Visit https://ebookfinal.

com to download the full version and

explore more ebooks

How to Form Your Own California Corporation 10th

Bk&Cr Edition Anthony Mancuso

_____ Click the link below to download _____

https://ebookfinal.com/download/how-to-form-your-own-
california-corporation-10th-bkcr-edition-anthony-
mancuso/

Explore and download more ebooks at ebookfinal.com

Here are some suggested products you might be interested in.
Click the link to download

LLC or Corporation How to Choose the Right Form for Your

Business Third Edition Anthony Mancuso Attorney

https://ebookfinal.com/download/llc-or-corporation-how-to-choose-the-
right-form-for-your-business-third-edition-anthony-mancuso-attorney/

Incorporate Your Business A Legal Guide to Forming a

Corporation in Your State 6th Edition Anthony Mancuso

https://ebookfinal.com/download/incorporate-your-business-a-legal-
guide-to-forming-a-corporation-in-your-state-6th-edition-anthony-
mancuso/

Incorporate Your Business A 50 State Legal Guide to

Forming a Corporation 2nd Edition Anthony Mancuso

https://ebookfinal.com/download/incorporate-your-business-a-50-state-
legal-guide-to-forming-a-corporation-2nd-edition-anthony-mancuso/

How to form a corporation in Florida 6th ed Edition Warda

https://ebookfinal.com/download/how-to-form-a-corporation-in-
florida-6th-ed-edition-warda/
Your Limited Liability Company An Operating Manual 3rd
Edition Anthony Mancuso

https://ebookfinal.com/download/your-limited-liability-company-an-
operating-manual-3rd-edition-anthony-mancuso/

How to File Your Own Bankruptcy or How to Avoid It 6th

Edition Edward A. Haman

https://ebookfinal.com/download/how-to-file-your-own-bankruptcy-or-
how-to-avoid-it-6th-edition-edward-a-haman/

File Your Own Divorce 7E Everything You Need for a Fresh

Start How to File Your Own Divorce 7th Edition Edward
Haman
https://ebookfinal.com/download/file-your-own-divorce-7e-everything-
you-need-for-a-fresh-start-how-to-file-your-own-divorce-7th-edition-
edward-haman/

The Rough Guide to California 10th Edition Rough Guides

https://ebookfinal.com/download/the-rough-guide-to-california-10th-
edition-rough-guides/

Kick Your Own Ass Robert Johnson

https://ebookfinal.com/download/kick-your-own-ass-robert-johnson/
How to Form Your Own California Corporation 10th
Bk&Cr Edition Anthony Mancuso Digital Instant
Download
Author(s): Anthony Mancuso
ISBN(s): 9780873378260, 0873378261
Edition: 10th Bk&Cr
File Details: PDF, 2.94 MB
Year: 2002
Language: english
 10th California edition

How to Form Your Own

California
Corporation

by Attorney Anthony Mancuso

 A b o u t N o l o
th in pr int
lp yo u answer it, bo
e Nolo can he
esti on? Chances ar
Have a legal qu
and online. legal
to he lp pe o ple solve their
ission has been whenever
r th re e de ca des, Nolo's m o f fu ss an d expense, and—
Fo minimum
confidence, a
problems with
hout a lawyer.
possible—wit job done.
ai la bl e to he lp you get the
d every tool av aining all the
r th e ye ar s, we’ve offere pl ai n- En gl ish books cont
O ve acti ca l, l tasks.
s, w e be ga n publishing pr ar y to ta ck le day-to-day lega
In the 70 ctions necess
-by-step instru
forms and step got to work
k th e w o rl d by storm, we
mputers too , which took
In the 80s, whe
n personal co ak er an d Li ving Trust Maker
Will M e also
ve lo pe d pr o grams such as f al l th o se bi ts and bytes. W
and de nvenience o
e speed and co many of our bo
oks.
advantage of th an d C D s to
acked disks
added form-p to get legal
ec o gn iz in g that it's best
e 90 s. R useful,
e In te rn et exploded in th ch ai r, N o lo started making
Then th
g in your own
com fy odem.
n w hi le si tt in w it h a co m puter and a m
informatio ailable to anyo
ne
o -d at e le ga l information av
up-t you can find
w nl o ad Center, where
opened our o
nlin e D o to do your
re ce nt ly, w e s. T he fa st es t, easiest way
Most l eProduct ion directly to
nvenient, topica s and informat
all of Nolo's co liver sp ec ifi c fo rm
, eProducts de
own legal work
r.
your compute not. As
bo o ks in pr int? Absolutely
andon our ue to redesign
n we plan to ab we will contin
Does this mea rn et ex pa nd s, the best
no lo gy ev o lv es and the Inte ak in g yo ur ac cess to the law
tech products, m
l our current
and improve al
it can be.
 “America’s leading source of self-help legal
information.” ★★★★
—YAHOO!

LEGAL INFORMATION
ONLINE ANYTIME
24 hh u r s a d a y
www.nolo.com
AT THE NOLO.COM SELF-HELP LAW CENTER, YOU’LL FIND
• Nolo’s comprehensive Legal Encyclopedia filled with plain-English
information on a variety of legal topics
• Nolo’s Law Dictionary—legal terms without the legalese
• Auntie Nolo—if you’ve got questions, Auntie’s got answers
• The Law Store—over 200 self-help legal products including
Downloadable Software, Books, Form Kits and eGuides
• Legal and product updates
• Frequently Asked Questions
• NoloBriefs, our free monthly email newsletter Our
• Legal Research Center, for access to state and federal statutes “No-Hassle”
• Our ever-popular lawyer jokes Guarantee
Return anything you buy

Quality
directly from Nolo for any
Law Books & Software reason and we’ll cheerfully re-
for Everyone fund your purchase price.
No ifs, ands or buts.
Nolo’s user-friendly products are consistently first-rate. Here’s why:

• A dozen in-house legal editors, working with highly skilled authors,

ensure that our products are accurate, up-to-date and easy to use

• We continually update every book and software program

to keep up with changes in the law

• Our commitment to a more democratic legal system informs all of our work

• We appreciate & listen to your feedback. Please fill out and

return the card at the back of this book.
 Read This First
T he information in this book is as up to date and accurate as we can make it. But it’s
important to realize that the law changes frequently, as do fees, forms and other
important legal details. If you handle your own legal matters, it’s up to you to be sure that
all information you use—including the information in this book—is accurate. Here are
some suggestions to help you do this:

First, check the edition number on the book’s spine to make sure you’ve got the most
recent edition of this book. To learn whether a later edition is available, go to Nolo’s online
Law Store at www.nolo.com or call Nolo’s Customer Service Department at 800-728-3555.

Next, because the law can change overnight, users of even a current edition need to be
sure it’s fully up to date. At www.nolo.com, we post notices of major legal and practical
changes that affect a book’s current edition only. To check for updates, go to the Law Store
portion of Nolo’s website and find the page devoted to the book (use the “A to Z Product
List” and click on the book’s title). If you see an “Updates” link on the left side of the page,
click on it. If you don’t see a link, there are no posted changes—but check back regularly.

Finally, while Nolo believes that accurate and current legal information in its books
can help you solve many of your legal problems on a cost-effective basis, this book is not
intended to be a substitute for personalized advice from a knowledgeable lawyer. If you
want the help of a trained professional, consult an attorney licensed to practice in your state.
 10th California edition

How to Form Your Own

California
Corporation

by Attorney Anthony Mancuso

TENTH EDITION September 2002
ILLUSTRATIONS Mari Stein
COVER DESIGN Toni Ihara
BOOK DESIGN Jackie Mancuso
PRODUCTION Sarah Hinman
PROOFREADER Joseph Sadusky
INDEX Nancy Ball
PRINTING Consolidated Printers, Inc.

Mancuso, Anthony.
How to form your own California corporation / by Anthony Mancuso. -- 10th ed.
p. cm.
Includes index.
ISBN 0-87337-826-1
1. Close corporations--California. I. Title: California corporation. II. Title.

KFC357.C55 M36 2002

346.794'0668--dc21 2002016634

Copyright © 2002 Anthony Mancuso

ALL RIGHTS RESERVED. Printed in the U.S.A.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any
means, electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the
publisher and the authors. Reproduction prohibitions do not apply to the forms contained in this product when
reproduced for personal use.
For information on bulk purchases or corporate premium sales, please contact the Special Sales Department. For
academic sales or textbook adoptions, ask for Academic Sales. Call 800-955-4775 or write to Nolo, 950 Parker
Street, Berkeley, CA 94710.
Acknowledgements
Special thanks to Bethany Laurence, my editor, and Ralph Warner for go-
ing over the technicalities of numerous corporate law and tax statutes and
for helping me bring this material down to earth. Also thanks to the pro-
duction and design staff and all the other hardworking people at Nolo for
their help in making it all happen.

About the Author

Tony Mancuso is a California attorney and the author of Nolo’s best-selling
corporate law series, including How to Form Your Own Corporation (Califor-
nia, Florida, Texas and New York book and computer editions) as well as
California Incorporator, a stand-alone software program that produces all
the documents you need to make your California corporation legal. Tony is
also the author of How to Form Your Own Nonprofit Corporation, a national
title with forms and instructions to form a nonprofit in any state, and au-
thor and programmer of LLC Maker™, a software program which prepares
the documents to form a limited liability company in each of the 50 states
(plus Washington, DC). Tony’s latest national titles are Form Your Own
Limited Liability Company, a book that shows readers how to form an LLC
under the laws of each state, and Nolo’s Quick LLC, a quick course on the
advantages of starting a business as an LLC. Tony is a professional guitarist
and is a licensed helicopter pilot.
 CONTENTS

Introduction

CHAPTER 1

Choosing the Right Legal Structure for Your Business

A. THE DIFFERENT WAYS OF DOING BUSINESS ......................................................... 1/2
B. BUSINESS ENTITY COMPARISON TABLES .............................................................. 1/20

CHAPTER 2

A Closer Look at California Corporations

A. KINDS OF CALIFORNIA CORPORATIONS ................................................................ 2/2
B. CORPORATE POWERS ............................................................................................... 2/7
C. CORPORATE PEOPLE ................................................................................................. 2/7
D. HOW MANY PEOPLE MAY ORGANIZE THE CORPORATION? ............................... 2/16
E. CAPITALIZATION (OR, HOW MUCH MONEY YOU NEED TO FORM
YOUR CORPORATION) ............................................................................................ 2/17
F. SALE OF STOCK ....................................................................................................... 2/20
G. PAYMENT OF DIVIDENDS ....................................................................................... 2/21
H. DISSOLUTION OF A CORPORATION ...................................................................... 2/21
I. PIERCING THE CORPORATE VEIL (OR, IF YOU WANT TO BE TREATED
LIKE A CORPORATION, IT'S BEST TO ACT LIKE ONE) .......................................... 2/23

CHAPTER 3

Issuing and Selling Stock

A. SECURITIES LAWS AND EXEMPTIONS ..................................................................... 3/2
B. THE CALIFORNIA LIMITED OFFERING STOCK ISSUANCE EXEMPTION ............... 3/4
C. FEDERAL SECURITIES ACT ...................................................................................... 3/15
 CHAPTER 4

Corporate Taxation
A. CALIFORNIA TAXES ................................................................................................... 4/3
B. FEDERAL TAXES ......................................................................................................... 4/5
C. S CORPORATION TAX STATUS ............................................................................... 4/10
D. CORPORATE ACCOUNTING PERIODS AND TAX YEARS ....................................... 4/15
E. TAX CONCERNS WHEN STOCK IS SOLD ............................................................... 4/16
F. TAX TREATMENT WHEN AN EXISTING BUSINESS IS INCORPORATED ............... 4/18
G. TAX TREATMENT OF EMPLOYEE COMPENSATION AND BENEFITS .................... 4/23

CHAPTER 5

Steps to Form Your Corporation

STEP 1. CHOOSE A CORPORATE NAME ........................................................................ 5/4
STEP 2. PREPARE YOUR ARTICLES OF INCORPORATION .......................................... 5/12
STEP 3. SET UP A CORPORATE RECORDS BOOK (OR ORDER A
CORPORATE KIT) ............................................................................................. 5/20
STEP 4. PREPARE YOUR BYLAWS ................................................................................. 5/23
STEP 5. PREPARE MINUTES OF THE FIRST MEETING OF THE
BOARD OF DIRECTORS ................................................................................... 5/28
STEP 6. PREPARE SHAREHOLDER REPRESENTATION LETTERS ................................ 5/46
STEP 7. PREPARE AND FILE NOTICE OF STOCK TRANSACTION FORM ................... 5/53
STEP 8. ISSUE SHARES OF STOCK ............................................................................... 5/60
 CHAPTER 6

After You Incorporate

A. POST-INCORPORATION PAPERWORK AND TASKS ................................................. 6/3
B. TAX FORMS—FEDERAL ........................................................................................... 6/10
C. TAX FORMS—STATE ................................................................................................ 6/14
D. LICENSES AND PERMITS ......................................................................................... 6/16
E. WORKERS’ COMPENSATION INSURANCE ............................................................. 6/17
F. PRIVATE INSURANCE COVERAGE .......................................................................... 6/17

CHAPTER 7

Lawyers and Accountants

A. LAWYERS .................................................................................................................... 7/2
B. ACCOUNTANTS AND TAX ADVISORS ...................................................................... 7/3

APPENDIX A

How to Use the Forms CD-ROM

APPENDIX B

Incorporation Forms
 INTRODUCTION

T he start of the 21st century

marks an exciting time for small business owners
One of the corporation’s most appealing charac-
teristics is the legal “limited liability” protection it
and other entrepreneurs. With the downsizing of provides to all business owners. The shareholders of a
many of their larger, publicly held corporate coun- corporation are not personally liable for the debts or
terparts, small businesses have an even more im- liabilities of the business—their personal assets are
portant role to play in revitalizing and expanding not at risk to satisfy business debts, losses or legal
the U.S. economy and redefining the American liabilities, including lawsuits.
workplace. Coupled with the fact that savvy, Limited liability protection is a tried-and-true
hardworking small business owners often do ex- feature of corporate law, well settled by years of court
tremely well financially, the trend toward small decisions. And the rare instances when a corporation
business formation continues to swell, as more and will be denied limited liability are also clearly estab-
more escapees from the corporate treadmill step lished—usually when a small corporation owner
out on their own to form their own business. commingles corporate and personal funds or other-
Fortunately, it’s not difficult to start a business in wise blatantly disregards the fundamentals of doing
California, but you do need to make key decisions— business as a corporation.
one of which is to decide which legal structure your A corporation is also a separate tax entity from
business will assume. One of the most popular its owners. In practice, this means you can often
choices is the small, privately held corporation. In use your corporation to shelter business income
large part, this is because the corporate form has a instead of having to pay personal income taxes on
unique set of characteristics that can’t be found all all business profits each year (as you would with a
together in any of the other business forms. sole proprietorship or partnership, where you and
your business are treated as the same person for tax
I/2 HOW TO FORM YOUR OWN CALIFORNIA CORPORATION

purposes). Of course, you have to pay corporate

income taxes on money left in the corporation, but ANOTHER NOLO CORPORATE RESOURCE
because initial corporate tax rates are lower than This book covers the basics on how to set up your
most individual tax rates, overall tax savings often corporation, complete with a one-class, voting
result. stock structure. If you need help with corporate
Organizing your business as a corporation is tasks and formalities after you incorporate, check
also a handy way to provide yourself and other out The Corporate Minutes Book, by Anthony
employees with unique corporate perks such as Mancuso (Nolo). It shows you how to prepare
stock options and stock bonuses. There is nothing standard minutes of annual and special director
more motivating to attract and keep talented cor- and shareholder meetings for your corporation. It
porate employees than sharing a piece of the cor- includes more than 80 board and shareholder
porate pie with them. For example, corporations resolutions to approve the various legal, tax,
often offer “signing bonuses,” consisting of shares financial and business transactions that commonly
of stock, to attract key people to work for them, occur during the life of a small, closely held
and continue to offer stock option privileges to corporation. Forms are included as tear-outs and
workers who are loyal over the long term. on disk.
Corporations are also a “natural” for raising
private startup and expansion capital from business Another unique feature of the corporate form is
associates, friends and others. That’s because the its ability to help you raise capital and fund future
corporate form has a number of built-in “activity growth by making a public stock offering of your
layers”—comprising shareholders, directors, offic- shares. Yes, this is a big step and one that may be
ers and employees—that allow a number of people quite a way down the road for your business. It is
to easily and sensibly participate financially and nonetheless exciting to realize that as you move
managerially in its operations. Financial participa- forward with your business, you may be able to set
tion by others, which can take a variety of forms, is your corporate sights on a public offering of shares.
part and parcel of the corporate package. An inves- A recent stock offering innovation, which pro-
tor can lend money to the corporation, or invest in vides smaller corporations with access to public
its stock, and shares can be split into different capital markets, is the “direct public offering” (or
classes and series to allow different types of inves- DPO). A DPO is a realistic goal for small corpora-
tors to obtain different financial benefits and voices tions due to recent streamlining of the federal secu-
in corporate governance. For example, some inves- rities laws. This overhaul of the securities laws has
tors may wish to purchase shares that give them allowed smaller corporations to go public on their
preferential treatment in a distribution of corporate own without the ritual and expense of a traditional
assets when the corporation is wound up; others underwritten public offering. To make this type of
may want first rights to the distribution of divi- direct public offering, smaller corporations typi-
dends when declared by the board. Still other in- cally start by marketing their shares to their own
vestors can be granted special voting rights—for customers. But some cast a wider net by marketing
example, a right to appoint one of the members of shares over the Internet or by bringing in an under-
the managing board of directors. writing firm to sponsor a second public offering,
which is ultimately registered on a regional stock
exchange.
 INTRODUCTION I/3

