Breaking Through the Red Tape

By Drew Robb | Posted March 31, 2006

Red tape can cause a lot of red ink, both for the government demanding compliance with an ever-growing list of regulations and for the companies trying to follow the rules. When it becomes too burdensome, some people conduct their business under the table. The U.S. Internal Revenue Service, for example, calculates that it loses more than $300 billion in revenue annually due to the underground economy. Most of these losses come from people trying to avoid the time and expense of dealing with all the government regulations for running a business.

"Most people who want to set up a company get right to the aspects of actually doing business," says Ed Rowland, president of EdgeView Software, LLC. "They don't want to get tangled up in all the forms required by the local, state and federal governments."

While these government bodies have eGov initiatives that make it easier to file registration forms on line, it still requires a high level of expertise to ferret out what agency needs which reports and forms at what time. Three years ago, the owners of EdgeView, an Ohio firm that produces software for the security and stage-lighting industries, decided to register as an LLC in Nevada. But rather than handling the paperwork themselves, they used a company known as Bizfilings.com.

"We wanted to get it done in a hurry and didn't want to get involved in a lot of paperwork," says Rowland. "BizFilings offered a cost effective and painless way to create an LLC in Nevada."

From Self Help to Helping Others
BizFilings was started in 1996 by two entrepreneurs looking for online resources to start their own business. Based on their experience, they wound up establishing a company that helps other entrepreneurs navigate their way through the paper maze. That niche proved successful. Over the past decade, the firm has helped get more than 100,000 businesses off the ground with formation services packages ranging from $130 to $420, plus applicable state filing fees. The company, which is now part of the multinational information services firm Wolters Kluwer, has 30 employees at its Madison, Wis. headquarters, and others at satellite offices around the country providing local service.

"We're unique among online formation service providers because we have a company-owned network of offices in all fifty states, which means that we don't have to outsource parts of the process" says BizFilings.com Marketing Director Troy Janisch. "That provides several advantages, particularly for individuals who are seeking a registered agent."

BizFilings offers online tools to set up a corporation, an LLC or a non-profit in all fifty states. It starts with filling out a simple online form. "We gave them a list of our managers and members, gave them a company name, and that was about it," says Rowland. "They took care of filing the forms with Nevada, making sure the company name hadn't already been taken, getting an EIN [Employee Identification Number] for us from the federal government and filing our articles of incorporation."

About a month later a package arrived from BizFilings containing ownership certificates for each member, a corporate seal for use on official documents, draft forms of minutes and a draft set of operating agreements. "Once everything was done in Nevada, they sent the package to us and we were a company," says Rowland.

Profit and Non
While EdgeView went for an LLC, Steve Nguyen opted for a corporation for his technology consultancy, Stickblade. "It is usually suggested that you should get legal advice if you do not really know what to do in the beginning, but I spent a considerable amount of time studying what the best form of business was and learning what my responsibilities and rights are," he says. "So, unlike many people, I actually knew what I was getting into without any support from a legal advisor."

But, like Rowland, he went the Internet route to file the papers. "BizFilings made forming my company a much easier task with its online company registration technology," he says. I didn't have to fill in various forms and send them to the Registrar, because BizFilings handled the company formation process for me in a matter of weeks."

In addition to commercial filings, BizFilings also helps to register new non-profit entities, however it doesn't prepare the IRS Form 1023, which is used to gain tax-exempt status. "The application is difficult and specific," says Janisch. "Most 1023 applications are abandoned because of the amount of work involved." Instead he recommends that non-profits get assistance from The Foundation Group, a consultancy that specializes in non-profit issues.

Going for a Repeat
While BizFilings does help companies get off the ground, its services don't stop there. It also helps them maintain their legal status and expand their business. For example, it has an online tool called the BizComply, which alerts business owners to important dates for holding board meetings or filing documents with appropriate agencies in its state of incorporation. It also contains a library of forms, making it easy to generate minutes of the annual stockholders meeting or generate a board resolution authorizing the opening of an account. This service is available to companies such as EdgeView that use BizFilings registered agent service.

BizFilings also has software called the Ultimate Business Planner — an add-on to any incorporation service — that guides owners through the creation of a professional business plan. And the company plans even more. "During 2006, we plan to offer clients more educational resources and tools," says Janisch. "Our vision is to provide our customers with tools that help ensure their success by educating business owners on important topics for every small business."

Although most business owners only want to go through the incorporation process once, these additional services help to set BizFilings apart and get what repeat business there may be. Rowland, for example, reports that after setting up EdgeView, the same group of principals set up another corporation. This time it was in Delaware and, once again, they used BizFilings. "Hopefully I will never create another one but if I do, I will look for BizFilings," he says. "It's a painless way to get a company started so you can start taking care of your customers."

Drew Robb is a Los Angeles-based freelancer specializing in technology and engineering. Originally from Scotland, he graduated with a degree in geology from Glasgow's Strathclyde University. In recent years he has authored hundreds of articles as well as the book, Server Disk Management by CRC Press.

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