eBay – What a Strange Name for a Billion Dollar Corporation

Every day millions of eBay users log onto their accounts to buy and sell and don’t have any idea about the history of the company. This is the account of how one man created the revolutionary auction website eBay, why he gave it the unusual name, is also an interesting story about the early days of the Internet.

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ebay, sell online, sell, auction, business

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Every day millions of eBay users log onto their accounts to buy and sell, and don’t have any idea how eBay got its name. They might not really care, either. Like the person who turns on the TV and just wants it to come on and play their favorite television show, many eBay users probably aren’t curious about the fine points of the company. But it’s a fun story and all true eBay enthusiasts will be interested in knowing the history.

Just ask some friends what "eBay" stands for and you’re probably going to get an answer like "it’s maybe an abbreviation for ‘electronics bay’ or ‘ecommerce bay’ or something like that". But while the "e" could stand for lots of things, if you look up different definitions for "bay" there’s just no way to stretch any of them so they have anything to do with an online auction site. However if we search way back to 1995, the year eBay was founded, we can find some clues.

An explanation you’ll probably see on the Internet, and even in some books about eBay, says that the auction site was created by a young computer programmer named Pierre Omidyar to help his girlfriend, Pam, increase the size of her collection of PEZ candy dispensers. PEZ, if you are not familiar with them, are little plastic containers with character heads that flip back and push out a piece of candy. Pam supposedly wanted a way to enlarge her collection, so Pierre came up with an idea for an online marketplace. Since he was a computer programmer, he put together the code which would become the core for eBay.

Just goes to show you can’t always trust what you read on the Internet. According to Adam Cohen in his 2002 book, "The Perfect Store: Inside eBay" that’s not really the way it happened. The PEZ story, which is widely circulated and believed, was created by a public relations manager to further the myth surrounding the company and has been spread widely ever since.

The real story is that Omidyar was simply a smart man, and he wanted to make an impact with an online venture. He observed the operation of buyers and sellers in other markets and decided that an auction website would be a great service to offer. Ironically, he had never attended a real auction himself. The whole thing started out as a hobby, but the auction site soon was earning enough money so that Omidyar could quit his job and work it full-time. As a computer programmer he did write the original computer code which made the auction site function - in one weekend.

The website launched on Labor Day, 1995 and he called it "Auction Web". Pretty descriptive, right? Well, Omidyar had earlier founded a web consulting company which he called Echo Bay Technology Group. "Echo Bay" because he just liked the sound of it. There was already a gold mining company who owned EchoBay.com, so Omidyr took the second best option and dropped the "cho" part of "echo" and named his business - you guessed it - eBay. If you go to www.echobay.com today, you’ll see only one simple dark blue webpage with the words, "EchoBay - What eBay could have been!".

The original website operated as "Auction Web" for 2 years, then officially became eBay.com in 1997.

So there you have it. Maybe that will give you an answer for a "Trivial Pursuit" question, or maybe you can work it into a conversation and impress your friends sometime. Just know that when you buy or sell on eBay, you’ll be one of the few to know the real story of how eBay got its name.

California Corporation Commissions

California Corporation Commission is a statutory authority whose job is to oversee the functioning of the department of corporations and also to frame policies for its proper functioning. The Commissioner, who is the chief executive officer, heads the commission. He is assisted by a team of officers who advise him on the day to day financial and other administrative operations. There is also a public relations officer who coordinates the activities of all the departments of the commission.

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California Corporations, California Department Of Corporations, California Corporation Commissions, California Corporation Searches

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California Corporation Commission is a statutory authority whose job is to oversee the functioning of the department of corporations and also to frame policies for its proper functioning. The Commissioner, who is the chief executive officer, heads the commission. He is assisted by a team of officers who advise him on the day to day financial and other administrative operations. There is also a public relations officer who coordinates the activities of all the departments of the commission.

The main function of the commission is to inform and educate the general public on important financial and investment issues. In addition, the commission is also equipped with powers to enforce the law to protect innocent businessmen. For this, it has an enforcement division, which investigates the irregularities and other acts of omission and commission and brings the defaulters to book through the process of litigation.

There may be situations when in order to evade state taxes, people may not procure licenses to conduct their business. The commission investigates such cases and takes appropriate action against them. There may even be licensed corporations that violate the state law. The commission takes action, and in case of serious offences, files cases against them in the court of law. There may be other financial violations and fraudulent activities. The commission refers such cases to the District Attorney for prosecution.