Of course, there are other considerations to Although not required by law, we do think that
weigh and balance when deciding whether to in- it can make sense to consult an attorney to check
corporate your small business. Certainly, one part over your incorporation papers, particularly if you
of the process is to clearly understand the possible have special questions or needs—for example, to
advantages of organizing your business in a differ- implement a complicated stock structure. And, of
ent way. After study, you may even conclude that course, after reading the introductory tax material
another business form, such as the newer limited you’ll find here, you may have several unanswered
liability company, may be a better fit for your busi- questions concerning the tax implications of oper-
ness. Accordingly, we explain and compare all ating your business as a corporation, which you
business forms and the pros and cons associated will want to discuss with a tax advisor. To help you
with each in Chapter 1. find the right person to answer legal and tax ques-
tions, we discuss how to locate a helpful lawyer
THIS BOOK WILL ONLY HELP YOU FORM A and tax advisor in Chapter 7.
CALIFORNIA CORPORATION
If you do decide to incorporate, this book provides
the instructions and forms necessary to organize a
privately held, profit-making (business) corpora-
tion in California. You cannot use it to form a
How to Use This Book
California nonprofit or California professional Completing the Articles of Incorporation, bylaws,
corporation (one set up to practice law, medicine, minutes and other forms necessary to form a small
accounting and other special state-licensed profes- California corporation isn’t difficult. You will find
sions). The special types of corporations needed for the how-to-do-it material clearly set out in Chapter
these purposes are summarized in Chapter 2. 5. But before you start filling in blanks, we have
two favors to ask: First, please carefully read the
material in the first four chapters. This material is
designed to give you background information
Using Professionals to Help You Incorporate about how corporations work and to warn you
about potential danger areas. You may find some of
Lawyers can charge up to $2,000 or even more to
this information more technical than you need,
incorporate your business. To allow you to save
especially if you are incorporating a small business.
money and spend it more usefully elsewhere, this
That’s fine. You haven’t lost much by reading it,
book shows you how to fill in standardized incor-
and we are confident you will learn some things
poration forms. As you’ll see, its not hard, and the
you need to know.
investment of your time and energy should be
And now for the second favor. If you are con-
modest. Beyond this, How to Form Your Own Cali-
fused by anything you read here, check it with an
fornia Corporation is geared to help you ask and
expert. Remember, if you do form your own corpo-
answer questions related to the specific needs of
ration, the ultimate responsibility for making the
your corporate organization.
right decisions is yours.
I/4 HOW TO FORM YOUR OWN CALIFORNIA CORPORATION

ICONS USED IN THIS BOOK CD-ROM FOR CALIFORNIA INCORPORATORS

Throughout this book, these icons alert Included at the back of this book is a CD-
you to certain information. ROM containing files for the tear-out
incorporation forms included in Appendix B.
Fast Track. We use this icon to
This CD-ROM can be used with both
let you know when you may skip
Windows and Macintosh computers. The
information that may not be relevant to
files provided are in standard file formats
your situation.
that can be opened, completed, printed,
Warning. This icon alerts you to and saved using a word processor. For
potential problems. details on how to use the CD and install the
files, see the instructions in Appendix A.
Recommended Reading.
When you see this icon, a list of
■
additional resources that can assist you
follows.

Tip. A legal or common sense tip

to help you understand or comply
with legal requirements.

See an Expert. Lets you know

when you need the advice of an
attorney, accountant or other expert.

Cross-Reference. This icon

refers you to a further discussion
of the topic elsewhere in this book.

Website. This icon refers you to

a website where you can down-
load forms and obtain information.

Reminder.
 CHAPTER 1

Choosing the Right Legal Structure

for Your Business
A. THE DIFFERENT WAYS OF DOING BUSINESS .................................................. 1/2
1. Sole Proprietorship .......................................................................................... 1/2
2. Partnership ...................................................................................................... 1/4
3. The Limited Liability Company ....................................................................... 1/8
4. The Corporation ............................................................................................ 1/10
B. COMPARING BUSINESS ENTITIES AT A GLANCE ........................................... 1/20
1/2 HOW TO FORM YOUR OWN CALIFORNIA CORPORATION

T o help you make sure that

forming a California corporation is the best legal
Often, business owners start with the simplest
legal form, the sole proprietorship, then move on
to a more complicated business structure as their
and tax approach for your business, this chapter business grows. Other business people pick the
compares the California corporation to other small legal structure they like best from the start, and let
business legal structures. Our discussion is based their business grow into it. Either way, choosing
upon recent tax and legal rule changes, most sig- the legal structure for your business is one of your
nificantly, the rise of a new legal structure, the important decisions when starting a business. The
limited liability company. This relatively new way analysis we present here, which includes examples
to organize a business shares some of the tradi- of businesses that might sensibly choose each type
tional legal and tax qualities of the corporation, of business structure, should help you make a good
while at the same time offering several of the less decision.
formal attributes of a partnership. The corporation
continues, however, to stand apart from all other
business forms due to its built-in organizational
structure and unique access to investment sources For an expanded analysis and comparison of the
and capital markets. It also continues to uniquely different business forms, see the Legal Guide for
answer a need felt by many business owners who Starting & Running a Small Business, by Fred S.
are attracted to the formality of the corporate form, Steingold (Nolo).
a quality not shared by the other business struc-
tures.

1. Sole Proprietorship
A. The Different Ways of A sole proprietorship is the legal name for a one-
Doing Business owner business (spouses can co-own and help run
a sole proprietorship, too). When people think of a
There are several legal structures or forms under “mom and pop” or a home-based business, they are
which a business can operate, including the sole usually thinking of a sole proprietorship. A sole
proprietorship, partnership, limited liability company proprietorship has the following general character-
and corporation. In addition, two of these structures istics:
have important variants. The partnership form has Ease of Formation. The sole proprietorship is the
spawned the limited partnership and the registered easiest to establish legally. Just hang out your shingle
limited liability partnership. And the corporation can or “Open for Business” sign, and you have established
be recognized, for tax purposes, as either the stan- a sole proprietorship. Sure, there are other legal steps
dard C corporation, in which the corporation and its you may wish to take—such as registering a fictitious
owners are treated as separate taxpaying entities, or business name different from your own individual
as an S corporation, in which business income is name by filing a “dba statement” with the county
passed through the corporate entity and taxed only clerk—but these steps are not necessary to establish
to its owners on their individual tax returns. your business legally.
 CHOOSING THE RIGHT LEGAL STRUCTURE FOR YOUR BUSINESS 1/ 3

Personal Liability for Business Debts, Liabilities and Sole Proprietorships in Action Many small, one-
Taxes. In this simplest form of small business legal owner or spouse-owned businesses start small with
structures, the owner, who usually runs the busi- very little advance planning or procedural red tape.
ness, is personally liable for its debts, taxes and Celia Wong is a good example—Celia is a graphics
other liabilities. Also, if the owner hires employees, artist with a full-time salaried job for a local book
she is personally responsible for claims made publishing company. In her spare time she takes
against these employees acting within the course on extra work using her home computer to pro-
and scope of their employment. duce audio cassette and CD jacket cover art for
Simple Tax Treatment. All business profits (and musicians. These jobs are usually commissioned on
losses) are reported on the owner’s personal in- a handshake or phone call. Without thinking much
come tax return each year (using Schedule C, Profit about it, Celia has started her own sole proprietor-
or Loss From Business, filed with the owner’s 1040 ship business. Celia should include a Schedule C in
federal income tax return). And this remains true her yearly federal 1040 individual tax return,
even if a portion of this money is invested back in showing the net profits (profits minus expenses) or
the business—that is, even if the owner doesn’t losses of her sole proprietorship. Celia is respon-
“pocket” business profits for personal use. sible for paying income taxes on profits, plus self-
Legal Life Same as Owner’s. On the death of its employment (Social Security) taxes based on her
owner, a sole proprietorship simply ends. The sole proprietorship income (IRS Form SE is used to
assets of the business normally pass under the compute self-employment taxes; Celia attaches it to
terms of the deceased owner’s will or trust, or by her 1040 income tax return).
intestate succession (under the state’s inheritance If Celia has any business debts (she usually
statutes) if there is no formal estate plan. owes on a charge account at a local art supply
house), or a disgruntled client successfully sues her
DON’T LET BUSINESS ASSETS in Small Claims Court for failing to deliver prepaid
GET STUCK IN PROBATE art work, Celia is personally liable to pay this
The court process necessary to probate a will can money. In other words, she can’t simply fold up
take more than a year. In the meantime, it may be Wong Designs and walk away from her debts
difficult for the inheritors to operate or sell the claiming that they are the legal responsibility of her
business or its assets. Often, the best way to avoid business only.
having a probate court involved in business
operations is for the owner to transfer the assets of
the business into a living trust during his lifetime;
this permits business assets to be transferred to
inheritors promptly on the death of the business
owner, free of probate. For detailed information on
estate planning, including whether or not it makes
sense to create a living trust, see Plan Your Estate,
by Denis Clifford & Cora Jordan (Nolo).
1/4 HOW TO FORM YOUR OWN CALIFORNIA CORPORATION

PUT SOME PROFITS ASIDE TO BUY

BUSINESS INSURANCE
A great source of practical information on how to
Once Celia begins to make enough money, she
start and operate a small sole proprietorship is
should consider taking out a commercial liability
Small Time Operator, by Bernard Kamoroff, (Bell
insurance policy to cover legal claims against her
Springs Press). Also, see Tax Savvy for Small
business. While insurance normally won’t protect
Business, by Frederick W. Daily (Nolo), a small
her from her own business mistakes (like perform-
business person’s guide to taxes, which includes a
ing shoddy or late work or failing to pay her bills),
full discussion of setting up and deducting the
it can cover many risks including slip-and-fall
expenses of a home-based business.
lawsuits, damage to her or a client’s property or
fire, theft and other casualties that might occur in
her home-based business.

Running the business as an informal sole pro- 2. Partnership

prietorship serves Celia’s needs for the present. A partnership is simply an enterprise in which two
Assuming her small business succeeds, she will or more co-owners agree to share in the profits. No
eventually need to put it on a more formal footing written partnership agreement is necessary. If two
by establishing a separate business checking ac- people go into business together, and do not incor-
count, possibly coming up with a fancier name and porate or form a limited liability company, they
registering it as a dba with the county clerk and, if automatically establish a legal partnership.
she hires employees, obtaining a federal employer Partnerships are governed by each state’s partner-
identification number (EIN) from the IRS. She may ship law. But since all states have adopted a version
also feel ready to renovate her house to separate of the Uniform Partnership Act (for example, the
her office space from her living quarters (this can California Uniform Partnership Act, beginning with
also help make the portion of the mortgage or rent Section 15001 of the California Corporations
paid for the office deductible as a business expense Code), laws are very similar throughout the U.S.
on her Schedule C). Mostly, these laws contain basic rules that provide
Celia can do all of this and still keep her sole for an equal division of profits and losses among
proprietorship legal status. Unless her business partners and establish the partners’ legal relation-
grows significantly or she takes on work that puts ship with one another. These rules are not manda-
her at a much higher risk of being sued—and tory in most cases, and you can (and should) spell
therefore being held personally liable for business out your own rules for dividing profits and losses
debts—it makes sense for her to continue to oper- and operating your partnership in a written part-
ate her business as a sole proprietorship. nership agreement. If you don’t prepare your own
partnership agreement, all provisions of California’s
Partnership Law apply to your partnership.
 CHOOSING THE RIGHT LEGAL STRUCTURE FOR YOUR BUSINESS 1/ 5

CALIFORNIA LIMITED PARTNERSHIPS

Most smaller partnerships are general partnerships—this means that all owners agree to manage the
partnership together, and each partner is personally liable for debts of the partnership. However, there
are two other fairly common types of partnerships: limited partnerships and registered limited liability
partnerships (RLLPs). Each of these is quite different from a general partnership
THE LIMITED PARTNERSHIP The limited partnership structure is used when one or more of the
partners are passive investors (called “limited partners”) and another partner (called a “general part-
ner”) runs the partnership. A Certificate of Limited Partnership is filed with the Secretary of State to form
a limited partnership, and a filing fee must be paid. The advantage of a limited partnership is that unlike
a general partnership, where all partners are personally liable for business debts and liabilities, a
limited partner is allowed to invest in a partnership without the risk of incurring personal liability for the
debts of the business. If the business fails, all that the limited partner can lose is her capital investment—
the amount of money or the property she paid for an interest in the business. However, in exchange for
this big advantage, the limited partner normally is not allowed to participate in the management or
control of the partnership. If she does, she can lose her limited liability status and can be held personally
liable for partnership debts, claims and other obligations.
Typically, a limited partnership has a number of limited partner investors and one general partner
(there can be more, but there must be at least one) who is responsible for partnership management and
is personally liable for its debts and other liabilities.
THE REGISTERED LIMITED LIABILITY PARTNERSHIP The registered limited liability partnership
(RLLP) is a special legal structure designed for persons who form a partnership in California to perform
the licensed professional services of attorneys, accountants or architects. An RLLP is formed by filing a
Registration of Limited Liability Partnership form with the California Secretary of State.
The point of an RLLP is to relieve professional partners from personal liability for debts, contracts
and claims against the partnership, including claims against another partner for professional malprac-
tice. However, a professional in an RLLP remains personally liable for his own professional malpractice.
Example: Martha and Veronica have their own two-person accounting partnership, registered as
an RLLP. Each has her own clients. If Martha loses a malpractice lawsuit, and Veronica did not partici-
pate in providing services to the client who won the suit, Veronica should not be held personally liable
for the lawsuit judgment. If partnership insurance and assets are not sufficient to pay the judgment,
Martha’s personal assets, but not Veronica’s, are subject to seizure to satisfy the unrecovered judgment.
In they had an accounting general partnership practice that was not registered as an RLLP, both Martha
and Veronica could be held personally liable for either CPA’s individual malpractice.

