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NOMINEE OFFICER SERVICES FOR WYOMING CORPORATIONS AND WYOMING LLC'S? 

ANSWER:  NOT ADVISABLE WHEN THE GOAL IS TO BUILD BUSINESS CREDIT. 

$995-$1295 for a five year old shelf company.  Ask for the list here.   When is an LLC better than a corporation?

Privacy doesn't help you when building corporate credit.  If anything, it backfires.  Bankers want to know who is behind the company.  Bankers feel more comfortable with you and your company when you're the corporate officer or manager, the business is in your name, you're the signer on the account, and you're the contact for the post office and the IRS.  It signals commitment, connectivity, transparency and clarity.  When you obtain another person to serve as corporate officer on your behalf, it seems uncertain, unclear and ambiguous.  And now with the banking crisis, the lenders are nervous and agitated.  If you need credit, don't use a nominee for anything.

If you have assets to protect, please visit LLC.bz on the Wyoming LLC and the charging order protection.

The purpose of this page is to cover why someone may prefer not to list themselves on the public record for the company they own, or control.  We also cover the nominee EIN and signers on accounts, and how that impacts business matters.

ISSUES, CHALLENGES AND PROBLEMS OF A NOMINEE OFFICER/CORPORATE OFFICER SERVICE FOR YOUR WYOMING CORPORATION OR WYOMING LLC, OR A COMPANY FROM ANY OTHER STATE

ADVANTAGES OF USING A NOMINEE/CONTRACT OFFICER

1.  Prevent identity theft.  Protect your credit and company identity against theft.  The Secretary of State, in every State, doesn't require ID before they file a document as it applies to the company.  This means you're at risk for someone pretending to be you.  This justifies your use of our corporate officer services to protect your business interests.
2.  Discourage people from having an incentive to sue you.  If assets have your name on them, then you're painting a bulls eye on your forehead.  In other words, you're asking for trouble when key assets are attached to your name.
3.  Reduce exposure to the abuses associated with public records.
4.  Enjoy increased flexibility in acquiring assets and business interests without others gossiping about you.  It prevents personalities from creating conflicts.  For example, Disney obtained land using nominees, who were attorneys, and a group of corporations.  This is so the local landowners wouldn't know what he had in mind to build a theme park.  This kept land prices low and prevented speculators from competing against him  and boosting prices. 

DISADVANTAGES

1.  It's difficult or impossible to obtain corporate credit.  Lenders want to see you associated with the company through the public record.  When this doesn't happen, they tend to refuse credit lines; as do those who lease equipment and other sources of credit.  In other words, if you seek to build business credit, don't use a "nominee."  Most of the time, business owners use our companies to build business credit.  As such, using a nominee officer is contrary to their objectives. 

     As for banks in particular, they want you exposed on the public record.  If you were the bank, would you lend money to a company whose company officer wasn't running the company?  No.  It's a fundamental principle that bankers seek to know who is behind the corporation.

2.  Accessing loans are next to impossible when using a nominee officer for privacy.  It's counter-productive.

3.  You're in an asset building stage in your life, and protecting assets is not a high priority.  You must first have something to protect.  This means privacy works against your short term interests in accessing financing.

4.  These disadvantages highlight the issue of why transparency is important to obtain corporate credit.  If you don't have an asset portfolio worth chasing, and you're starting a business, then focus on limited liability by using a corporation.  If you have an  asset base, a corporate officer service is often advantage with a solid estate plan, and qualified legal and tax advice. 

5.  Even if a nominee officer/contract officer is an advantage, the privacy is superficial.  One subpoena will release your name and other information to a court of competent jurisdiction.  Protection from the abuses of the public record is only skin deep.  If asset protection is the goal, just set up an LLC for maximum asset protection.  With an LLC, the IRS and the bank will know of your interest in the company, but the charging order protection is formidable against private for-profit creditors.  See LLC.bz for more information.

 

HOW TO USE NOMINEE OFFICER/CONTRACT OFFICER SERVICES FOR YOUR WYOMING CORPORATION OR WYOMING LLC:

  • Everything must be normal, and part of doing daily business, even if the privacy is unveiled. 
    • You can't lie.  You can't say the company isn't yours when it is.  You can't commit perjury.  One well placed subpoena will discover the whole arrangement.  Don't be shady or slimy.  Don't evade taxes. 
    • Why use such a service?  Your protection is the limited liability and the charging order protection (LLC).  Privacy only shields you from identity thieves and takes the target off your back for a short time.  The nominee officer/contract officer also helps you reinforce the corporate veil by preparing and signing the resolutions, bylaws and operating agreement.  In this way the company is considered separate from yourself and the corporate veil is protected.  This is the key advantage to such a service. 
    • The contract officer will not and cannot hide you from the IRS.

     

  • EIN's, BANKING AND THE SIGNER ON THE COMPANY BANK ACCOUNT:

  • What about a nominee EIN?  Nominee EIN's are worthless and often lead to unnecessary trouble.  The intended signer on the bank account should apply for the EIN, whether it's you or your bookkeeper.  In this way, the bookkeeper is cognizant that the EIN was obtained properly and correctly. 