The commission is invested with certain powers to stop violations of the law. Yet, it does not have the powers of the court of law. It can only report the cases to the court, but cannot act on behalf of the victims of fraud. However, the commission does cooperate with the lawyers of the victims by furnishing facts and figures. This goes a long way in helping them get back their money. It should, however, be clear that the investor has to find his legal resources to get the refunds. Also, the commission conducts its investigations in complete secrecy and the complaints of the aggrieved persons are not made public.

Four Dumbest S Corporation Setup Mistakes

S corporations can save you thousands of dollars a year in corporate and payroll taxes. But for heaven's sake, don't make these common mistakes says CPA and tax professor Stephen L. Nelson.

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California S corporation, incorporation, S corporation

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I see and hear about a lot of dumb S corporation setup mistakes.

Some of the mistakes are made by entrepreneurs and investors trying to save money on accountants and attorney fees. And I guess that’s okay--albeit penny-wise and pound-foolish.

But you know what really irks me? Some of these mistakes—in fact, most of them—are made by attorneys and paralegal services… Professionals who should know better.

But enough whining. Without further fanfare, here are the four dumbest mistakes that I see people make again and again when it comes to setting up a new S corporation.

Mistake #1: Not Using an LLC

An LLC is almost always the place to start if you want to end up with an S corporation. Why? I like to tell students and clients that LLCs are akin to lite beer. Remember the lite beer commercials? Same great taste but with half the calories?

LLCs work like that. LLCs provide you with all the same great liability protection, but they require only half the red tape.

This might all seem irrelevant, but LLCs can make an election to be treated as an S corporation for income tax purposes. Acccordingly, you want to use an LLC as the basis of an LLC in almost all cases—and not a corporation.

Mistake #2: Forgetting about the Foreign Corporation Registration Rules

Read those tempting advertisements for Delaware or Nevada corporations? The advertisements sound pretty good, but most small businesses shouldn’t use out-of-state llcs or out-of-state corporations.

Here’s why: If you’re doing in business in, say, New York, you’re not going to be able to avoid state taxes by forming your llc or corporation in, say, Nevada. The tax and corporation laws in your state will require you to register your out-of-state, or foreign, llc in the states where your business operates. Those same laws will require you to pay state income taxes in the states where you earn your income.

A couple more quick points: Large businesses do like Delaware for a variety of reasons—mostly having to with how sophisticated the Delaware chancery courts are. But this applies to really big businesses that will litigate in Delaware—not small businesses. And Nevada does offer corporations a no-income-tax haven—but you need to set up a real business presence there, with an office, employees, property—the whole enchilada.

Mistake #3: Electing to be Treated as a C Corporation

A long time ago if you wanted to turn an LLC into an S corporation—before July of 2004 as I recall—you first had to turn it (for tax purposes) into a C corporation. You did this by filing something called an 8832 Entity Classification Election with the IRS service center in Philadelphia. Then, once that entity classification took effect and the LLC was considered a C corporation, you made a second election to have the new C corporation treated as an S corporation. You did this by filing another form called a 2553 with the same IRS service center you’ll later file your corporate return with.

This two-steps-to-an-S corporation process was pretty much a disaster. Thankfully, the IRS finally threw its hands up and said you only need to file the S election paper (the form 2553).

Some people still want to do it the old, unfortunately. Which is really dumb. The old way doesn’t work very well. And, in a worst case scenario, you may end up with your LLC converted to a C corporation but not converted to an S corporation.

Note: If you do foul up an S corporation, know that the IRS is very, very forgiving. You might want to get an accountant’s or attorney’s help if you get into this trouble, however.

Mistake #4: Electing to be Treated as an S Corporation Too Early

Once a business generates profits well in excess of the amounts paid to owners for salaries, an S corporation election saves the owners big money--sometimes tens of thousands of dollars per owner per year.

But you don’t want to elect S corporation status too early if you were smart enough to start off your business as llc. This is especially true if you’re the only owner of the llc.

By electing S corporation status, the llc needs to file an expensive corporate return, needs to begin doing payroll--even if the only employee is the owner, and may need to pay additional payroll taxes like the 6.2% federal unemployment tax. (This tax is levied on the first $7,000 of wages paid to each employee.)