Other professionals can obtain similar legal liability protection by forming a

California professional corporation. See How to Form a California Professional Corporation,
by Anthony Mancuso (Nolo).
1/6 HOW TO FORM YOUR OWN CALIFORNIA CORPORATION

A general partnership has the following charac-

teristics: PARTNERSHIPS CAN CHOOSE TO BE TAXED
Each Partner Has Personal Liability. Like the owner AS CORPORATIONS
of a sole proprietorship, each partner is personally Unincorporated co-owned businesses,
liable for the debts and taxes of the partnership. In including partnerships and limited liability
other words, if the partnership assets and insurance companies (discussed below), can choose
are insufficient to satisfy a creditor’s claim or legal to be taxed as a corporation by filing IRS
Form 8832, Entity Classification Election.
judgment, the partners’ personal assets can be
Most smaller partnerships will not wish to
attached and sold to pay the debt.
make this election, preferring instead to
The Act or Signature of Each Partner Can Bind the Part-
have profits divided among the partners
nership. Each partner is an agent for the partnership and then taxed on their individual tax
and can individually hire employees, borrow returns. But this is not always true. For
money, sign contracts and perform any act neces- example, some partnerships—especially
sary to the operation of the business. All partners those that want to reinvest profits in
are personally liable for these debts and obliga- expanding the business—may prefer to
tions. This rule makes it essential that the partners keep profits in the business, and have
trust each other to act in the best interests of the them taxed to the business at the lower
partnership and each of the other partners. initial corporate tax rates. Your tax
Partners Report and Pay Individual Income Taxes on advisor can tell you if this tax strategy
Profits. A partnership files a yearly IRS Form 1065, makes sense for your business. (See
Chapter 7.)
U.S. Partnership Return of Income, which includes
a schedule showing the allocation of profits, losses
and other tax items to all partners (Schedule K).
The partnership must mail individual schedules Partnership Dissolves When a Partner Leaves. Legally,
(Schedule K-1s) to each partner at the end of each when a partner ceases to be associated with carry-
year, showing the items of income, loss, credits and ing on the business of the partnership (when he
deductions allocated to each partner. When a part- withdraws or dies), the partnership is dissolved.
ner files an individual income tax return, she re- However, a properly written partnership agreement
ports her allocated share of partnership profits provides in advance for these eventualities, and
(taken from the partner’s Schedule K-1), and pays allows for the continuation of the partnership by
individual income taxes on these profits. As with permitting the remaining partners to buy out the
the sole proprietorship, partners owe tax on busi- interest of the departing or deceased partner. Of
ness profits even if they are plowed back into the course, if one person in a two-partner business
business, unless the partners decide to elect to have leaves or dies, the partnership is legally dissolved—
the partnership taxed as a corporation. you need at least two people to have a partnership.
 CHOOSING THE RIGHT LEGAL STRUCTURE FOR YOUR BUSINESS 1/ 7

WHY YOU NEED A WRITTEN PARTNERSHIP AGREEMENT

Although it’s possible to start a partnership • If you agree on value, how will the
with a verbal agreement—or even with no departing partner be paid for her
stated agreement at all—there are draw- interest—in a lump sum or installments? If
backs to taking this casual approach. The in installments, how big will the down
most obvious problem is that a verbal payment be; how many years will it take
agreement can be remembered and inter- for the balance to be paid; and how
preted differently by different partners. And much interest will be charged?
having no stated agreement at all almost • What happens if none of the remaining
always means trouble. Also, if you don’t partners wants to buy the departing
write out how you want your partnership to partner’s interest? Will your partnership
be operated, you lose a great deal of dissolve? If so, can some of the partners
flexibility. Instead of being able to make your form a new partnership to continue the
own rules in a number of key areas—for partnership business? Who gets to use
example, how partnership profits and losses the dissolved partnership’s name and
are divided among the partners—California client or customer list?
state partnership law will automatically come California law does not necessarily
into play. These state-based rules may not be provide helpful answers to these questions,
to your liking (for example, state law which means that if you don’t have a written
generally calls for an equal division of profits partnership agreement, you may face a long
and losses regardless of partners’ capital legal battle with a partner who decides to call
contributions). it quits. To avoid these and other problems, a
Another reason why you should prepare basic partnership agreement should, at a
and sign a written partnership agreement is minimum, spell out how much interest each
to avoid disputes over what happens when a partner has in the partnership, how profits
partner wants to leave the business. Here are and losses will be split up between or among
just a few of the difficult questions that can the partners and how any buyout or transfer
arise if a partner wants to leave the partner- of a partner’s interest will be valued and
ship: handled. The aftermath of the dissolution of
• If the remaining partners want to buy the the partnership also should be considered,
departing partner out, how will the and rules set out for a continuance of the
interest be valued? partnership’s business by ex-partners if
desired.

Partnerships in Action George and Tamatha are

good friends who have been working together in a
For a much more thorough look at the legal and rented warehouse space where they share a kiln
tax characteristics of partnerships, and for a clause- used to make blown glass pieces. They recently
by-clause approach to preparing a partnership collaborated on the design and production of a
agreement, see The Partnership Book, by Denis batch of hand-blown halogen light fixtures, which
Clifford & Ralph Warner (Nolo). immediately become popular with local lighting
1/8 HOW TO FORM YOUR OWN CALIFORNIA CORPORATION

vendors. Believing that they can streamline the judgments as if they had formed a corporation. Or,
production of these custom pieces, they plan to put another way, with an LLC you can simulta-
solicit and fill larger orders with retailers, and look neously achieve the twin goals of one-level taxation
into wholesale distribution. They shake hands on of business profits and limited personal liability for
their new venture, which they name “Halo Light business debts.
Sculptures.” Although they obtain a business li-
cense and file a dba statement with the county CAN YOUR PROFESSIONAL BUSINESS
clerk showing that they are working together as FORM AN LLC?
“Halo Light Sculptures,” they don’t bother to write The California LLC Act prohibits certain profession-
up a partnership agreement. Their only agreement als (the same professionals—such as doctors,
is a verbal one to equally share in the work of mak- lawyers and accountants—who must form a profes-
ing the glass pieces, splitting expenses and any sional corporation if they want to incorporate) from
profits that result. forming an LLC. If you are a licensed professional
This type of informal arrangement can make and you want to form an LLC, contact your state
sense for the very early days of a co-owned busi- licensing board (most are in Sacramento) and ask
ness, where the owners, like George and Tamatha, whether the law allows you to form one. If not,
wish to split work, expenses, profits and losses you’ll have to incorporate your professional practice
equally. However, for the reasons mentioned ear- to protect yourself from personal liability for the
lier, from the moment the business looks like it has debts of your business. Accountants, architects and
long-term potential, the partners should prepare lawyers have another option: They can register their
and sign a written partnership agreement. Further- general partnership practices as registered limited
more, if either partner is worried about personal liability partnerships (RLLPs) to protect themselves
liability for business debts or the possibility of from personal liability in many situations. (RLLPs
lawsuits by purchasers of the fixtures, then forming are discussed in Section A2, above).
a limited liability company or a corporation prob-
ably would be a better business choice. (See below.) Here are some of the most important LLC char-
acteristics:
Limited Liability. The owners of an LLC are not
3. The Limited Liability Company personally responsible for its debts and other li-
abilities. Specifically, Section 17101 of the Califor-
The limited liability company (LLC) is the new kid
nia Beverley-Killea Limited Liability Company Act
on the block of business organizations. It has be-
says that members are not personally liable for any
come popular with many small business owners, in
debt, obligation or liability of the LLC, whether
part because it was custom-designed by state legis-
that liability or obligation comes from a contract
latures to overcome particular limitations of each of
dispute, tort (injury to other persons or damage to
the other business forms, including the corpora-
their property) or any other type of claim. This
tion. Essentially, the LLC is a legal ownership
type of sweeping personal legal liability protection
structure that allows owners to pay business taxes
is the same as that enjoyed by shareholders of a
on their individual income tax returns like partners
California corporation. In short, the LLC and the
(or, for a one-person LLC, like a sole proprietor-
corporation offer the same level of limited personal
ship), but also gives the owners the legal protection
liability protection.
of personal limited liability for business debts and
 CHOOSING THE RIGHT LEGAL STRUCTURE FOR YOUR BUSINESS 1/ 9

Pass-Through Taxation. Federal tax law normally Formation Requirements. Like a corporation, LLCs
treats an LLC like a partnership, unless the LLC require paperwork to get going. Articles of Organi-
elects to be taxed as a corporation (by filing IRS zation must be filed with the California Secretary of
Form 8832—see Section A2, above). The Califor- State. And if the LLC is to maintain a business
nia Franchise Tax Board treats a California LLC for presence in another state, such as a branch office, it
state income tax purposes as it is treated for federal also must file registration or qualification papers
income tax purposes. An LLC with an annual gross with the other state’s Secretary or Department of
income of $250,000 or more must pay an addi- State. California’s LLC formation fee is $70. Cali-
tional annual fee, based upon a graduated fee fornia LLCs, like California corporations and lim-
schedule that is adjusted from year to year. ited partnerships, must pay an annual minimum
If an LLC is treated as a partnership at the fed- $800 tax to the Franchise Tax Board. There is an
eral and state levels, it files standard partnership additional LLC annual tax, with a tiered rate struc-
tax returns (IRS Form 1065, Schedules K and K-1) ture, for LLCs with annual gross incomes of
with the IRS and state, and the LLC members $250,000 or more (the additional tax may be any-
(owners) pay taxes on their share of LLC profits on where from $900 to $11,000).
their individual income tax returns. An LLC that Like a partnership, an LLC should prepare an
elects corporate tax treatment files federal and state operating agreement to spell out how the LLC will
corporate income tax returns. be owned, how profits and losses will be divided,
Ownership Requirements. California allows one how departing or deceased members will be
owner (member) to form an LLC. Members need bought out and other essential ownership details.
not be residents of California, or even the U.S. for However, preparation of an LLC operating agree-
that matter. Other business entities, such as a cor- ment is not legally required. If it is not prepared,
poration or another LLC, can be LLC owners. the default provisions of California’s LLC Act will
Management Flexibility. LLCs are normally man- apply to the operation of the LLC. Since LLC own-
aged by all the owners (members)—this is known ers will want to control exactly how profits and
as “member-management.” But state law also al- losses are apportioned among the members rather
lows for management by one or more specially than following the default rules set out in the LLC
appointed managers (who may be members or Act, preparing an LLC operating agreement is a
nonmembers). Not surprisingly, this arrangement practical necessity.
is known as “manager-management.” In other
words, an LLC can appoint one or more of its
members, one of its CEOs or even a person con-
tracted from outside the LLC to manage its affairs. See Form Your Own Limited Liability Company, by
This setup makes sense if one person wishes to Anthony Mancuso (Nolo), for instructions on how
assume full-time control of the LLC while the other to form a California LLC, prepare an operating
owners act as “passive” investors in the enterprise. agreement (member- and manager-managed
agreements are included) and handle all other LLC
formation formalities.
1 / 10 HOW TO FORM YOUR OWN CALIFORNIA CORPORATION

LLCs in Action Under the name “Aunt Jessica’s What sets the corporation apart from all other
Floral Arrangements,” Barry and Sam jointly own types of businesses is that it is a legal entity sepa-
and run a flower shop that specializes in unique rate from any of the people who own, control,
flower arrangements (the name stems from the fact manage or operate it. The state corporation and
that Barry used to work for his aunt Jessica, who federal and state tax laws view the corporation as a
taught him the ropes of floral bouquet design). legal “person”—it can enter into contracts, incur
Lately, business has been particularly rosy, and the debts and pay taxes separately from its owners.
two men plan to sign a long-term contract with a
flower importer to supply them with larger quanti-
a. Limited Personal Liability
ties of seasonal flowers. Once they receive the addi-
tional flowers, they will be able to create more Like the owners (members) of an LLC, the owners
floral pieces and wholesale them to a wider market. (shareholders) of a corporation are not personally
Both men are sensitive to the fact that they will liable for the corporation’s business debts, claims
encounter more risks as their business grows. Ac- or other liabilities. This means that a person who
cordingly, they decide to protect their personal invests in a corporation (a shareholder) normally
assets from business risks by converting their part- only stands to lose the amount of money or the
nership to an LLC. They could accomplish the value of the property which he has paid for its
same result by incorporating, but they prefer the stock. As a result, if the corporation does not suc-
simplicity of paying taxes on their business income ceed and cannot pay its debts or other financial
on their individual income tax returns (rather than obligations, creditors cannot seize or sell the corpo-
reporting profits and paying business taxes on a rate investor’s home, car or other personal assets.
separate corporate income tax return). They also
Example: Rackafrax Dry Cleaners, Inc., a Califor-
realize that they can convert their LLC to a corpo-
nia corporation, has several bad years in a row.
ration later to obtain the advantage of lower corpo-
When it finally files for bankruptcy it owes
rate tax rates on money kept in the flower business
$50,000 to a number of suppliers and $80,000 as a
or, even more simply, make an IRS election to have
result of a lawsuit for uninsured losses stemming
their LLC taxed as a corporation without changing
from a fire. Stock in Rackafrax is owned by Harry
its legal structure.
Rack, Edith Frax and John Quincy Taft. Their per-
sonal assets cannot be taken to pay the money
Rackafrax owes.
4. The Corporation
Now, let’s look at the basic attributes of the corpo-
ration, the type of business organization this book
shows you how to organize.
A corporation is a statutory creature, created
and regulated by state law. In short, if you want the
“privilege”—as the courts call it—of turning your
business enterprise into a California corporation,
you must follow the requirements of the California
Business Corporation Law.
 CHOOSING THE RIGHT LEGAL STRUCTURE FOR YOUR BUSINESS 1/ 11

BEWARE OF EXCEPTIONS TO THE RULE OF Fortunately, most of the problem areas where
PERSONAL LIMITED LIABILITY PROTECTION you might be held personally liable for corporate
In some situations, corporate directors, officers and obligations can be avoided by following a few
shareholders of a corporation can be held respon- commonsense rules (rules you’ll probably adhere
sible for debts owed by their corporation. Here are to anyway): First, don’t do anything which is dis-
a few of the most common exceptions to the rule of honest or illegal. Second, make sure your corpora-
limited personal liability (these exceptions also tion does the same, by having it obtain necessary
apply to other limited liability business structures, permits, licenses or clearances for its business op-
such as the LLC): erations. Third, pay employee wages and withhold
Personal Guarantees. When a bank or other lender and pay corporate income and payroll taxes on
makes a loan to a small corporation, particularly a time. Fourth, don’t personally obligate yourself to
newly formed one, it often requires that the people repay corporate debts or obligations unless you
who own the corporation agree to repay it from fully understand and accept the consequences.
their personal assets should the corporation default
on the loan. Shareholders may even have to pledge b. Corporate Tax Treatment
equity in a house or other personal assets as secu-
rity for repayment of the debt. Of course, share- Let’s now look at a few of the most important tax
holders can just say no—but if they do, their cor- characteristics of the corporation. We’ll start with
poration may not qualify for the loan. the dual level of taxation built into the corporate
Federal and State Taxes. If a corporation fails to business structure.
pay income, payroll or other taxes, the IRS and the
California Franchise Tax Board are likely to attempt 1. Dual Taxation and Income Splitting
to recover the unpaid taxes from “responsible em- The corporation is a taxpayer, with its own income
ployees”—a category that often includes the princi- tax rates and tax returns separate from the tax rates
pal directors, officers and shareholders of a small and tax returns of its owners. This double layer of
corporation. taxation allows corporate profits to be kept in the
Unlawful or Unauthorized Transactions. If you use the business and taxed at the initial corporate tax rates,
corporation as a device to defraud third parties, or which are generally lower than those of the
if you deliberately make a decision (or fail to make corporation’s owners. The result of this type of
one) that results in physical harm to others or their business income splitting between the corporation
property (such as failing to maintain premises or a and its owners can result in an overall tax savings
work site properly, manufacturing unsafe products for the owners (compared to pass-through taxation
or causing environmental pollution), a court may of all business profits to the owners, which is the
“pierce the corporate veil” and hold the sharehold- standard tax treatment of sole proprietorships,
ers of a small corporation individually liable for partnerships and LLCs).
damages (monetary losses) caused to others.
1 / 12 HOW TO FORM YOUR OWN CALIFORNIA CORPORATION

