Own Your Own Corporation, Garrett Sutton
2/25/07
Part of the Rich Dad series, Own Your Own Corporation, discusses corporate entities from inception to dissolution. The book is less of a “how to” own your own corporation, rather it is a overview of what corporations are, how they are created, concerns of corporations, and finally dissolution of corporations. The book is an excellent primer for people who want an overview of the corporate process.
Notes:
Entities discussed:
C Corporation – Big companies, many shareholders, double taxed
S Corporation – Small, starting companies, taxes pass though
Limited Liability Company (LLC) – Member or manager managed, can be big or small
Limited Liability Partnership (LLP) – General Partner managed, can be big or small
General Partnership – No liability control, 2 or more partners
Sole Proprietorship – No liability control, 1 manager/owner
A LLC could own a small stake in an LLP, be the managing member thus limiting the liability of all parties.
Each entity is discussed and advantages that can be leverage are explained. Some discussing of formation is given. The book recommends establishing entities in Nevada for many privacy and tax reasons.
After an entity is established the book discusses how corporate formalities protect the corporate veil and then how to go about protecting the company name by trademark registration, etc.
Now that the corporation is established the book explains how raising money works. It explains the SEC rules that govern how different rounds of stock can be offered. It is important to note that in most states; only 35 non-accredited investors (people who are not millionaires) are allowed to be involved in funding of companies, etc. The road to an IPO is also briefly explained.
Once the money has been raised, protection of the companies with respect to employee issues, buy sell agreements (what if a partner leaves, etc.)
The appendix reviews each state’s corporation laws.
