particular circumstances? The advice "Never accept the word of a lawyer on anything" seems a little controversial, to say the least.
  - StavrosK 16y ago
    To support his point, I registered a startup in Cyprus a while ago, we made it clear to the lawyer that we had very little money and we needed it as cheaply as possible, but he still had us register for trademark, VAT, and who-knows-what other bells and whistles we never needed. It cost us a few thousand dollars more than if we had to do it ourselves (it was about $50 and filling out two forms to do it ourselves). When it came to dissolving the company, the lawyer quoted us $3000 to dissolve. Not trusting anyone by that point, I called the companies house and they said that, to dissolve the company, all we had to do is fill out a form at their offices, we did it and we didn't even have to pay a cent. Many lawyers will give you advice that leads to them getting paid more rather than benefitting you.
    - joshuaheard 16y ago
      Getting advice from the clerk behind the counter is a big mistake. Filing the form may be all that's required from their end, but that may not be all that's required by law. It sounds like you failed to communicate effectively with your lawyer to get the advice you needed. And that's what it is: advice. You can choose to accept or reject the advice since you are the one who is taking the actions.
      - StavrosK 16y ago
        On what grounds would I choose to reject it? I'm paying him to give me advice because he's the one who knows how these things work, if I knew what to do I wouldn't need him. By that logic, in the end it all comes down on the GP's "never accept the word of a lawyer on anything".
jarrett 16y ago
The hard part, though, is getting a good lawyer and accountant. I've worked with bad ones and good ones, and you can't always tell the difference from the outset. Many times, I've found that lawyers' and accountants' opinions on critical issues are diametrically opposed. Clearly, someone was wrong in those instances. As expensive as it is, I'm now leaning towards the idea that one should always get two independent opinions, just as a sanity check. I also strongly recommend double-checking everything yourself. You're still getting professional advice, of course. But sometimes it's good to practice what's derisively called "playing lawyer" and do some legal reading. A good lawyer or accountant will not mind you asking questions like: "The corporation code says X; could this be applied to me to mean Y?" If your professional does get offended by those questions, I'd consider it a red flag. You're paying by the hour, right? It's no skin off their nose if you want to chat.

deleted 16y ago

[deleted]

rosenjon 16y ago
"Regardless of if I talked to a professional, I'd actually have to pay the same amount to dissolve this entity." Really? There is a reason companies like G.E. (http://online.wsj.com/article/SB10001424052748704530204576235090332473366.html http://online.wsj.com/article/SB1000142405274870453020457623...) legally pay essentially no federal taxes. Because there are sophisticated lawyers and accountants (a.k.a. professionals) who figure out how to shift the law to their advantage. For example, there may be laws in place that allow you to write-off of the dissolution of your business against your personal income taxes. Or perhaps there is a way to file a grievance with the state to prevent having to pay the dissolution fees, based on some statute pertaining to small companies. However, you won't ever know, because you don't want to talk to a professional. Recognize that you're in this situation in the first place because you didn't want to talk to a professional. Now, as the situation has escalated, you still don't want to talk to a professional. This does not bode well for your future business dealings. There are law firms that do work for free for start-ups. I'm guessing one of your friends from high school or college is a lawyer at one of these firms. Reach out to the people you know, and figure out how to leverage your connections to get some professional advice. Remaining ignorant is not the solution to this problem.
- bugsy 16y ago
  GE is incorporated in New York not Delaware. GE pays NY state franchise taxes not Delaware. Overall, GE paid $2.7 billion in income tax in 2010 and over $1 billion in payroll, state and local sales and property taxes.
  - rosenjon 16y ago
    Ok, but what's your point? On $19 Billion in profit, they paid no federal income tax. I made substantially less than $19B last year, and I paid both state and federal income tax. Also, if you read the article I posted on G.E., it talks about how you can write off up to $10,000 in start-up costs on your taxes. I think this may be for the company, not the individual, so maybe that doesn't help in a dissolution. However, my overall point was simply that professionals know about all these loopholes, regular Joe start-up guy does not. So go see someone who knows what they're talking about.