Example: Jeff and Sally own and work for their

own two-person corporation, Hair Looms, Inc., a HOW SMALL CORPORATIONS AVOID DOUBLE
mail order wig supply business that is starting to TAXATION OF CORPORATE PROFITS
enjoy popularity with overseas purchasers. To keep What about the old bugaboo of corporate
pace with the surge in orders, they need to expand double taxation? Most people have heard
by reinvesting a portion of their profits back in the that corporate income is taxed twice: once
business. Since Hair Looms is incorporated, only at the corporate level and again when it is
paid out to shareholders in the form of
the portion of the profits paid to Jeff and Sally as
dividends. In theory, the Internal Revenue
salary is reported and taxed to them on their indi-
Code says that most corporations are
vidual tax returns—let’s assume, at a marginal
treated this way (except S corporations,
(top) tax rate of 31%. By contrast, the first $50,000 whose profits automatically pass to
in profits left in the business for expansion is re- shareholders each year—see below). In
ported on Hair Looms’ corporate income tax return practice, however, double taxation seldom
and taxed at the lowest corporate tax rate of only occurs in the context of the small business
15%. The next $25,000 is taxed at 25%. Above corporation. The reason is simple: Em-
$75,000, corporate income is taxed at 34% and ployee-owners don’t pay themselves
higher. dividends, which are taxed at the corpo-
rate rate when earned and at the indi-
vidual shareholder level when paid to
CORPORATE TAX RATES MAX OUT AT 34% FOR
them. Instead, the shareholders, who
MOST CORPORATIONS
usually work for their corporation, pay
Even though corporate tax rates can go up to 39%, themselves salaries and bonuses, which
all corporate net income below $10 million is are deducted from the profits of the
subject to an effective flat tax rate of 34%. (See corporate business as ordinary and
Chapter 4, Section B.) necessary business expenses. The result is
that profits paid out in salary and other
forms of employee compensation to the
owner-employees of a small corporation
LLCS AND PARTNERSHIPS CAN ELECT
are taxed only once, at the individual
CORPORATE TAX TREATMENT
level. In other words, as long as you work
Dual taxation and income splitting are no longer for your corporation, even in a part-time or
unique to corporations. Partnerships and LLCs can consulting capacity, you can pay out
elect to be taxed as corporations if they wish to business profits to yourself as reasonable
keep money in the business and have it taxed at compensation. Your corporation won’t
corporate rates. (See the sidebar in Section A2, have to pay taxes on these profits.
above.)
 CHOOSING THE RIGHT LEGAL STRUCTURE FOR YOUR BUSINESS 1/ 13

2. Corporations Can Elect Pass-Through Taxation of Profits

Just as partnerships and LLCs have the ability to LLCS AND PARTNERSHIPS HAVE TECHNICAL TAX
ADVANTAGES OVER S CORPORATIONS
request corporate tax treatment, corporations can
change their built-in dual income tax treatment to LLC owners and partners can split profits
the type of pass-through taxation of business prof- disproportionately to their ownership
interests in the business (these are called
its which normally applies to partnerships and
“special allocations” of profits and losses
LLCs. A corporation accomplishes this by making
under the tax code); S corporation
an S corporation tax election with the IRS.
shareholders can’t. Also, the amount of
corporate losses that may be passed
WHEN JUST STARTING OUT, through to S corporation shareholders is
FORM AN LLC INSTEAD limited to the total of each shareholder’s
An LLC, like an S corporation, gives its owners “basis” in his stock (the basis is the
pass-through taxation of business profits plus amount paid for stock plus and minus
limited personal liability for business debts. It also adjustments during the life of the corpora-
tion) plus amounts loaned personally by
is more flexible than an S corporation for technical
each shareholder to the corporation.
reasons (see below). Therefore, it usually makes
Losses allocated to a shareholder that
more sense to form an LLC when you are just
exceed these limits can be carried
starting to organize your business. If you are forward and deducted in future tax years
already doing business as a corporation, switching if the shareholder then qualifies to deduct
over to S corporation tax status—by making an S the losses. In contrast, LLC owners and
corporation tax election—makes sense if you wish partners may be able to personally
to keep your corporation intact, but decide that deduct more business losses on their tax
pass-through taxation of profits will save you tax returns in a given year than S corporation
dollars. This might be true, for example, for a shareholders. The reason is that an LLC
corporation that no longer wishes to keep profits in member and partner gets to count her
the business, but can’t pay all of them out to pro-rata share of all money borrowed by
shareholders as salaries (if some shareholders don’t the business, not just loans personally
made by the member or partner, in
work for the corporation or if the payout of all
computing how much of any loss allo-
profits as salaries would render them “excessive”
cated to her by the business she can
and subject to IRS attack, for example). The only
deduct in a given year on her individual
other way an existing corporation can get the income tax return.
limited liability protection and pass-through tax
treatment of the S corporation is to dissolve, then
reorganize as an LLC. This can be costly from a tax
perspective, and a lot more trouble than simply
electing S corporation tax status.
1 / 14 HOW TO FORM YOUR OWN CALIFORNIA CORPORATION

U.S. corporations that have 75 or fewer share- the business pass through to the S shareholders
holders who are U.S. citizens or residents can elect directly and are taxed on their individual income
federal S corporation tax treatment (by filing IRS tax returns. This meets the investors’ needs and
Form 2553). Once an S corporation election is avoids the double tax that would have been paid if
made with the IRS, the corporation can make the profits were distributed to the investors as divi-
same election with the California Franchise Tax dends. This also helps Fred, since he can keep his
Board. A corporation that files an S corporation tax corporate salary low and still get money out of his
election has all its profits, losses, credits and de- corporation. As discussed in Chapter 4C, S corpo-
ductions passed through to its shareholders, who ration profits allocated to shareholders, unlike
report these items on their individual tax returns. salaries, are not subject to self-employment taxes.
In effect, this allows the corporation to sidestep This means Fred ends up with more after-tax
corporate taxes on business profits, passing the money in his pocket.
profits (and the taxes that go with them) along to
the shareholders. Each S corporation shareholder is 3. Tax Consequences of Corporate Dissolution
allocated a portion of the corporation’s profits and You should consider an additional tax aspect of
losses according to her percentage of stock owner- forming a corporation before deciding to incorpo-
ship in the corporation (a 50% shareholder reports rate—the tax consequences of ending the corpora-
and pays individual income taxes on 50% of the tion when it is dissolved or sold. The general rule is
corporation’s annual profits, for example). that when a corporation is sold or dissolved, both
Note that these profits are allocated to the the corporation and its shareholders have to pay
shareholders whether the profits are actually paid capital gain taxes. However, there are ways to mini-
to them or kept in the corporation. mize this double tax, if you plan in advance. Check
Example: Fred’s Furniture and Appliance was with your tax person on the eventual tax ramifica-
incorporated during a period of fast business tions of dissolving your corporation right from the
growth, when Fred brought in two relatives as start. One of the most important pre-incorporation
investors and moved his business to a larger store- services your tax advisor can provide is to make
front in an upscale neighborhood (with a renovated sure that the future dissolution or sale of your
business name of “Frederick’s Interior Accessories, corporation will not result in an unexpectedly hefty
Inc.”). He chose the corporate form to limit his and tax bill for your corporation and its owners.
the investors’ personal liability and to accommo-
date his investors by issuing them shares in his
business. With the business growing fast, the inves-
tors wanted to see some return of profits. Fred
elects S corporation tax treatment. Net profits of
 CHOOSING THE RIGHT LEGAL STRUCTURE FOR YOUR BUSINESS 1/ 15

c. Owners Who Work in the Business Are Example 1: Myra, Danielle and Rocco form their
Treated as Employees own three-person corporation, Skate City, Incorpo-
rated, a skate and bike shop in Venice Beach, Los
A key tax characteristic of the corporate structure
Angeles. Storefront access to the Venice Beach
is that business owners who also work in the busi-
rollerblade, skating and bike path makes it popular
ness become employees. This means that you, in
with local rollerbladers and bicyclists. Needing
your role as an employee, become eligible for tax-
more cash, the three approach relatives for invest-
deductible corporate fringe benefits, some of
ment capital. Rocco’s brother, Tony, and Danielle’s
which you would not qualify for as a sole propri-
sister, Collette, chip in $10,000 each in return for
etor, partner or LLC member.
shares in the business. Myra’s Aunt Kate lends the
For example, Henry incorporates his California
corporation $25,000 in return for an interest-only
sole proprietorship, “Big Sur Shoes, Inc.” He now
promissory note, with the principal amount to be
works as a full-time corporate employee, entitled to
repaid at the end of five years. Here’s how the man-
unique tax-deductible corporate perks such as
agement, executive and financial structure of the
reimbursement for medical expenses, 100% de-
corporation breaks down:
ductibility of health insurance premiums and
Board of Directors: The management team,
group term life insurance paid for by his business.
which meets once each quarter to analyze and
If he gave himself these perks in his unincorpo-
project financial performance and review store
rated business, his business could deduct them as
operations, consists of the three founders, Myra,
ordinary and necessary business expenses, but he
Danielle and Rocco, and one of the other three
would have to report them as income and pay
investors. The investor board position is a one-year
income taxes on them. (See Chapter 4G for more
rotating seat. This year Tony has the investor board
on corporate fringe benefits.)
seat; next year, Collette; the third year, Aunt Kate.
This pattern repeats every three years. Directors
d. Built-In Organizational Structure have one vote apiece, regardless of share owner-
ship—this means the founders can always outvote
Perhaps the most unique benefit of forming a cor-
the investor vote on the board, but this also guar-
poration is the ability to divide management, ex-
antees that each of the investors will have an op-
ecutive decision making and ownership into sepa-
portunity to hear board discussions and give input
rate areas of corporate activity. This separation is
on major management decisions.
achieved automatically because of the separate legal
roles which reside in the corporate form: the roles
of directors (managers), executives (officers) and
owners (shareholders). Unlike partnerships and
LLCs, the corporate structure comes ready-made
with a built-in separation of these three roles, each
with its own legal authority, rules and ability to
participate in corporate income and profits.
1 / 16 HOW TO FORM YOUR OWN CALIFORNIA CORPORATION

Executive Team: The officers or executive team As you can see from this example, the mecha-
charged with overseeing day-to-day business; su- nisms to put this custom-tailored management,
pervising employees; keeping track of ordering, executive and investment structure into place are
inventory and sales activities; and generally putting built into the Skate City corporation. To erect it, all
into practice the goals set by the board are Myra that is needed is to fill in a few blanks on standard
(President) and Danielle (Vice President). Rocco incorporation forms, including stock certificates,
fills the remaining officer positions of Secretary/ and prepare a standard promissory note. To dupli-
Treasurer of the corporation, but this is a part-time cate this structure as a partnership or LLC would
administrative task only. Rocco’s real vocation—or require a specially drafted partnership or LLC oper-
avocation—is blading along the beach and training ating agreement with custom language and plenty
to be a professional, touring rollerblader with his of review by the founders and investment group
own corporate sponsor (maybe Skate City if profits (and, no doubt, their lawyers). The corporate form
continue to roll in). is designed to handle this division of management,
Participation in Profits: Corporate net profits are day-to-day responsibilities and investment with
used to stock inventory, pay rent on the West End little extra time, trouble or expense.
storefront and pay all the other usual and custom- There is a flip side to this division of corporate
ary expenses of doing business. The two full-time positions and participation in profits. Some busi-
executives, Myra and Danielle, get a corporate ness people—particularly those who run a business
salary, plus a year-end bonus when profits are by themselves or who prefer to run a co-owned
good. Rocco gets a small stipend (hourly pay) for business informally—feel that the extra levels of
his part-time work. Otherwise, he and the two corporate operation and paperwork are a nuisance.
investor shareholders are simply sitting on their That’s why incorporating may be a bit of an over-
shares. Skate City is not in a position yet to pay load for small startup companies—these may be
dividends—all excess profits of the corporation are better and more comfortably served by the less
used to continue expanding the store’s product formal business structures of the sole proprietor-
lines and add a new service facility at the back of ship or partnership, or, if limited legal liability is an
the store. Even if dividends are never paid, all three overriding concern, by the LLC legal structure.
know that their stock will be worth a good deal if But for many business owners, the ability to
the business is successful. They can cash in their separate out corporate management and oversight
shares when the business sells or when they decide from day-to-day executive decisions, plus the abil-
to sell their shares back to the corporation (or, who ity to treat people who invest in the business
knows, if Skate City goes public someday). Aunt strictly in their capacities as co-owners and not as
Kate, the most conservative of the investment active day-to-day participants, makes the corporate
group, will look to ongoing interest payments as model extremely attractive. The fact that there are
her share in corporate profits, getting her capital legal differences among directors, officers and
back when the principal amount of her loan is shareholders becomes particularly attractive as a
repaid. business grows and people from outside the initial
circle of incorporators become involved in the
business (as investors, lenders or even public
shareholders).
 CHOOSING THE RIGHT LEGAL STRUCTURE FOR YOUR BUSINESS 1/ 17

Example 2: Leila runs a lunch counter business cial controls. Leila and the investment group agree
that provides her both a decent income and an to incorporate the new venture as “Tide Pool Fran-
escape from the cubicled office environment in chising, Inc.” The corporate business structure is a
which she was once unhappily ensconced. Business good fit. Leila will assume a managerial role as a
has been slow, but Leila has a new idea to give the director of the new company, along with Sally and
business more appeal, as well as make it more fun a member of the venture capital firm. The new firm
for her. She changes the decor to reflect a tropical hires two seasoned small business people, one as
motif, installs a salt water aquarium facing the President and one as Treasurer, to run the new
lunch counter, adds coral reef (metal halide) light- franchise operation. Business begins with the origi-
ing and light-reflective wall paneling and renames nal Tide Pool as the first franchise, and Leila gets
the business the “The Tide Pool.” The standard started working for a good salary, plus commis-
lunch counter fare is augmented with a special sion, setting up other franchise locations.
bouillabaisse soup entrée and a selection of organic If the new venture makes a go of it, Leila and
salads and fruit juice drinks, and a seafood and the investment group can either sell their shares
sushi dinner menu is added to cater to the after- back to the corporation at a healthy profit or, if
work crowd. Leila has her hands full, doing most growth is substantial and consistent, take the com-
of the remodeling work herself and preparing the pany public in a few years, selling their stock in the
expanded menu each day. corporation at a sizable profit once a market has
The new operation enjoys great success, and a been established for the corporation’s publicly held
newspaper in the nearby capital city features the shares.
Tide Pool in an article on trendy eating spots, giv-
ing it a rave review. Patronage increases and Leila
e. Raising Money—Corporate Access to Private,
hires a cook and three waiters to help her.
Venture and Public Capital
A local entrepreneur, Sally, who represents an
investment group, asks Leila if she would be inter- Corporations offer a terrific structure for raising
ested in franchising other Tide Pools throughout money from friends, family and business associates.
the country. Sally says an investment group would There is something special about stock ownership,
help develop a franchise plan, plus fund the new even in a small business, that attracts others. The
operation. Leila would be asked to travel to help corporate structure is designed to accommodate
set up franchise operations for the first year, and various capital interests—for example, you can
would have a managerial role and substantial stake issue common, voting shares to the initial owner-
in the new venture. employees, set up a special nonvoting class of
Leila likes the idea—sure, she’ll have to get shares to distribute to key employees as an incen-
back into the work-a-day world, but on her own tive to remain loyal to the business and issue yet
terms, and as a consultant and business owner. another preferred class of stock (one that gives
Besides, she’s feeling overworked running the Tide investors a preference if dividends are declared or
Pool by herself, and it would be a relief to have the the corporation is sold) to venture capitalists will-
new venture take over the business. The invest- ing to help fund future expansion of your corpora-
ment group wants a managerial role in the fran- tion.
chise operation, plus a comprehensive set of finan-
1 / 18 HOW TO FORM YOUR OWN CALIFORNIA CORPORATION