    Although there are providers who sell the idea of a nominee EIN, let's cover why this practice is counter-productive, costly and ill-advised:

    • Those who sell nominee EIN's use the same SSN to apply for hundred's of EIN's.  This red flags the SSN used and the EIN's obtained.  Do you want to be one of hundreds or thousands of EIN's obtained for your business using the same SSN?  No.  A person who you don't know applies for your company's EIN? Not a good idea.  A person who may not have paid taxes?  Bad idea.  A person who may even be a criminal?  Nope, no thanks.  Sounds risky, am I right?  This may place you at increased risk for an audit, which will cost professional fees. It's not a good idea to buy a "nominee EIN."  Don't do it.  Nominee EIN's don't help at all.  In fact, it causes problems.
    • The nominee EIN's are sold and promoted by people who sell privacy on the internet.  These services are ill advised. This creates a high profile.  Do you want to be high profile when obtaining a little privacy?  No.  That doesn't make sense, am I right?  The same applies for the signer on the bank accounts.  Don't buy any "banking privacy" or "nominee signer" service from providers on the internet.  Rather, obtain a local bookkeeper and ask that person to apply for the EIN, or sign on your account.  If the bookkeeper applies for the EIN as a third party, you are identified to the IRS on the SS4 form (application for EIN).  The bookkeeper simply applies for the EIN as a third party and this may make the process easier for you.  The focus is to ease operations and to streamline your business.  This will free you up for increased sales and responsible management of the business.  Even the third party services aren't necessary.  You can apply for the EIN yourself using the IRS website online.  It takes about fifteen minutes. 
    • The bookkeeper helps you keep the accurate numbers to prepare the income tax return and pay all taxes, as you must. 
    • How do you approach the bookkeeper for this service?  It's simple...tell the truth.  You're busy and you don't have time to handle these tasks.  There are many business people who are great at sales and marketing, but are horrible at administration.  You need someone to trust with the numbers and the details of running the business.  The bookkeeper will help you declare proper deductions and be truthful in all matters.  Focus your time or marketing and building the business as your local bookkeeper keeps you on track and organized.  The privacy is a small plus.  Organization is key.  The role of the bookkeeper is to keep you organized so you can sell your product or service.  The bookkeeper's role is to assist you in compliance.  He or she will reduce your stress level and keep things humming along.
  • What about the bank?  You don't need to bank in Wyoming if you have a Wyoming corporation or Wyoming LLC.  The same applies if you have a Nevada corporation or Nevada LLC--you don't need a bank account in Nevada.  Incorporators like to make you pay for more services than you need.  Internet banks such as Everbank.com, FirstIB.com, BankofAmerica.com, and Etrade.com allow you to set up the account online, operate online, check balances, etc., without hassle or interruption.  Gone are the days you need a bank account in the same state the company is operating; even in Wyoming.
  • In order to liberate effective sales people from additional paperwork, as well as increased privacy and convenience; it's normal for a bookkeeper or accountant to sign on the bank account in place of the Treasurer.  Seeking privacy from the general public is healthy because of the risk of fraud, deceit and forgery.  There is no privacy from the IRS.  The bookkeeper customarily has a copy of your name, DOB, SSN and a photocopy of your driver's license.  This person, who serves as the signer on the account, should be listed as a Treasurer, or Assistant Treasurer, for the company, either through resolution, or on the public record.  Bookkeepers usually charge about $100 a month, or less, for this service.  Many business owners don't need this service.  Rather, you can sign on the account and the Treasurer function is filled by the owner of the company.  The corporate officer simply fills a function as far as the public record is concerned, and possibly more.  The Treasurer may or may not sign on the bank account.
    • There is low risk the bookkeeper or accountant may run off with the money belonging to the company.  It's unlikely, but it happens once in a while.

      • Make certain the bookkeeper has error and omissions insurance.

      • The signer should be well identified.  Obtain a copy of the signer's driver's license. 

      • The signer on the account should sign a declaration that the signer has no ownership interest in the company, and that the money doesn't belong to the signer.

      • Keep balances low to minimize the incentive to take off with the money.

      • The bookkeeper and the client should exchange photocopies of one another's driver's license.

    • The signer on the account should apply for the EIN.  
      • In almost all cases, you should apply for the EIN instead of the bookkeeper.
      • When you open the bank account, the bank requires name, address, SSN, DOB and photocopy of picture ID.  The bank reports this information to the US Treasury.  IRS is the collection arm to the US Treasury.  So, the signer on the account should be the applicant for the EIN.  This means if you're the signer on the account, you should apply for the EIN.  If your bookkeeper is the signer on the account, the bookkeeper should apply for the EIN.  Banks like consistency.  If anything goes wrong with the account or the bookkeeper, the bank should be cognizant that you are the person in control.  This also sets the bookkeeper at ease that you are properly identified with the bank and the IRS. 
      • If you obtain a signer on the account, such as a bookkeeper, then it's easier to prepare the tax return.
      •   The bookkeeper will add up the financial numbers, prepare a profit and loss statement, and the balance sheet.
      • Be truthful on the tax return and pay all taxes in full.
      • Obtain qualified tax advice.  See a lawyer if necessary.
      • If you file for bankruptcy, you must report your interest in the company that you own.  If you lie, you go to jail.  In other words, don't think that you can skimp on the bankruptcy petition simply because you're not the signer on the bank account. 
      • Remember that one subpoena upon the signer on the account will disclose your interest and involvement with the company.  Therefore, don't be overconfident and don't be dishonest in any of your affairs.
      • Privacy offers convenience and limited security from the public.  It doesn't conceal dishonest conduct.
      • On the other hand, using a bookkeeper doesn't completely insulate you from theft and fraud.

 

 

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