nethsix 16y ago

Consulting a lawyer/accountant would have set someone back even before they started. I asked for the price to consult a lawyer before and it cost around $2500 just to have a chat regardless of the outcome. There is an unwritten guideline "do first, ask for forgiveness later" among people trying to blaze new trails. (NOTE: felons need not apply =) ).

jamesjyu 16y ago
There are some law firms that defer all legal fees until a startup raises money; that way, you can get the legal advice until you have some money in the bank to afford paying their hourly rate.
- ams6110 16y ago
  How do they deal with the "call-girl effect" (perceived value of services rendered declines rapidly after the fact)?
michaelpinto 16y ago
"do first, ask for forgiveness later" applies to software design, but it doesn't apply to the IRS. Firstly you could have spoken to a personal accountant for next to nothing, and there is such a glut of lawyers out there that it's easy to get one for much less. As with any other pros pick these helpers via recommendation from other that have had good results. PS I say this as someone who did a DIY incorporation and had to un-do it at a later date when it didn't make sense...
- nethsix 16y ago
  I think "do first, ask for forgiveness later" may apply generally to any institution/community where the authority are people who wants the institution to function in the spirit it was setup rather than based solely on the rules that were implemented to govern it. If the IRS was run in that spirit, then such abnormal cases can be dealt with by 'taxing' the person for IRS wasting resources to deal with it but not the rather astronomical figure of tens of thousands of dollars.

bugsy 16y ago

Worst mistake I ever made was consulting with a lawyer in setting up a business. Nearly everything he said and advised was completely wrong, and he came highly recommended. Never accept the word of a lawyer on anything.

chris_j 16y ago
Could you expand a little on what happened in your particular circumstances? The advice "Never accept the word of a lawyer on anything" seems a little controversial, to say the least.
- StavrosK 16y ago
  To support his point, I registered a startup in Cyprus a while ago, we made it clear to the lawyer that we had very little money and we needed it as cheaply as possible, but he still had us register for trademark, VAT, and who-knows-what other bells and whistles we never needed. It cost us a few thousand dollars more than if we had to do it ourselves (it was about $50 and filling out two forms to do it ourselves). When it came to dissolving the company, the lawyer quoted us $3000 to dissolve. Not trusting anyone by that point, I called the companies house and they said that, to dissolve the company, all we had to do is fill out a form at their offices, we did it and we didn't even have to pay a cent. Many lawyers will give you advice that leads to them getting paid more rather than benefitting you.
  - joshuaheard 16y ago
    Getting advice from the clerk behind the counter is a big mistake. Filing the form may be all that's required from their end, but that may not be all that's required by law. It sounds like you failed to communicate effectively with your lawyer to get the advice you needed. And that's what it is: advice. You can choose to accept or reject the advice since you are the one who is taking the actions.
    - StavrosK 16y ago
      On what grounds would I choose to reject it? I'm paying him to give me advice because he's the one who knows how these things work, if I knew what to do I wouldn't need him. By that logic, in the end it all comes down on the GP's "never accept the word of a lawyer on anything".

jarrett 16y ago

The hard part, though, is getting a good lawyer and accountant. I've worked with bad ones and good ones, and you can't always tell the difference from the outset. Many times, I've found that lawyers' and accountants' opinions on critical issues are diametrically opposed. Clearly, someone was wrong in those instances. As expensive as it is, I'm now leaning towards the idea that one should always get two independent opinions, just as a sanity check. I also strongly recommend double-checking everything yourself. You're still getting professional advice, of course. But sometimes it's good to practice what's derisively called "playing lawyer" and do some legal reading. A good lawyer or accountant will not mind you asking questions like: "The corporation code says X; could this be applied to me to mean Y?" If your professional does get offended by those questions, I'd consider it a red flag. You're paying by the hour, right? It's no skin off their nose if you want to chat.