And owners of a small corporation can set their EMPLOYEES OFTEN PREFER TO WORK
sights someday on making a public offering of FOR CORPORATIONS
shares. Even if your corporation never grows large Key employees are more likely to work for a
enough to interest a conventional stock underwrit- business that offers them a chance to profit if
ing company in selling your shares as part of a future growth is strong through the issuance of
large public offering, you may be able to market stock options and stock bonuses—financial
your shares to your customers or to individual incentives that only the corporate form can pro-
investors by placing your company’s small offering vide.
prospectus on the Internet—something that has
now been approved by the SEC (the federal Securi-
ties and Exchange Commission). And the good f. Perpetual Existence
news is that no matter how you market your A corporation is, in some senses, immortal. Unlike
shares, handling your own small direct public a sole proprietorship, partnership or LLC, which
offering (DPO) is much more feasible than it was can terminate upon the death or withdrawal of the
even a few years ago. The reason is that federal and owner or owners, a corporation has an inde-
state securities laws designed to help smaller cor- pendent legal existence that continues despite
porations raise from $1 million to $10 million changeovers in management or ownership. Of
annually by making a limited public offering of course, like any business, a corporation can be
shares have been liberalized. terminated by the mutual consent of the owners for
Incorporated businesses also have an easier time personal or economic reasons and, in some cases,
obtaining loans from banks and other capital in- involuntarily, as in corporate bankruptcy proceed-
vestment firms (assuming a corporation’s balance ings. Nonetheless, the fact that a corporation does
sheet and cash flow statements look good). That’s not depend for its legal existence on the life or
partially due to the increased structural formality of continual ownership interest of a particular indi-
the corporation (discussed above). In addition, vidual does influence creditors, employees and
loans can be made part of a package where the others to participate in the operations of the busi-
bank or investment company obtains special rights ness. This is particularly true as the business grows.
to choose one or more board members, or has
special voting prerogatives in matters of corporate
governance or finance. For example, a lender may
require veto power over expenditures exceeding a
specified amount. The range of capital arrange-
ments possible, even for a small corporation, is
almost limitless, which helps the corporation at-
tract outside investment.
 CHOOSING THE RIGHT LEGAL STRUCTURE FOR YOUR BUSINESS 1/ 19

g. Downsides of Incorporating Corporations in Action Sal Sr. and his son, Sal
Jr., co-own and run Sal’s Mimeo and Copy Center,
Just about everything, including the advantage of
a family business run for over 30 years as a part-
incorporating, comes at a price. And, of course, the
nership with a minimum of legal paperwork. In
answer to the question “How much does it cost?” is
fact, before Sal Jr. joined the partnership firm, Sal
an important factor to weigh when considering
Sr. ran the business as a sole proprietorship. Sal Sr.
whether to incorporate your business. For starters,
is retiring, letting Sal Jr., a business school grad,
a corporation, unlike a sole proprietorship or gen-
take over operational control.
eral partnership, requires the filing of formation
Sal Jr. plans to expand the business by bringing
papers—Articles of Incorporation—with the Cali-
in two business school friends, Ellen and Wilbur,
fornia Secretary of State. The filing cost is $100.
as investors. Sal Jr. will contribute the business and
Corporations must pay an annual franchise tax, as
its assets (including a long-term commercial lease
explained in Chapter 4, Section B1. Ongoing pa-
to its storefront location and goodwill), to the new
perwork is generally not burdensome, but you will
operation. Ellen and Wilbur will invest cash in two
have to hold and document annual meetings of
ways: each will pay cash in return for shares, and
shareholders and directors and keep minutes of
each will also lend money to the business in ex-
important corporate meetings. Creating this paper
change for promissory notes, which will be repaid
trail is a good way to show the IRS, in case of an
by the firm. Interest only will be paid by the busi-
audit (or the courts, in case of a lawsuit which tries
ness on the notes over a five-year period, with
to hold shareholders personally liable), that you
repayment of the principal amount at the end of
have, in fact, respected the corporate form and are
loan term. Ellen and Wilbur hope that in five to
entitled to claim (hide behind) its insulating layer
seven years they can sell their shares back to Sal Jr.
of limited personal liability.
at a greatly increased book value price, or to an-
other company wishing to buy into Sal’s business.
In the meantime, they are content to look to the
You can take care of ongoing corporate paperwork interest payments on their notes as an adequate
at minimal expense by using The Corporate Minutes return on their investment in the business.
Book, by Anthony Mancuso (Nolo). This book Sal Jr. will work as full-time manager of the
contains minute forms to hold corporate meetings business, which will continue to offer traditional
and helps corporations cope with the tax, business, copying services. In addition, the new capital will
legal and financial decisions and transactions that be used to expand into desktop publishing aimed
commonly arise during the life of the business. at both the small business and the student markets.
Sal Jr., seeing that a change in business struc-
The other main disadvantage of incorporating ture is needed to give Ellen and Wilbur a stake in
has traditionally been the $1,000 to $2,000 (or the business, decides to incorporate. The investors
more) you could expect to pay an attorney for like the corporate form, since it limits their per-
creating the initial paperwork. This book, together sonal liability for its debts and other liabilities.
with a little effort on your part, should significantly Incorporating also should give the business a lift in
reduce, if not eliminate, this cost. its lending status at the local bank, which likes the
fact that Sal Jr. is formalizing and expanding his
business operations. Sal Jr. also realizes that form-
1 / 20 HOW TO FORM YOUR OWN CALIFORNIA CORPORATION

ing a corporation will have tax advantages since it B. Comparing Business Entities at a
is one good way to split business income between
the business entity, the investors and himself. Spe-
Glance
cifically, the corporate form allows Sal to leave In the tables that follow, we highlight and compare
profits in the business, part of which will be used general and specific legal and tax traits of each type
to pay back and retire Ellen’s and Wilbur’s promis- of business entity. We include a few technical is-
sory notes. Of course, the corporation will get to sues in our chart to tweak your interest. Should
deduct Sal’s salary and fringe benefits (as well as any of the additional points of comparison seem
those of his employees) as well as the interest paid relevant to your particular business operation, we
on the investors’ notes. In short, the corporate encourage you to talk them over with a legal or tax
form, with its built-in limited liability legal status, professional.
income- and tax-splitting capability and stock
ownership structure, suits Sal’s new business needs
to a T.

DOES IT MAKE SENSE TO INCORPORATE OUT OF STATE?

You have no doubt heard about the possibility of incorporating in another state, most
likely Delaware, where initial and ongoing fees are lower and regulations may be less
restrictive than in California. Does this make sense? For large, publicly held corpora-
tions looking for the most lenient statutes and courts to help them fend off corporate
raiders, perhaps yes. But for a small, privately held corporation pursuing an active
California business, our answer is no—it is usually a very poor idea to incorporate out
of state.
The big reason is that you will have to qualify to do business in California even if
you don’t incorporate here, and this process takes about as much time and costs as
much money as filing incorporation papers in California in the first place. You’ll also
need to appoint a corporate agent to receive official corporate notices in the state
where you incorporate—another expensive pain in the neck.
Incorporating in another state with a lower corporate income tax isn’t likely to
save you any money. If your business makes money from operations in California, even
if it is incorporated in another state, you still must pay California taxes on this income.
Example: Best Greeting Card, Inc., plans to open a Jenner, California, facility to
design and market holiday greeting cards throughout the country. If it incorporates in
Delaware, it must qualify to do business in California and pay California corporate
income tax on its California operations. It also must hire a registered agent to act on its
behalf in Delaware. It decides to incorporate in California instead.
Unless you plan to open up a business with offices and operations in more than
one state and, therefore, have a real reason to compare corporate domiciles, you
should incorporate in your home state—California.
 BUSINESS ENTITY COMPARISON TABLES––LEGAL, FINANCIAL AND TAX CHARACTERISTICS

Sole Proprietorship General Partnership Limited Partnership C Corporation S Corporation LLC

Who owns business? sole proprietor general partners general and limited shareholders same as C corporation members
partners

Personal liability sole proprietor general partners only general partner(s) no personal liability same as C corporation no personal liability
for business debts personally liable personally liable personally liable of shareholders of members

Restrictions on may engage in any may engage in any same as general can’t be formed for same as C corporation same as C corporation;
kind of business lawful business lawful business partnership banking or trust —but excessive passive in California, certain licensed
business and other income (such as from professionals cannot form
special businesses rents, royalties, LLC (lawyers & accountants
interest) can can form RLLP instead)
jeopardize tax status

Restrictions on only one sole minimum two general minimum one general one-person corporations same as C corporation, California allows one-
number of owners proprietor (or spouses) partners partner and one allowed but no more than 75 member LLCs
limited partner shareholders (who must
be US citizens or residents)
permitted

Who makes sole proprietor general partners general partner(s) only board of directors; same as C corporation ordinarily members;
management (not limited partners) number of board members, or managers if
decisions? if less than 3, must at least be manager-managed
equal to number of shareholders LLC

Who may legally sole proprietor any general partner any general partner directors and officers same as C corporation ordinarily any
obligate business? (not limited partners) member; or any
manager if manager-
managed LLC

Effect on business dissolves automatically dissolves automatically same as general no effect same as C corporation most LLC agreements
if an owner dies unless otherwise partnership say that LLC continues
or departs stated in partnership after a member
agreement leaves

Limits on transfer free transferability consent of all general same as general transfer of stock may same as C corporation most LLC agreements
of ownership interests partners usually partnership be limited under —but transfers should be require membership consent
required under securities laws or limited to persons and to admit new member
partnership agreement restrictions in Articles entities that qualify
of Incorporation as S corporation
or bylaws shareholders
CHOOSING THE RIGHT LEGAL STRUCTURE FOR YOUR BUSINESS

Amount of minimal minimal; partnership startup filing required; startup filing required; same as C corporation startup filing required;
organizational agreement partnership agreement bylaws recom- operating agreement
paperwork and recommended recommended mended; annual recommended;
ongoing legal meetings of share- meetings not
formalities holders required normally required
1/ 21
 BUSINESS ENTITY COMPARISON TABLES––LEGAL, FINANCIAL AND TAX CHARACTERISTICS
1 / 22

Sole Proprietorship General Partnership Limited Partnership C Corporation S Corporation LLC

Source of sole proprietor general partners general and limited initial shareholders same as C corporation in California,
startup funds partners (in California, cannot —but cannot issue members can invest
invest with promise different classes of by promising to perform
to perform services or stock with different services or contribute
to pay later (unless note financial provisions cash later
is adequately secured))

How business sole proprietor’s capital contributions investment capital flexible; outside generally same as capital contributions
usually obtains contributions; working from general partners; from limited partners; investors (may offer C corporation—but from members; bank
capital, if needed capital loans backed business loans from bank loans backed by various classes of can’t have foreign loans backed by
by personal assets banks backed by general partners’ shares); bank loans partnership or corpo- members’ personal
of sole proprietor partnership and personal assets backed by share- rate shareholders; assets (if LLC has
personal assets holders’ personal must limit number of insufficient credit
assets (if corporation shareholders to 75; history)
has insufficient credit can’t offer different
history); may go classes of stock to
public if needs investors except for
substantial infusion shares with different or
of cash no voting rights

Ease of conversion to may change form at may change to may change to may change to generally same as may change to
another business form will; legal paperwork limited partnership, corporation or LLC; S corporation by C corporation— general or limited
involved corporation or LLC; legal paperwork filing simple tax may terminate S tax partnership or
legal paperwork involved election; change to status to become corporation; legal
involved LLC can involve tax C corporation but paperwork involved
cost and legal cannot reelect
complexity S status for five
years after

Is establishment or generally not generally not issuance or transfer of issuance or transfer same as C corporation generally not, if all
sale of ownership limited partnership of stock subject to members are active
interests subject to interests is subject state and federal in the business
federal and state to state and federal securities laws
securities laws? laws

Who generally finds owner who wants joint owners who are joint owners who owners who want the built-in owners who want the built-in owners who want a
HOW TO FORM YOUR OWN CALIFORNIA CORPORATION

this the best way legal and managerial not concerned with want partnership tax formality and capital incentives formality and capital incentives less formal legal
to do business? autonomy personal liability for treatment and some of the corporate form of the corporate form structure and automatic
business debts nonmanaging and the ability to with the pass-through pass-through of profits
investors; general split business income of corporate profits to (plus limited liability)
partners must be (plus limited liability) individual owners (plus
willing to assume limited liability)
personal liability for
business debts
 BUSINESS ENTITY COMPARISON TABLES––LEGAL, FINANCIAL AND TAX CHARACTERISTICS

Sole Proprietorship General Partnership Limited Partnership C Corporation S Corporation LLC

How business profits individual tax rates individual tax rates individual tax rates split up and taxed at individual tax rates individual tax rates
are taxed of sole proprietor of general partners of general and corporate rates and of shareholders; $800 of members, unless
limited partners individual tax rates minimum tax for second LLC files IRS Form
of shareholders; $800 and subsequent tax 8832 and elects
minimum tax for second years corporate taxation;
and subsequent tax $800 minimum tax
years each year plus addi-
tional fees if gross
income is $250,000
or more

Tax-deductible fringe sole proprietor may general partners and same as general full tax-deductible same as general can get benefits
benefits available set up IRA or Keogh other employees may partnership fringe benefits for partnership, but associated with sole
to owners who work retirement plan; may set up IRA or Keogh employee-shareholders; employee-shareholders proprietorship,
in business deduct all or a portion of plans; may deduct all may fully deduct owning 2% or more partnership or
medical insurance or a portion of medical medical insurance of stock are restricted corporation, depend-
premiums insurance premiums premiums and from corporate fringe ing on tax treatment
reimburse employees’ benefits under of LLC
medical expenses partnership rules

Automatic tax status yes yes yes, upon filing yes, upon filing no; must meet yes, unless LLC wishes
certificate of limited Articles of requirements and to elect corporate
partnership with state Incorporation with file tax election form tax treatment (by filing
filing office state corporate filing with IRS (and IRS Form 8832)
office sometimes state);
revoked or terminated
tax status cannot
be re-elected for
five years

Deductibility of owner may use losses partners may use same as general corporation may shareholders may follows sole proprietor-
business losses to deduct other losses to deduct other partnership, but deduct business losses deduct share of ship, partnership or
income on individual income on individual limited partners may (shareholders may not corporate losses on corporate loss rules
tax returns (subject to tax returns if “at risk” only deduct deduct losses) individual tax returns, depending on tax
active-passive for loss or debt “nonrecourse debts” but must comply with status of LLC
investment loss rules (for which general special limitations
that apply to partners are not
all businesses) specifically liable)
CHOOSING THE RIGHT LEGAL STRUCTURE FOR YOUR BUSINESS
1/ 23

■
Exploring the Variety of Random
Documents with Different Content
bring your mind to take me at all ... only if you’d turn it over in your
mind....”
Margaret started at that, as if a shot had been fired off, close to her
ear. She turned red. At last she understood what he was driving at.
Then she grew white, and dizzy....
But her mind flew over everything! her home gone, and she left,
lonely and desolate, without a soul she cared for, to be looking after
and working for.
She looked up at Heffernan on the car, and the sight of him, with his
eyes fixed on her as if his life depended on what answer she would
make ... and above all the useless foot hanging loose as he sat
balanced there, helpless, just as she had settled him ... these things
melted Margaret’s heart.
“You’ll ... you’ll think of it, maybe!” said Mickey, anxiously.
“Think!” said Margaret; “and what else do I be doing, only think!”
and she laughed even as she went on: “But it’s an ould saying I
often heard, ‘Thinking’s poor wit!’” and she ended with another
laugh, that had a sob in it, too.
“Then you’ll agree?” said Heffernan.
“At your request!” said Margaret.
There now is the whole account of how Heffernan got a wife at long
last, to bring into the Furry Farm. Of course there was talk about it.
Some said Mickey was just caught on the rebound, and took Marg
after losing the other girls.
“I b’lieve meself,” said Dan to Kitty, “it’s what Mickey couldn’t find it
in his heart to see them two calves leaving the Furry Farm; and
neither did he wish to have to pay Marg for them! Wasn’t it cheaper
on him marry her and have them for nothing? let alone a girl like her
to take care of them and him and all he has!”
“That’s no right way to be talking!” said Kitty; “won’t they both be
the better of one another? and if they don’t live happy, that you and
I may!”
 CHAPTER VII
AN AMERICAN VISITOR

