30 Nov
2016

Choosing Your Business Formation


Choosing the formation structure of your business is like choosing the type of car you will drive - weighing concerns about initial costs, maintenance, and if you are considering attracting outside investors, "style".  You should consider your choice carefully, as it affects everything from the way you are taxed to the way you operate. A few factors influencing your decision include:

  • Legal Restrictions - Usage of some formations are restricted under certain circumstances, (like owning subsidiaries in another formation), and heavily regulated industries.
  • Liability Exposure - In a high-risk venture, you have the options of being personally responsible for obligations, or creating a business that can develop it's own "identity".
  • Type of Operation - Some formations are more complicated than others to maintain, which may reduce productivity and/or profitability in some cases.
  • Capital Needs - Corporate formations allow the sale of stock to raise money at any time; Other possibilities are financing, or self-funding organizational goals and growth.

The globe is made of different countries with different rules, regulations and laws concerning business, all influenced by different cultures and ways of life.  While this post provides some fundamental basics about each entity in the U.S., I may go further in depth on each type and cover international requirements in future posts.

Here in the U.S. there are a handful of different entities:

Sole Proprietorship

• Pro(s): Easy to setup;  Low maintenance "pass-through" taxation.

• Con(s): Unlimited risk/liability for owner; Ownership limited to one person.

This is the easiest and cheapest way to start a business.  It can be formed as simple as finding a location and opening the doors for business.  Of course you would have fees to register a business name, and to obtain necessary operating licenses, but it is usually a quick process.

Sole proprietors are taxed on all income at the individual tax rate.  No separate return is required when filing.  Sole proprietors must also pay self-employment tax on the business income.

Partnership

• Pro(s): Easy to setup; Low maintenance "pass-through" taxation.

• Con(s): Unlimited risk/liability for owners; Possible difficulty managing differing interests.

There are several types of partnerships.  The two most common are general, and limited partnerships.  A general partnership can be formed simply by an oral agreement between two (or more) persons.  I personally recommend having a partnership agreement drawn up by an attorney.  A partnership agreement can help resolve any disputes, however partners are responsible for the other partners business actions, so choose wisely.

Taxation is similar to sole proprietors in that they pass to the partners to be included on their personal tax returns.


Corporations

• Pro(s): Limits owner(s) liability; Easy to transfer/add ownership.

• Con(s): More costly to set up and maintain; Requires separate tax returns.

The corporate structure is usually the most complex and costly to organize than the other formations.  Control is largely based on stock ownership.  For a corporation to be formed, share/stock holders must agree on the following:

  • Name of the business
  • Total number of shares of stock the corporation can issue
  • Amount of money and/or property each owner will contribute to buy their share of stock
  • Industry the corporation will engage in
  • Who will manage the corporation

Once agreed, they must prepare and file articles of incorporation with the corporate office of the state in which they want to incorporate.  This can be in a home state, or any other state.

Control is exercised through regular board of directors' meetings and annual stockholders' meetings, who also elect officers to run the corporation daily.  Records must be kept to document decisions made at all times! Liability is usually limited to stock ownership, (unless fraud is involved, remember Enron).

Corporations come in two "flavors" -  "C" and sub-chapter "S".  A major difference between  "C" and "S" is in taxation.  Sub-chapter "S" status enable pass-through taxation to shareholders on their personal returns.  The amounts are divided based on the percentage of stock they own.  Also note that you may be required to to pay tax on the income of a sub-chapter "S" even if you have not been paid any money from the corporation.

Check with your attorney on long term advantages and strategies when incorporating.


Limited Liability Company

• Pro(s): Low maintenance; "Pass-through" taxation; Flexible profit distribution.

• Con(s): Limits future choice for IPO; Each member's share of profits represent taxable income, (whether paid or not).

The limited liability company formation is relatively new and combines corporate and partnership characteristics.  LLC owners are considered "members" instead of "shareholders" or "owners, and limits their risk only to their investment.  Taxes are assessed the same way as sole proprietorship and partnerships.

As you can see the decision of what entity to select for your business may be very complicated.  It's wise to make the best decision for your particular situation that will maximize your profit and minimize your tax bill!

There may be additional factors for you to consider because laws change over time and in different jurisdictions. It is imperative that you consult an attorney in your area regarding legal matters and an accountant regarding tax matters about issues that affect your proposed industry.

