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We hope you find this arcthve useful. A subscription to The Small Business Advisor Newsletter is free. Subscribe now - it's easy! The Small Business Advisor Newsletter for September, 2001 ======================== ======================== ======================== No doubt, one of the most asked questions by the prospective business owner is "Should I incorporate?" The legal structure you choose, corporation or otherwise, depends on a number of things, including your type of business, individual situation, goals for the business, and a number of other personal and financial factors. Before deciding what's best for you, discuss your plans with your accountant and attorney. Make sure you are prepared to describe your business plans in some detail. It will be money and time well spent. Making the right choice can help you avoid a mistake that can cost you big in terms of possible future liability Here are the choices available for operating your business: Sole Proprietorship. The vast majority of small and home-based businesses operate as a sole proprietorship. There is no limited liability - the owner is solely responsible for all debts. Business profit or loss becomes part of the owners personal tax returns. Major advantage: Simplicity. Regular ("C") Corporation. Limited liability is its major asset. Profits are taxed at corporate rates (lower than personal rates). Salaries paid to owners is subject to their regular personal tax rate. Major advantage: Relief from personal liability. S Corporation. Limited liability as with a "C" corporation but with some additional restrictions that only affect a few. Business profit and loss is passed through to the shareholders' personal tax returns. Major advantage: Profit and loss pass through to personal returns. Limited Liability Corporation ("LLC"). A fairly new entity that offers limited liability like a corporation and the tax advantages of a partnership and S-corporation. (No Federal taxes and personal pass through of losses). Major advantage: Limited liability PLUS profit and loss pass through to personal returns. General Partnership. No limited liability. Each partner reports profit and loss on their personal tax returns. Major advantage: No Federal taxation. Limited Partnership. Limited partners enjoy limited liability but the general partners (at least one is required) do not enjoy limited liability. Major advantage: Limited liability for the limited partners. Except for the sole
proprietorship, each of these legal entities can be complex to setup.
It is very important that you engage the services of an attorney and/or
CPA to ensure no mistakes are made. There is no "best" choice. When someone is introduced as "Dr" or "Mr" or "Bob" we all immediately formulate opinions as to who this fellow is and how we should react to his words. We react to the title. It's sort of interesting, and curious, but it's something to think about in your business dealings. Using a title selectively can be advantageous - depending on the situation or the audience. I'm proud of my academic achievements but in the business world it pays (literally) to remember who you are talking to. For example, when I'm giving a seminar or selling one of my small-business related books, I'm "Bob" - I do not want to give anyone the impression that my talk is going to be academic in nature, nor do I want to make anyone uncomfortable. My books indicate that the author is simply "Robert Sullivan." The book is not a "text book" and I don't want to do anything to convey that impression. When I'm consulting, I become "Dr. Sullivan," hotshot high-powered academic. I want my customer to be impressed(!) and to get the feeling he is dealing with someone who can assist with his problem. Use your "title" only when it makes sense. It can make a difference. ======================== Here we go again. The economy is slowing down and big companies are laying people off right and left. Rather than cowering in a corner waiting for the axe to fall, get out there and do something to make your future bright. Start your own business. But isn't it nuts to start a business when times are tight? Not at all. Many of today's huge corporations started out in someone's basement during the height of the Great Depression when one in three people were destitute. Now those were tough times, yet great new businesses were born and thrived. And don't you need a big bankroll or at least a line of credit at your bank? Nope. Half the companies on the Fortune 500 started with just a few thousand dollars. Many began with only a few HUNDRED dollars. I know plenty of thriving small businesses that started with nothing more than an order pad and $20 worth of fliers announcing a new service. Here's the big secret to success: YOU suddenly become a NEW person when you start your own business. For most of us, getting out from under the demands of a boss changes something in us. When YOU are demanding things from YOURSELF, you suddenly become ten times more motivated than when someone else is telling you what to do. When I started my business from a corner of my kitchen I found the hours flew by. I went from working 40 hours a week doing bookkeeping at an asphalt company to putting in 100 hours a week on my business. And you know what? It didn't feel like work. I was tired at the end of those 14 hour days, but I felt like I had just come back from vacation. This is one of those human things that people knew well back in the 1800s, but nobody seems to remember today. You're smarter, more clever, and harder working when you work for yourself. Here's how to get started. 