The talk about Heffernan being married at last had all died away, and
Marg was well settled in at the Furry Farm, busy and contented,
looking after the house and her old man there, when another affair
arose at Ardenoo that was the cause of a great deal of
unpleasantness and worry.
A stranger from America turned up there; at least, that’s what he
said he was, and no one for long enough knew anything different.
But it was really Patsy Ratigan, no less, that had left Ardenoo years
upon years before, and in too great a hurry to leave any message to
say why or where he was going. Now he was back, and feeling none
too sure what kind of welcome would be waiting for him. So he
thought, when he got there, the day after he landed from America,
that he’d keep himself quiet, till he saw how the thing would go on.
The place looked to Patsy wider and more silent than ever; the
people fewer, and any he met, either they didn’t know him, or he
couldn’t put a name upon them. That was just what he wanted,
really; and still, he thought it very strange that everything was so
changed from his recollection of it! He forgot that the world and all it
contains must always be moving. If you come back to a place you
left, even a very short time before, you’ll always find something not
the same as it was. If it’s only a kettle that you leave swinging over
the fire, while you run out for a few sprigs to hurry it to boil, it won’t
be the same when you come in again. The water will be hotter or
colder; the fire will be stronger or maybe gone black out.
Patsy should have bethought himself of the length of time he had
been away, and then he wouldn’t have been so put out, to find
things different. And, indeed, whatever change he saw in Ardenoo,
there was more upon himself! Hard-set any of the neighbours would
have been, even the comrade-boys that knew him best in the old
wild days, to make out the thin rake of a fellow, ragged and light,
that he used to be, in this big, stout, heavy-looking man. And he
dressed, moreover, in black glossy clothes and a slouch hat; and
with a gold watch-chain and ring upon him.
Grand indeed Patsy looked! And still, as well-appearing as he was,
sitting resting himself by the side of the road, he was very uneasy in
his mind. For he was thinking that he was on the last of his cigars,
and wondering in his own mind how he was going to knock out
another smoke, let alone any other little necessary comfort he might
want. Very downhearted he was, and was feeling as lonesome as a
milestone without a number upon it, when somebody else came in
sight, walking along very brisk, although with a stick.
“I should know that person, anyway!” said Ratigan to himself; “she
seems familiar.... Why, if it isn’t Dark Moll Reilly! And she with the
ould shawl ... and the fiddle under it, on her back ... and all the ould
bags hanging round her, to gather whatever she’s given.... She’s apt
to have all the news of the place ... if there is any to know! If I can
get chatting with her ... and she’ll not see who I am....”
So when she got near where he was, he called out to her:
“Hi! you there! my good woman! where are you off to?”
At the words, Moll stopped short, and began poking with the stick,
as if to feel her way. It was as if hearing the voice had put a “blind”
upon poor Moll; like the bit of board, or old cloth, you’ll see
sometimes fastened across the face of a beast that is a rogue, to
keep it from straying out of its own pasture.
“I ask yer pardon, sir,” she said, “but sure, I’m dark, you perceive!
and couldn’t tell, no more nor the dead, where y’are or who y’are!”
With that, she dropped a curtsey, with her back to Ratigan, by the
way of that she was so confused.
“Here!” said Ratigan, getting up, and catching her by the hand,
“come over here, and sit down, and we can have a bit of
discourse.... Just come here I am, from America, only landed
yesterday....”
“From America! do ye tell me that, sir!” said Moll; “and are well
acquainted with these parts, are you, sir?”
“Never set foot here, till now!” said Ratigan; “I just took me grip in
me hand, and started off on this trip. And some friends of mine
across the herring-pond were most anxious I should visit Ardenoo,
and look up some old connections of theirs, and bring them all the
news.... It’s when you’re away awhile from a place that you’ll be
feeling queer and lonesome for them you left behind there!”
Ratigan was always ready for any kind of play-acting, and he could
tell lies as easy as a dog can trot. He had made up this story, while
Moll was groaning and letting herself down upon the bank beside
him, very cautiously.
“Blind, are you? that’s a hard case!” he went on; “but I dare say
you’ll be able to give me the information I require. I have all the
names I was to ask after, wrote down here in my pocket-book,” he
said, pretending to take one out of his breast, but all he had there
was an old purse and it empty. “D ... D ... Dempsey ... ay, that’s the
name of one ... queer names, the most of them are! Now, what
about them?”
“Och, the Dempseys!” said Moll; “why, the sorra one of that family is
left in the old place! by that name, at least. The last of them, little
Kitty, took and married a boy ... Dan Grennan it is ... and he after
coming home from America.... You never chanced to meet up wid a
boy of the name, out there, sir?”
“Never heard it, till this minute!” he said.
“Well, Grennan came home, and just was in time to get Kitty, that
was very near marrit upon old Heffernan of the Furry Farm.... And in
luck Dan was, too, to get his head in there at Dempsey’s ... and a
nice little girl for a wife he got, when he did cut his good days short,
marrying at all!”
“Married young, did he?” said Ratigan.
“Ay, did he; and a very decent, quiet man he is, and always was; so
that Kitty didn’t get the worst of it! They’re not to say too out-of-the-
way rich; for whatever little money Dan brought home with him out
of America didn’t stand them long. But God was good to Kitty; is
sending her the full up of the house of childher; and nineteen
turkeys she has, this year, let alone two pigs, and has the grass of
her cow, for doing the herding for ould Heffernan....”
“Heffernan of the Furry Farm?” said Ratigan; “that’s another I was to
ask about.... But from the description I was given of him, he should
be a great age by now! Or is he to the good at all?”
“Getting young again he is,” said Moll, “ever since he has Marg there
to be minding him and the place....”
“Marg! what Marg is that?” said Ratigan, a bit impatient.
“Why, who but ould Molally’s dauther!” said Moll; “she was none too
young, but even so, Mickey might be her father. But what won’t a
girl do, to get where there’s money! And he wid a head upon him as
grey as a badger!”
Now the reason Moll spoke like that was, she had a spleen in for
Marg, because she thought it was she herself had made up that fine
match for Marg, with old Heffernan, and that in consequence she
ought to be as free to go in and out at the Furry Farm as she used
to be at Molally’s, before Marg had quitted it, to become Mrs.
Heffernan. But Mickey didn’t like those ways, of having such as Moll
too frequent visitors in his house; and Marg never went against him.
“As grey as a badger, is he?” says Ratigan; “well, sure, there’s some
says, the bracketty[14] bird is the purtiest of the clutch!”
“Grey; and as lame as a crutch, to the back of that!” says Moll; “a
cant off the side-car that caused it. But Mickey was always weak
about the legs; born on a fair-day, as the saying is, with the two
knees of him boxing for sugar-sticks!”
“Lame of a leg, and grey in the head!” said Ratigan; “that’s a fancy
man for a girl to go take!”
“Marg was none too young herself, though fresh and active still,”
said Moll; “and when all fruit fails, welcome haws! She wanted some
one. But if you have any wish for more information than a poor ould
blind body can give you, sir, can’t you go give them a call at the
Furry Farm? They do be mostly always within.”
“Well, maybe I would do that,” said Ratigan; though not a notion he
had of doing any such thing.
So Moll gave him all the directions for finding his way, which Ratigan
knew as well as she did; and then she went off on her own business,
leaving him sitting still by the roadside.
“Divil may care what way you go, for I don’t!” said Moll to herself,
when she got a piece off from Ratigan; “to say he was too mean
even to offer me the price of a pint, and I as dry as a limekiln, telling
him all the news!... Who is he now, at all? For I can’t believe that
he’s a stranger in these parts. He was too ready with his talk ... and
too anxious for news....”
She went on again, another little bit, thinking hard. Then, “I have it
now!” she thought, laughing to herself; “it’s that bright boyo, Patsy
Ratigan, as sure as God made little apples! And the great big size of
him now! The broad red face of him! and he the full of his skin;
instead of the way he was, so thin that there wasn’t as much fat
upon him as would grease a gimlet! And the thick back to his head!
and used to have a long neck upon him, like a distracted gander
peeping down a pump-hole to look for poreens!”[15]
Moll, as I said, had better use of her eyes than the people thought.
Still, she never would have known Ratigan again, only that her ears
were so sharp. It was his voice she knew.
“And why did he tell that story? It’s terrible to be a liar!” thought
Moll; “but sure, he must have some good reason.... Let you say
nothing, Moll Reilly,” she went on to herself, “until you see how the
cat jumps....”
Now it was true enough, what Moll had said to Ratigan about the
Heffernans not often going from about their own place. Mickey
wasn’t able for much travelling, on account of the bad leg; and Marg
didn’t feel it right to leave him. Besides, she had always been one to
keep herself to herself.
The place she went most to was Grennan’s. And so it happened
some time after Ratigan coming back, though no word of that had
reached the Furry Farm, that Marg said one evening to Mickey, “I
have an occasion for going over to Grennan’s ... some eggs that
Kitty is gathering for me ... and now, I have the churning done, and
the butter made and all cleared away. So I’ll bring a sup of the fresh
buttermilk with me, for it’s always welcome in a house like theirs;
and it the Hallow Eve and all....”
Dan Grennan had got in on Dempsey’s farm when he married Kitty.
But it was a small holding, and not worth much, by the time all the
older girls had been fortuned off it. And though Dan had brought
some money home with him out of America, it didn’t stand long,
between rent that was owing, and then old Mrs. Dempsey having to
be buried, when her time came; and of course Dan wanted to do the
decent thing by Kitty’s mother. So when all that was attended to,
there wasn’t much coming in, and Dan was glad enough to
undertake the herding of the Furry Farm for Heffernan. It lay
convenient to their own little place, too.
Marg had another reason for wanting to go to Grennan’s that same
evening, but she didn’t want Mickey to know anything about it just
then.
“Well, go, in the name of God!” said Heffernan, to her standing
ready to start; “and as you are going, you might as well throw an
eye over that young stock that I have there beyant. Dan is good,
and very good; but it’s the master’s eye that puts meat upon his
beasts, and I’m not able this len’th of time to be going across fields
and rough ways....”
“Whatever you say yourself, I’ll do,” said his wife.
Marg never had any wish for going outside of her own work or
interfering with what belongs to men. But she would not disagree
with any word Mickey said. To give him his due, neither did he
interfere with her. He was only too contented and happy to have her
there, kind and good and peaceable; instead of Julia that had been
such a heart-scald to him for so long, that he didn’t know himself to
be the same, since he got shut of her, and had Marg to look to for
everything.
She saw him settled comfortably by the fire, with his pipe for
company, before she set off, with her can swinging by her side; and,
moreover, a brave big lump of butter fresh off the churn, swimming
in the milk. She was bringing that a present to Kitty, for Marg was
very nice and free-handed in her ways. But there was no use in
speaking of the butter to Mickey. That might only bring on an
argument. And a woman has a good right to her churn and all that
comes out of it. If she chooses to give any of it away, why not? And
if Mickey knew nothing about it, he couldn’t object to it. Supposing
he had any claim to the butter, wouldn’t he be all the better of its
being given in charity and kindness, and he getting so far on in life?
And they would never miss it, no, nor twice as much.
Marg was counted a very lucky hand over a dairy, and always had
good yield from the milk. Near though she was to the Furry Hills,
that were well known to be full up of fairies, she never got any
annoyance from them, such as the Good People to “milk the tether”
on her, or to take away the value of the milk from her. But of course,
that mightn’t be luck, so much as that Marg knew what she was
about. She was very particular not to give away anything to a
stranger that might come borrowing from her on May Day; a mistake
that has cost many a woman the loss of a fine cow. And she never
forgot to throw a grain of salt into the churn, before she began to
stir the dash. And as soon as ever she had the butter taken off the
churn, she took care to stick the first bit against the wall, for the
fairies. People can’t be too careful in such things, especially if they
live anyway near such a place as the Furry Hills.
It was from those hills that Heffernan’s place had got its name of the
Furry Farm. The hills rose up, across his land, steep and sharp, like
the fin of a fish. High they were, and grown over with furze and
ferns and brambles and old thorn bushes, that of course no one
would ask to disturb. But anyway, you could never run a plough up
such hills as they were, so there was no occasion to interfere with
anything that grew on them.
In one part of the Furry Hills there was a gap, like a cleft, and the
old people said it had been made there by a fairy sword. A narrow
road, no more than a boreen, ran through that cleft; and hardly any
one used it, though it was handy enough for many purposes. But
there was great talk of fairies being thereabouts, and that fairy
music could be heard there, and so on. It might be, too, that the old
boreen was deserted because there was another road made, better
and even handier for cattle that would be going to fairs at Ardenoo
or Balloch. But even before that new road was there, the people
would never go through the cleft by themselves or late at night; and
it was used as seldom as possible. Except for this: not very far
distant there lay a holy well, that people would go to at certain
times. But Marg could get across the hills to Grennan’s without
passing near the cleft at all.
She was supple and strong still, because she gave herself no time to
get stiff in the limbs, only always kept going about something or
other. So now it was no trouble to her to cross the hills, and strike
off through the fields to Grennan’s.
The instant minute after she saw Kitty and they had passed the time
of day with one another, “Any news yet?” asked Marg.
“The sorra news!” said Kitty; “me heart’s broke, so it is, fretting, and
Dan the same. And he tells me, he heard below there at Melia’s, that
there’s more cattle gone, the same way, as if the earth had opened
and swallowed them. No account of them to be got, high, low, or
holy! And not a night, since Dan missed that bullock out of the Big
Field here, but there’s a rosary said in this house at bedtime, for it to
be got back. The Lord forgive them that gets on with such work!”
“Did you ask St. Anthony?” said Marg; “he’s great, for things that are
lost. I remember to hear tell of an old woman that lost her rosary
once, and she having a great regard for it. So she used to ask St.
Anthony; and it was a twelvemonth after, she went to turn up the
mattress of her bed; and there was the rosary!”
“Look at that, now!” said Kitty; “well, sure, we might try him!”
“You could do no more, then,” said Marg; “but ... there’s the fair-day
of Balloch coming round ... and himself might take the notion of
selling there some of the cattle; and then he’ll have to be told about
the bullock being lost!”
“I suppose that will have to be!” said Kitty, and she ready to cry; “it
can’t be kept from him for ever! It was God that done it, that his leg
got too bad for him to be able to go round the place, to see the
stock and count them himself, this while back!”
Kitty meant no harm to Mickey by that saying; and Marg didn’t think
it of her.
“What way is he now?” Kitty went on; “it’s a long time since he took
the light from this door.”
“He’s well enough,” said Marg, “barrin’ for the leg, that has been
giving him great punishment this good while. Only for that, and that
I didn’t wish to be putting any other annoyance upon him, I would
have told him about the bullock being lost before now.”
“Wait another little weeny while!” said Kitty, coaxingly; “what would
we do at all, if he fell out with Dan?”
“Sure don’t I know that well! and have no wish in life to be making
trouble,” said Marg, “carrying stories and telling tales ... only ... you
see, he depends on me to bring him the report....”
She sat down then and began watching the children, while Kitty
hung down the kettle to wet a grain of tea.
“Ora, Kitty,” said Marg, jumping up, “mind the child! the baby will be
killed, if you don’t take heed! Little Mag isn’t able to be lifting him....”
The little girl at Grennan’s was called after Marg herself, and Kitty
used to let her have the baby on the floor to nurse him.
“Och, never fear for them!” said Kitty; “here! I’ll put the two of them
outside the door with a pinch of sugar ... there now, Maggie; be
good and don’t be annoying me and I busy with Mrs. Heffernan; and
take care of the baby....”
Kitty never was one to have much talk about her babies, and in
particular when Marg that had none was by. But Kitty was right, to
let them mind themselves, and learn to do that, by being left alone.
If you’re always watching a child, and warning it about falling and so
on, it will never learn to be handy with the little feet or anyway
independent.
Kitty settled the children outside, then, and that left the kitchen
quiet, so that she could give Marg the cup of tea in peace and quiet,