Wait until your business is profitable to elect S status for your llc. You patience will pay off in two ways: simpler accounting and less expensive tax returns.

Bylaws – The Guts of a Corporation

Most states make forming a corporation relatively painless by providing forms for practically everything. The bylaws of the corporation, however, are an area you don’t want to rely on a form.

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corporation, incorporation, corporate bylaws, bylaws, incorporate, shareholders, corporate meetings

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Most states make forming a corporation relatively painless by providing forms for practically everything. The bylaws of the corporation, however, are an area you don’t want to rely on a form.

What Are Bylaws?

Bylaws are the technical rules that govern how a corporation will be run. They are a private document for the corporation and are not filed with any government entity. The purpose of the bylaws is to set out how things such as meetings, voting and share transfer will occur with the business.

Provisions

Typically, the bylaws will be the biggest document in your corporate book. If you are a single shareholder entity, they tend to be fairly straightforward since there isn’t really any dispute possibility unless you have a split personality. If there are two or more shareholders, however, the document is going to be a key item because it is going to detail voting rights and so on.

Typically, the bylaws of a corporation will cover the following specific issues:

1. Board of Director Meetings – When, where and how meetings will be conducted.

2. Notice of Meetings – The form, time and how notice must be given to board members.

3. Quorums – Before a board can issue resolutions on corporate business, a certain percentage of board members must be present. This “Quorom” is set out in the bylaws.

4. Annual Meetings – The bylaws typically detail when and where the annual meeting of the entity will occur.

5. Special Meetings - The process by which special board meetings may be called when an issue arises that requires the immediate attention of the board.

6. Voting Rights – Language detailing the voting rights of shareholders and board members in relation to passing or defeating resolutions.

7. Share Transfer Rights – Language detailing share transfer issues such as right of first refusal and so on.

8. Directors – Language detailing how many board members there will be, the length of their term, compensation, etc.

9. Amendment – The process by which the bylaws can be amended to reflect the evolution of the business.

10. Removal – Language detailing when and how a board member can be involuntarily removed.

There are numerous other provisions that can and probably should go into the bylaws of a corporation. Make sure to discuss them with your attorney.

Forming a Corporation – Investors

You’ve come up with the best idea since sliced bread, figured out a business name and formed a corporation. There is, however, one small problem. You need money. Welcome to the world of investing.

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forming corporation, investors

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You’ve come up with the best idea since sliced bread, figured out a business name and formed a corporation. There is, however, one small problem. You need money. Welcome to the world of investing.

Business Funds

Unless Bill Gates is your friend, money is going to be a problem for every new business. Even the might Google had to hunt for cash with one of the founders of Sun Microsystems finally kicking down a much needed $100,000. Whether you decide to pimp your business plan to anyone breathing or beg your step-mother for funds, here are some issues to consider.

Investors are looking for the best deal, to wit, the most stock possible in an entity. If you are asking them for cash, they have the leverage. Don’t be so desperate that you give away the farm. All to often, I speak with individuals who started a business on a whim and have become disillusioned because they have lost equity in the business.

Assume I start a corporation and need funds. My neighbor agrees to kick in $20,000 for 20% of the stock. Things go great, but four months later I need another $50,000 for inventory and cash flow. My aunt agrees to kick in $50,000 for another 20% of the stock. Yikes, I am not even through the first year and I have given up 40% of the equity!

What happens in year two when I need a $100,000? I give up more stock and suddenly own less than 50% of the business. Inevitably, this leads to feelings of resentment and bitterness. “It was my idea, but now these blood suckers are going to get most of the money and they aren’t even working on the business.” This sentiment is so common that it would be laughable if it weren’t so depressing.

As a general rule, you should only sell ownership in a business as an absolute last resort. Instead, try to get loans from investors, banks, home equity lines and even credit cards.

If you must sell stock to raise funds, be very careful when valuing the stock. You should place a value on each share as though the company was already a raging success, not just starting out. Further, make sure you sell only small allotments of stock such as three to five percent. If you owned IBM, how much of the ownership would you sell for $20,000?

In Closing

When starting a corporation, guard equity as though it is the Holy Grail. If you don’t, you risk becoming a disillusioned shareholder down the road.