1. Pick a field you know and LOVE. If you don't know much about what you love, set out to learn. But don't--no NEVER--do something you hate just because you have a chance at succeeding. I suppose there are people in other cultures who can make that work, but we Americans fall flat on our faces if we don't feel a deep personal commitment to what we are doing. Go to your library, Amazon.com, and search engines. Look for books, web sites, and videos about your chosen field. Give yourself a crash course. Become a self-taught expert (or even more knowledgeable than you are already.) 2. Find a group of potential customers who REALLY want what you have to sell. AND, make sure they are a group you can advertise to with little or no money. Then promote, promote, promote. Don't sit at home and wait for the phone to ring. Go door to door, send out letters, call a talk radio station, write a letter to the editor, talk to an organization, or join a trade association. If you're really serious, do all of those things and more. Buy or borrow Jay Levinson's "Guerrilla Marketing Weapons" and find a half dozen promotion methods that work for you. 3. Keep track of your money. Most of the small businesses that fail do so for one of two reasons. The owner lost interest or the owner didn't keep good books. Buy or borrow "Small Time Operator" by Bernard Kamoroff. It tells you in simple language all the things you need to do to stay legal and keep track of money and inventory. 4. Don't give up. It takes most of a year to get a new business going. Most business owners tell me they got almost no business the first year. The second year was better. They ended up being pretty busy the third year. The fourth year they had more business than they knew what to do with. Visit Lisa Lake's smart tips for starting and succeeding at http://MyAdBlaster.com. ContactLisa at lisa@DrNunley.com. ======================== There's another truth to publicity ... you can create it if you need to, and it's not that hard to do! Let me offer you useable suggestions that you can implement in order to gain some free exposure for your small business. --->> Offer A Donation to a Worthy Cause One woman (a business coach) gave two scholarships to a local community college that catered to the underprivileged. She included two months of free business-building coaching services for qualified applicants at the school. She set forth the criteria with the help of the college, and decided on how to choose the scholarship winners. Press releases were sent out, and the media went wild! Of course they would ... everyone loves to hear about people who are helping out the underdog. She received a lot of free promotion and boosted her image as a community leader, too. --->> Relate Your Product or Service to a Local or National News Event Right now the United States is experiencing two very troubling problems that the media covers on a regular basis. The first is a drastic upswing in unemployment (especially in high-tech fields). The second is an energy crisis (particularly in California). If your product or service can somehow offer a solution (even a small one) to one of these two dilemmas, you stand a great chance of getting some publicity. Perhaps you own a resume service that has an exceptional rate of success for one reason or another. Phrase your release so that it helps to solve the unemployment crisis (and does not blatantly promote your business) and you'll perk up some journalist's ears. --->> Get In Line With Seasonal Events The change in seasons always makes the news. In summertime, you'll find stories on safe vacation travel or the best airline deals. At the end of the year there is always coverage pertaining to New Year's Resolutions and how to keep them. Fall is generally a great time for gardening-type businesses to remind everyone to plant now so their yards will look fabulous come springtime. If your company can offer some viable information pertaining to seasonal events, a press release might be in order. Writing a release outlining how your online travel agency always gives clients a "vacation safety" package that has proven to "save the day" in the past will bring out some interest in the local (and maybe national) media. Above all, use your imagination. Pay attention to the newspapers, television news and magazines you come in contact with. Notice the types of stories they cover and then write a release that falls in line. You will soon be able to create news where none previously existed and gain some free exposure for yourself in the process! Visit Diane Hughes, editor of the popular ProBizTips Newsletter, at http://www.adminder.com/c.cgi?hnbco&article. Return to top of page - Back to Home Page - Back to Archive Index |