and have a chat.
“I suppose,” said Kitty, while she was cooling a sup of her tea in the
saucer, “I suppose you heard tell of the American that’s beyant in
Clough-na-Rinka?”
“How would I hear,” said Marg; “that never goes anywhere, except
to the chapel, from one year’s end to the other!”
“I wonder at that!” said Kitty, “but there he is, this len’th of time,
stopping with the Widdah Grogan; and has her heart-scalded, by
what I hear, with his grand, particular ways! Wanting beefsteaks and
pie for his dinner, no less! as if he was a lord. And as for the talk he
does have out of him...!”
“Americans does mostly always be that way,” says Marg; “quare
notions they have, there beyant....”
“And for all that,” said Kitty, “in ways, you’d think him real innocent;
don’t ask the use of a bedroom at all, so he’s no trouble that way ...
go away now, Mags! and don’t be annoying me....”
Marg watched, while Kitty hunted the little girl again out of the
kitchen, to where she had the baby laid in a turf-basket; and Marg
wondered to herself, how Kitty could bear to have them out of her
sight. But she said nothing about that, only, “Has no bed! that’s a
quare way to be going on!”
“It appears,” Kitty explained, “that this is a man that got out of his
health there in America, and was ordered a voyage across the salt
water; and he knew people out there, that spoke to him of this
place, and how quiet and healthy you could be here. And above all
things, he says, he was warned never to sleep under a roof, if he
could avoid doing so. Well, you know that little canoe of a place Mrs.
Melia has, squeezed on at the back of her house? she keeps a bit of
hay in it for the pony, and it’s there the American asked to be let lie
down at night; says he has to have the fresh air. He has a bad foot,
too, the crature! the size of a pot it is with all the old rags and
bandages he keeps on it. Oh, very lame he is, with it, and says he
always was, from a child, and had a fortune spent on it, but can find
no cure. So there’s the way it is with him; he appears to have all the
money any one could require. Stands treat, regular, to the boys that
gather in to hear his stories, at Melia’s, and tells the shop-boy to
score all up to him. I’d as soon he’d let that part of it alone!” said
Kitty; “Dan was a bit too late coming home, a few nights ago, and
then....”
Kitty sighed.
“It’s a seldom thing for that to occur with Dan!” said Margaret.
“Oh, ay! there’s not much to fault in Dan!” said his wife; “only a
body gets a bit anxious, for fraid he might get the fashion of being
late ... maybe begin stravaguing the roads....”
“Well, if the American is the way you say, with the bad foot, they’ll
not go far, if they want his company!”
“Ay! that’s only God’s truth! and now speaking of a lame leg and the
like, what remedy are you trying for Mickey?”
“Nothing; for there seems no good in anything I can apply to give
him ease!” said Marg.
“Did you think of getting the water from the Holy Well?” said Kitty.
“I thought of that, over and over,” said Marg; “but I never got to try
it for him yet. Only this evening, and I coming along here, I was
intended to bring home a sup of the blessed water in the buttermilk
can. And so I will, too, for I can get it easily, on the way back. So as
soon as you can have the can readied out, I’ll be shortening the way
home,” says Marg.
“I’ll not ask to delay you, so,” said Kitty, “and it Hallow Eve and all;
and the daylight beginning to fade. And cold it’s turning, too!”
“I’ll not heed that!” said Marg; and away she went.
There was a touch of frost in the air; the grass felt crisp underfoot.
Dusk was gathering about the fields and the shadows began to lie
very thick and dark under the trees and hedges. Margaret even
shivered a little, as she hurried on. But that might be because all
these lonesome signs of the night seemed worse, after leaving
Kitty’s kitchen, gay and full up of the little chatter and laughing of
the children, the baby in Kitty’s arm, and little Maggie standing
beside her mother, to watch Mrs. Heffernan disappearing into the
twilight. Marg loved to go to Grennan’s, and see the children, and
maybe now and then coax one of them to sit on her knee and let
her play with it. All the same, she was sighing now, to think how
silent and sober her own house was, compared to Grennan’s.
She was thinking, going along, of the sound of the little voices there;
“like music!” she said to herself. And with that word, she started. For,
whether it was some echo carried on the wind from Grennan’s, or
whatever it might have been, that very moment she thought she
heard some sound of music coming out of the darkness to her as
she was passing through the Big Pasture-Field.
“What can it be? Sure, I often heard tell of fairy music, and how that
some can hear noises, like piannas and bugles, if they put their ear
to the ground, close by a rath. But that can only be foolishness! I’ll
not let the like of that talk stop me now, from going to the Holy
Well, if there’s a cure, or even some small relief to be got there, for
that poor leg of Mickey’s!”
So on she went, by the Furry Hills, until she got to the Holy Well,
close under the Cleft of the Fairy Sword.
“It’s well the moon is up,” thought Marg, “the way I’ll have no delay
in filling the can!”
The Holy Well lay in a corner, where the Big Pasture-Field sloped
down to a hollow. Many’s the time Marg had seen it, of a Saint’s Day,
with the lone thorn that leans out over the water all dressed up with
bits of ribbon, and even rags, that the people would tie there, when
there would be a Pattern at the Holy Well. And, besides, the girls
had a great fashion of going there on Hallow Eve, to try old charms
and “pistrogues,” “so that they might get to see whatever boy they
were to marry.”
Well, this time, when Marg came in sight of the Well, wasn’t it all hid
from her! ay and even the hollow where it lay was covered over with
white columns of mist, that rose, and wavered, moving this way and
that way as the night wind blew. It was steam from the Well, for the
water there is warm. Not hot enough to make tea and boil eggs, as
Mickey used to tell the people, but just nicely warm. And always in
frost or cold, you could see the steam rising from it.
But as long as Marg had been at the Furry Farm, she had never
chanced to see it like that. The Well lay a piece off from where she
had business. And Marg never had been one to go stravaguing the
fields for pleasure; and she wasn’t going to begin that fashion now,
and she married.
Marg began to go slower, and to feel a bit fearful in herself. It was
Hallow Eve, when, as everybody knows, the dead can come back to
visit those they love. And here was she, all alone among the wide,
silent fields, close to the Holy Well, with the moonlight white upon
everything. And not a sound, only the whisper, whisper, of the
stream that ran from the Well; and the soft, white clouds of steam,
dancing and beckoning like strange beings that had life, this way
and that way across the water....
“I’ll make no delay, for fraid I’d take fright altogether here!” she said
to herself; and she hurried forward to the brink of the Well, and
dipped in her can.
What did she see, when she straightened herself up again, but a
Face, at the other side of the Well, and it staring, staring at her.
Her heart stopped beating; then “Patsy!” she said, in a choked kind
of voice....
At the word, a puff of steam blew between her and the Face, and
when she was able to see clearly again, it was gone!
How Marg got home that night, she never knew. All of a tremble she
was; so much so, that her two shoes were full up with the water
that kept spilling out of the can, she was walking so unsteadily. But
still she kept on as fast as she could, and never let go her hold of
the water from the Holy Well, till she had it landed in upon the
kitchen floor. And proud she was to find herself there! and to be able
to shut the door, between herself and the black shadows that
seemed to rise out of the night, and to have been chasing and
threatening upon her heels, once she left the Holy Well, all the way
across the dark, lonesome fields.
But what was worse on her was, that the old fret seemed to be
wakening up in her heart; a sharp kind of pain, after all those years,
at sight of the boy that had treated her so queerly. She couldn’t tell
why! but there it was; and there’s others the same, that will always
have a soft corner in their hearts for any one they were young with;
let alone that they’d have a wish for, as poor Marg had for Ratigan.
And, “Was it Patsy that was in it?” she kept asking herself; “or could
it be that it was only some Appearance for Death ... or a Visit ... the
Lord be between us and harm, I pray!”
But now she was inside her own house, and it all seemed full of light
that was very bright after the dark night outside.... There was a
great look of comfort upon it. There were rows and rows of good
pewter plates and dishes and noggins, all shining and twinkling in
the blazing firelight, she had them so well scoured and polished up.
And the place was hung round with the fine sides of bacon that she
had cured; hanks of yarn she had spun, and stockings she had
knitted, in the chimney-corner, above her spinning-wheel of black
oak. And Mickey himself was sitting there, very much as she had left
him, in his big chair, close to the turf-box, the way he had it
convenient to throw on a few sods when they were needed to keep
the big pot boiling. He had his specs upon his nose and his pipe
ready filled, and the newspaper on his knee, reading in it now and
again. Margaret never forgot to bring that to him, every week, from
Melia’s shop.
“You’re later than I thought,” said Heffernan to her.
“There’s what has me delayed,” said Margaret. “Kitty Grennan that
bid me try the water from the Holy Well on that leg of yours ...” and
she showed him what she had in the can.
“And is that what you were at!” said Mickey, looking as proud as
Punch; “getting the blessed water to beethe me leg. Well, sure, you
can’t do worse than try it! But I was getting really unaisy in me
mind, for fear of something having happened you ... and a body
feels a thing of the sort worse, if they’re helpless the way I am!”
“The sorra ha’porth is wrong with me!” said Marg.
And neither there was. And, of course, there was no occasion to tell
Heffernan about what had happened at the Holy Well. What could
she say? If it was an Appearance, well and good! there was no more
to be said. But if it was Ratigan...! and how could it be? How could
he be there, trying to play off some trick on her? Wouldn’t it be best
to say nothing?
How could it be Patsy? wasn’t he married in America, ay, long
enough before she was herself! And never had thought it worth his
while to send her one line, either to ask for news of herself, or to tell
her what he was doing with himself, out there. Just by chance, she
had heard of his marriage. And, in troth, only for hearing that, she
might be Marg Molally yet. You never can tell what small little word
here or there will get you to do a certain thing or to leave it alone.
Whatever came or went, then or at any other time, Marg never
failed in anything that could be done for Mickey. She was very fearful
about going to the Well, after seeing what she saw there, that first
night. And it should be done after dark, too; still, she persevered.
“It must be continued on,” said Dark Moll, that had a good
knowledge of such things, so that Marg thought well of consulting
her, one day she met her on the road; “you must go on wid it. And
the water must be got by one that has a wish for whoever has need
of it; and that person must go by themselves ... if the Holy Well is to
do any good, that is!”
There wasn’t really one, on the face of this earth, to care one straw
about poor Mickey, only his wife. And Marg ... sure, it was more
compassion than anything else she felt for him, seeing how old and
lonely and helpless he was. Though, indeed, he was kind in his own
way to her, and showed great confidence and respect for her and all
she did, and she felt thankful to him, over and over, for that, and for
the good home he put her over. That’s a thing that is generally a
satisfaction to a woman, and it was to Margaret.
But with others, Mickey Heffernan was no great favourite. He had no
agreeable ways with him. He would do a kind turn for another, as
soon as the next one; but then again he had a fashion of taking the
good out of whatever he did that-a-way; the same as the cow that
fills the can, and then kicks it over. So it came about that there was
no one to go for the water for his leg but Marg herself. She went to
the Holy Well every evening of her life then. Sometimes it would be
fairly early, just duskish, and sometimes it would be late enough
before she would be ready to start off, but she never failed to go.
This was the way with Marg, and as nothing strange occurred for
some time, she was beginning to think that she had only imagined
to see Ratigan that Hallow Eve at the Holy Well, when she got
another great fright there. Bad as the first was, this was worse, so
much so, that she nigh-hand fell out of her standing.
She was making her way along by the Furry Hills, when suddenly
there was the greatest stamping and rustling and big clattering as if
cart-loads of stones were being thrown down the side of the Fairy
Cleft, and heavy sounds of grunting and breathing and snorting. And
then she thought there was something like a figure of a man, going
through the dusk, towards the Cleft, with a stick in his hand.
Margaret stopped and tried to think what it could mean.
“It can’t be Dan Grennan!” she said to herself; “for what would he
be doing here at this hour? God knows but it might be some villyans
of tinkers.... But whatever it is, I’ll have to find out who is there,
making so free, and coming in here upon our place!”
So, though she was as frightened a woman as could be, she gave a
great shout, thinking by that to frighten away whoever it might be.
It did frighten the man that was there! her voice lifted him off his
feet, he was so startled, the fields being generally so silent at that
hour.
He jumped up, and then he stopped; and the snorting and trampling
feet stopped, too. Then the figure, that Marg could just make out
against the pale yellow of the evening sky, where it was above the
hill ... the figure seemed to Marg to turn about, and then she could
hear it coming, coming quickly down the hill towards her.
She was frightened in earnest then. Her first thought was, that she’d
run away. But her knees gave under her. So she crouched down
close to the damp ground, thinking to escape being seen. And she
had herself dead and buried, in her own mind that is, when the man
came up, and stood still beside her.
“So you don’t know me, Marg Molally!” he said, in a very sad, mild
voice; “you don’t remember poor Patsy now! Nor couldn’t, I
suppose! Mrs. Heffernan is too big and grand a person now, to have
any recollection of the ould times!”
And with that, he turned on the light of a lantern he was carrying
under his coat; and Marg saw plainly who it was.
“In the name of God, Patsy Ratigan, it’s not you!” she said.
“Who else?” said he; “is it that I’m that changed a man, that you
don’t know me? But small blame to me to be changed! after all the
want and hardships I’m after putting over me! And small blame to
you, either, not to know me. It’s another story with you,” he says,
“the same as ever you look! not a day older than you were, the day
you ... well, sure, it’s bad to be raking up old sores! But if it was you
that had been away, and came back...! No matter what change there
was upon you, I’d know your skin upon a bush, so I would!”
Marg couldn’t but listen to him, for she was too much surprised to
do anything else. Puzzled too she was. For she was thinking of the
Face she had seen at the Well; and she had known that to be Patsy
Ratigan. And now here was a big, red-faced, puffy-looking man,
saying that he was Ratigan!
God knows, there’s many a thing remains a puzzle! not to speak of
what a body might chance upon, of a Hallow Eve.
But she got no time then to think this out, for of all the romancing
that ever was heard, and Ratigan reeled it out of him then.
“Little I thought, that when we’d meet, you would have forgotten
me!” he said; “but sure enough, there’s the way...!
“The full pig in the sty
Thinks little of the empty one passing by!
“And I working and slaving off there in America, and never thinking
when I came back, that I’d find meself forgot by every one, and you
marrit!”
“Marrit!” said Marg; “and what about yourself? and the widdah with
her shop ... and the six children?”
“Widdah? What widdah?” said Ratigan; “who was it at all that put
round that story upon me? I only wish I had him here!” says he,
very courageous, “and I’d soon show him the differ! And you to
believe that of me! I couldn’t have believed it of you ... only for
seeing it now! All I wonder is,” he went on, very bitter, “that it wasn’t
ten widdahs! and sixty children that they had laid out for me! And I
that was thinking of no one, only the girl at Ardenoo that I used to
be helping of an evening with the bullocks ... and of the welcome
home she would have for me, whenever I’d come back!”
Phwat! what he had in his mind was, that he had had enough of the
hard work in America, and the hurry and noise there, once the
widdah died, the crature. And her children took and threw Ratigan
out of that; and it appeared then that they owned the shop and
money, once the widdah was gone. And a loss it was to Patsy, that
he hadn’t inquired fully into the thing before he got married. But
when he had to quit out of the shop, where he had lived very nice
and easy, and found he would have to earn for himself, he began to
turn over in his mind about Ardenoo. Maybe Marg Molally was to the
good still. And he knew her to be a good warrant to work. Moreover,
he remembered that Ardenoo was a pleasant place for being idle in;
and that’s what he liked best always.
What he said further then to Marg was, that all he’d care to do now
was, to have leave to rest himself awhile before going back again;
and that he was trying the water of the Holy Well for a bad foot he
had. But he had been advised to do the cure secretly, and that was
how he chanced to be coming there so late to the Fairy Cleft.
“But,” says Ratigan, “I never said, to man nor mortal except yourself,
who I am. You’re the only living soul in Ardenoo that I have any wish