Republished by Blog Post Promoter

28 Nov
2016

5 More Cash Flow Tips

$avings Tip: Staying fit and in-shape lowers insurance costs, and greatly reduces the risk of "Heart-attack/stroke by bill".

Below are a few basics on minimizing expenses, and slowing down outgoing cash to improve operating cash flow.

Delaying Outflows

Paying bills as close to the due date as possible, without incurring late fees.

Trade Credit

This is when your suppliers supply you without requiring payment at the time of service. (Think  interest free short-term loans.)

Start by contacting current suppliers, and approach future suppliers about establishing trade credit with them.  More than likely you will be required to fill out a credit application, give references, and any other information they may require to determine your debt capacity and creditworthiness.

Trade Discounts

Sometimes you can get a discount by paying within a specified time.  These terms are usually listed on the invoice.

Negotiating Payment Terms

It can never hurt to ask.  Having input in your repayment terms can benefit your overall cash positioning and ease concern over "contingencies".

Your supplier agreeing to your terms depends on things like the overall relationship and their confidence in your business potential.  It can never hurt to ask.

Deferments

This strategy is great for payroll.  If you have employees, consider your payroll frequency.

Remember the act of processing payroll itself is an expense.  Minimizing the frequency of expenses like these can work wonders for your working cash.

Also look into ways you can boost receivables, streamline your operations, and/or batch processes.  Adopt a "faster, better, cheaper" mantra into management, while retaining the core value of your product or service, and watch your cash garden grow.

Republished by Blog Post Promoter

23 Nov
2016

Free Marketing Resources for Entrepreneurs

fre

Business + Marketing

A. FREE WEBSITE + LOGO + HOSTING + INVOICING

 

B. FREE BUSINESS / PROJECT NAME GENERATORS

 

C. WRITING / BLOGGING

  • Hemingway: Hemingway App makes your writing bold and clear.
  • Grammarly: Finds & corrects mistakes of your writing.
  • Medium: Everyone’s stories and ideas.
  • ZenPen: The minimal writing tool of web.
  • Liberio: Simple eBook creation and publishing right from Google Drive.
  • Editorial Calendar: See all your posts, drag & drop to manage your blog.
  • Story Wars: Writing stories together.
  • Headline Analyzer: Emotional marketing value headline analyzer.
  • WP Hide Post: Control the visibility of items on your blog.
  • Social Locker: Ask visitors “to pay” for your content with a tweet, etc.
  • Egg Timer: Set a time and bookmark it for repeated use.

 

D. FIND (TRENDING) CONTENT (IDEAS)

 

E. FREE SEO + WEBSITE ANALYZERS

 

F. FREE IMAGE OPTIMIZERS

 

G. FREE IMAGE EDITORS

  • Canva: Amazingly simple graphic design for bloggers.
  • Pixlr: Pixlr Editor is a robust browser photo editor.
  • Skitch: Get your point across with fewer words.
  • Easel.ly: Empowers anyone to create & share powerful visuals.
  • Social Image Resizer Tool: Create optimized images for social media.
  • Placeit: Free product mockups & templates.
  • Recite: Turn a quote into a visual masterpiece.
  • Meme Generator: The first online meme generator.

 

H. COLLECT & SEND EMAILS FOR FREE

 

I. FREE SOCIAL MEDIA + COMMUNITY MANAGEMENT + SURVEYS

 

J. A/B TESTS & GROWTH HACKING

  • Petit Hacks: Acquisition, retention, & revenue hacks used by companies.
  • Optimizely: One optimization platform for websites and mobile apps.
  • Hello Bar: Tool for A/B testing different CTAs & power words.
  • GrowthHackers: Unlocking growth. Together.

Design + Code

 

A. FREE DESIGN RESOURCES

 

B. COLOR PICKERS

 

C. INSPIRATION

 

D. FREE STOCK PHOTOGRAPHY

Republished by Blog Post Promoter

Connect!

Follow Me! Follow Me! Follow Me! Follow Me!
----------------------------------------------

Search

----------------------------------------------
----------------------------------------------

Venture Linkage

  • LivingNoLye.com
  • MasterMind Sounds
  • Qwik Care Clean Care
 
s2Member®