to speak to; and I’ll trust to you to say nothing!”
“Very well!” said Marg, a bit puzzled why he should want nothing
said. But, like many another, she was proud to be told what no one
else knew.
“And where do you stop?” said Marg then.
“Beyant in the town,” said Ratigan, telling the truth for once; “Mrs.
Melia that lets me sleep in the hay-loft that she has leaning up at the
back of the house; and then it’s not so expensive on a poor man like
Patsy. And, besides, I’d liefer not to be inside the shop; I can’t abide
the least smell of drink!”
Mrs. Melia could have told a different story about that, for the
American, as he was called at the shop, was the talk of the whole
place, the way he was going on with every play-boy that was there,
treating them all. And she could get no money out of him, only now
and then. He would always be telling her, that he was expecting
funds from his agent in America by the next mail.
Well, that agent lived quite convenient to Ardenoo! and was going
about on four legs, as long as he would be let. There was no doubt
that Ratigan had some way of getting money into his pocket; and
also that cattle and other things were disappearing, no one knew
how; neither did any one know whose turn it would be next.
There is something very curious about cows and the things that will
happen to them. Dark Moll had a story she was fond of relating,
about Andy McGuinness, long ago, that saw a strange woman
dressed in green, and long hair as yellow as butter flowing down her
back, and she was milking Andy’s fine cow one summer evening. So
Andy caught the cow by the tail, when the woman disappeared at
sight of him. And by that means he got inside the Furry Hills. And
there was the fairy-woman he had seen, and she with a fairy child in
her arms. And Andy had to promise her that she might take a pint of
milk every night for the child. And then he found himself out again
with his cow safe in his own fields. And after that he had no more
trouble with her. She had been no use to him up to that, giving only
small sups of milk, and no yield of butter upon even what she gave.
Well, Moll said, now that all the cattle were disappearing, that it
would be simple enough to find out all about them if only some one
had the spirit to go to the Fairy Cleft like Andy, and see what was
taking place there. She was right, too, as it happened, though not
exactly in the way she meant. But no one had any wish to take that
advice.
“It’s easy for them to talk, that will do nothing themselves! advice is
always cheap!” they would say.
Ratigan, or the American, as the people called him, had a good deal
to say about the stealing of the stock.
“If it was away in the States that such a thing was going on,” he
said, “the whole countryside would join, and turn out to hunt the
cattle-thief! What good are the people here, anyway! Only for this
bad foot of mine, I’d start the thing meself!”
And with that he stuck out a foot as big as a beehive, to all
appearance. And who was to know that there wasn’t a ha’porth the
matter with the same foot? It was all play-acting he was, and by this
talk he made it easy for himself to come and go after dark, in and
out of the hay-loft at Melia’s.
“Dan Grennan,” said Ratigan another time, “Dan that had a great
deal to say over his glass last night about this business, and in
particular about a bullock that is missing off the Furry Farm. Strayed,
as likely as not! But I can’t help thinking of a saying I used to hear
from an Irishman I met over in America; how that the fox always
smells his own smell!”
There were some that heard him say this that were inclined to be
angry. It was no right thing to say of a decent neighbour. But the
others laughed it off. The American had a way of making jokes, and
no one minded much what he said, he being very free with his
treats, too, to every one.
All this time, poor Dan and Kitty were fretting their hearts out about
the bullock that was lost. They knew well that Heffernan would
blame them for the loss, and maybe bid them leave the place for
some one that would be more careful. And then what would become
of them and the little family? Marg did all she could, but the thing
could not be kept from Mickey’s knowledge for ever. He took it very
hard.
You would really think that it was worse for him to be at a loss than
any one else that had met the same misfortune. And he with not
one in his house to care about providing for, except himself and the
wife! But God help him and all like him! Sure his money and money’s
worth appeared to be all he had, at that time anyway, to care about;
excepting only Marg herself, of course. And he was so well used by
now to her, and all her care and attention, that he scarcely knew
himself either how necessary she was to him, or how much he
thought of her.
But now, he wouldn’t listen to one word she’d say about this loss, to
try to reconcile him to it; only he would keep on, ding-dong, from
morning to night and from night to morning, lamenting about the
fine beast that was gone, and saying that such a thing had never
occurred as long as he had been to the good himself. At last, he
began to say that he’d have to turn Dan and Kitty away.
Now this is the kind of talk Marg had to listen to, all day long, up
and down, this way and that way, the same thing over and over
again, till she grew sick of the very name of a bullock! So you could
hardly blame her, that she began to look forward to the evenings,
when she would be slipping off to the Holy Well, and the chance of
seeing Ratigan there and passing a few remarks with him. It
happened pretty often that they met in this way.
Ratigan still had the same pleasant manners with him, and the
tongue that could coax the birds off the bushes. Sometimes he’d be
telling Marg of all the troubles and hardships he met up with, out in
America; and then again, it would be nothing but about the money
you could earn and the fine times you could have there. And this
would be, while he would be carrying the can of blessed water a
piece of the way home for her. He never could abide, he’d cry, to see
a woman have to work! as long as he’d have a leg under him; and
how that he himself was nearly cured by the same Well. Now Marg
could not but be glad to have her mind diverted from poor Mickey
with his complaints about the lost bullock as well as his lame leg.
It was worse that Heffernan was growing over this matter as time
went on, instead of beginning to forget it. In fact, it wasn’t Mickey
alone, or even those only that had lost a beast themselves that were
uneasy, but all Ardenoo could do nothing but talk about the cattle
being stolen, and wonder whose turn would come next.
Now this thing is so simple that it’s curious more don’t turn their
hands to it. Horn brand or hide brand, they’re easily got rid of, with
the help of a file and a pair of scissors. And if you start early in the
night, you can travel a long way with whatever you may have to
drive, before the weight of the people will be out of their beds. And
if there chances to be a lonely spot like the Fairy Cleft anyway
convenient, that crowns you for the job. The beasts could be taken
there and along the disused boreen as handy as you like. Ratigan
had it all as fit for his requirements as if he had made it himself.
At last Heffernan made up his mind that he’d run no more risks
about having his cattle stolen. So he said to Marg, “The fair in
Clough-na-Rinka is coming on, and it would be as good for us to sell
that half-score of store cattle there as to leave them to be stolen,
like their comrade. They’ll sell at a loss,” he went on, with a sigh,
“but sure, little fish is sweet! and the rent has to be made up. And it
will only be worse to be keeping them back and having to fodder
them in the winter, and the hay none too plenty ... sure, they’d have
themselves ett against next May!”
“Whatever you say yourself,” said Marg, only too glad of the chance
of getting rid of the bullocks, and thinking that then maybe Mickey
would cease to be fretting and annoying himself over the one that
was stolen; “but how will you manage to get to the fair?”
“I know well that I’d have no right to go, and the leg the way it is
with me,” said Mickey, “but I think you’d do, if you were instructed.”
“I’ll go, if you say the word,” said Marg.
She felt glad of the chance. She would hardly say it, even to herself,
but she would like to get away for even that one day from poor
Mickey. Not that she’d let any one say a word against him, but she
was worn out of all comfort by his growling and complaining. Of
course it was the bad leg that helped to make him so contrary; and
Marg never forgot that, and would never make him an answer, no
matter what he’d say.
“I can go away easy enough with the mare and side-car ...” for that
is how Mickey himself always went to fairs.
“Ora, what side-car do you want?” said Mickey a bit short; for now
along with all else, the poor old man was fretting because he could
not go to do the business himself, being sure, like every one, that he
could do it better than any one else; “what side-car do you mean?
Can’t ye take the little ass?”
“She’s very slow now,” said Marg, “and it will leave me that I’ll have
to be a long time away from you.”
“It’s lost for the want of work she is, this minute,” said Heffernan;
“fresh enough she is, this minute, to dance a cat off the high-road!
and as well, there’s a bit of ploughing that the mare could be at,
here at home....”
“I can walk; shanks’ mare will do me full as well as either ass or
mare!” said Marg, that had not one ounce of lazy flesh upon her
bones.
So when the fair-day came round, she was up and off, bright and
early, before the stars were out of the skies, the cattle having been
sent on ahead with Dan Grennan. Marg had no delay in selling the
stock, for fine beasts they were; and to a dealer that she and Mickey
were well acquainted with, so that Marg felt no great anxiety about
the business.
When they had the bargain closed, “Come along in here, Mrs.
Heffernan, mam,” said this dealer, “to Mrs. Melia’s, a decent woman
she is and keeps a decent house as you may wish to find. And I can
be paying you the money inside there, in the parlour, away out of
the noise and crowds in the street,” said he, “let alone the mud and
gutther, with the heavy rain that’s falling....”
“Very soft entirely it has turned, since the turn of the day,” said
Marg; “the cloak on me is heavy with the soaking wet.”
“You’re saying only the truth, mam,” said the dealer; “and all the
more reason for you to be getting into shelter, where we can be
having a cup of tea, or whatever other refreshment you like to put a
name upon.”
“I thank you kindly,” said Marg; “indeed, I’ll be glad of something
warm to drink....”
Like many another woman, Marg had neglected herself in the matter
of food, and had never tasted bite nor sup since leaving home that
morning. And now that she had the selling of the cattle off her mind,
she remembered that, and began to feel very weak-like in herself.
So she raised no demur to going into Melia’s, and in particular
because she had observed Ratigan a piece off from her down the
fair-green. He was pretending not to know her. Marg was no hand at
that work, and she was glad not to have to meet up with him, before
all the neighbours. But Ratigan was keeping a close eye on her, all
through. Not a turn of Marg that day but he watched. And when he
saw herself and the dealer going into Melia’s, my dear, what did he
do, only whipped round like shot, in and out among the crowds of
people and beasts of all kinds, and up with him into the hay-loft. The
big foot was no hindrance to him, he would explain, only betimes.
And anyway, every one was too much taken up with their own
concerns to mind much what the American was about that evening.
The loft wasn’t to say very well built. There was a chink that he had
often found very convenient, for seeing what went on in Mrs. Melia’s
parlour. He put his eye to it now.
In due course, he saw all he wanted to see. There were Marg and
the cattle-dealer, drinking their tea and eating fried eggs and bacon;
and badly they both stood in need of their bit. Then the dealer
pulled out the purse, and counted out the money upon the table,
that he was paying for Mickey’s stock; and the luck-penny was
handed back to him. Ratigan’s mouth was watering at the sight, and
when he saw Marg tying up what she got, a full hundred pounds, in
a strong bag, and fastening that into the front pocket of her cloak,
inside, a very safe spot.
“Yiz never got any account of the bullock that was lost ... not to say,
stole?” says the dealer.
“Never a word,” said Marg; “whoever done it, no one knows, nor
can’t think. And to say that all over the whole of Ardenoo such work
to be going on! Sure it’s a fright, so it is!”
“You may say that; a fright it is, sure enough!” says the dealer; “but
whoever it is, will soon be known! I have that from certain
knowledge; and that the polis has all ready, and will have the thief
inside of the barracks, before he’s a day oulder! so mind, now, I’m
telling you!”
“It would be a charity, too!” said Marg; and then the dealer bid her
the time of day, and went off, to get the cattle home before it would
be dark night down upon him and them, and it raining hard still.
Marg was just thinking in herself, had she the money safe for Mickey,
and fidgeting with her hand to feel was it where she had put it, not
two minutes before, and she was thinking of the long road that lay
between her and the Furry Farm, where she’d be as apt as not to
meet with tinkers and queer people going along, after leaving the
fair and maybe they not so sober as they might be ... when the door
of the parlour opened, very easy, and in walked Ratigan. And not a
limp was upon him then! He had too many other things in his head,
to remember about his lame foot. But anyway, Marg was too much
surprised to meet him there quite suddenly, after she trying to not
see him all day, to remark on that. She was flustered, too, about the
bag of money, not having satisfied herself yet that she had it in the
safest place.
She turned to face Ratigan, trying to look careless. But she felt
trembly and queer, meeting him there, in that little crowded-up
parlour. Someways, it wasn’t the same thing at all as when they
would be having just a chat in the dusk at the Holy Well, or straying
along through the quiet fields.
“Good-evening, Mrs. Heffernan, mam,” said Ratigan, very polite; “I
seen you over and over to-day ...” and he stopped short, and his
eyes began looking at her every way.
“Well, and if you did, and had anything to say, why didn’t you come
up and speak to me?” said Marg hurriedly.
It wasn’t what she wanted to say to him at all.
“Och sure, how was I to know would you wish that?” said Ratigan,
very humble in himself; and then Margaret’s heart softened towards
him.
“You’re not going out in that dreep of rain?” says he, noticing that
Marg was pulling up her cloak about her shoulders, where she had it
undone, while she was drinking her cup of tea; “teeming out of the
skies it is, as if all the wathers of the salt seas I have to cross was
coming down upon Ardenoo!”
“I’ll have to face out, rain or no rain,” said Marg; “I have a long ways
before me!”
“I’ve a longer!” says he; and he puffed a big sigh out of him; “and
has to go wid meself....”
“You should be used to that!” says Marg.
He had her persuaded that he never was married at all.
“I ought to be, I know,” said Ratigan; “but I haven’t the short
memory I see with some people for the old times! But them that’s in
heaven themselves, finds it easy to forget all else; and thim that’s
snug and warm in their own home, has little thought for them that
has to be without in cold and wet and hardship!”
“There’s more a body wants than food and fire,” says Marg, as if she
was thinking out loud.
“Ay is there! that’s a true word!” said Ratigan.
He was thinking at that present, that he wanted the price of his
passage back to America, as badly as ever a man wanted anything!
He had squandered away the money he had got for the cattle he
had stolen, in paying Mrs. Melia some of what he owed her, and the
rest drinking and spreeing. And now he was after hearing through
the chink in the hay-loft all that the dealer had been saying to Marg.
He knew about the money she had been putting away; and he
knew, too, about the polis, and the danger he was in. And he felt
that the sooner he could quit out of that the better it would be for
his health.
But how was he going to get away, and he without a penny to his
name! And it would take some days for him to get any more by that
means he was employing. And he must lose no time.
The only thing to be done was, to get a hold of that bag of money
he had seen with Marg. Have it he must, by hook or by crook!
Maybe she’d go with him. That would be the simplest, though not
what he’d like best. But he spoke to her very nice and soft, saying
how he thought the world and all of her, and trying to get to coax
her....
“I must be shortening the road home!” was all Marg said in answer.
And she went over to the window, and stood there, looking out at
where the rain was coming down in white sheets of wet, and
running down the street in streams, all choked up with mud, after
the traffic of the day, and the trampling feet of the sheep and cattle.
It wasn’t very tempting; and she turned away from it, as if she
couldn’t make up her mind ought she to go, or to wait a while
longer.
Ratigan all the time was watching her, like a cat with a mouse.
“Maybe it would be as good for you to start off at once!” he said;
“it’s not better it will be getting ... only the dark night coming
down....”
Welcome to our website – the ideal destination for book lovers and
knowledge seekers. With a mission to inspire endlessly, we offer a
vast collection of books, ranging from classic literary works to
specialized publications, self-development books, and children's
literature. Each book is a new journey of discovery, expanding
knowledge and enriching the soul of the reade

Our website is not just a platform for buying books, but a bridge
connecting readers to the timeless values of culture and wisdom. With
an elegant, user-friendly interface and an intelligent search system,
we are committed to providing a quick and convenient shopping
experience. Additionally, our special promotions and home delivery
services ensure that you save time and fully enjoy the joy of reading.

Let us accompany you on the journey of exploring knowledge and

personal growth!

ebookfinal.com