/Nellie Akalp
Nellie Akalp

About Nellie Akalp

Nellie Akalp is an entrepreneur, small business expert, speaker, and mother of four amazing kids. As CEO of CorpNet.com, she has helped more than half a million entrepreneurs launch their businesses. Akalp is nationally recognized as one of the most prominent experts on small business legal matters, contributing frequently to outlets like Entrepreneur, Forbes, Huffington Post, Mashable, and Fox Small Business. A passionate entrepreneur herself, Akalp is committed to helping others take the reigns and dive into small business ownership. Through her public speaking, media appearances, and frequent blogging, she has developed a strong following within the small business community and has been honored as a Small Business Influencer Champion three years in a row.

Foreign Qualifying your Business – FAQs

Happy February! With winter now in full swing, we will be talking about a way to get away from the cold with Foreign Qualifying! This month, we discuss the opportunities of Foreign Qualification into another state and what the requirements are for those states.

 

Q: What is foreign qualification?

A: A corporation or LLC transacting business in a state(s) outside of their state of incorporation is typically required to foreign qualify in those other states.

 

Q: What constitutes transacting business in another state and when do I need to foreign qualify?

A: As examples, your company is considered to be transacting business in an additional state if…

  • You have a physical presence in the state
  • You have employees in the state
  • You accept orders in the state
  • You have a bank account in the state

State rules vary and this isn’t a complete list. If you have any questions about whether you need to foreign qualify in a state, you can speak with an attorney.

 

Q: If I incorporated in Delaware or Nevada (but don’t live/work there), does this mean I need to foreign qualify in my own state?

A: Delaware is often chosen as the state of incorporation, especially by larger companies, because it has the most developed and flexible corporate statutes in the country and is considered pro-business.  Nevada has also become popular because of its lack of state corporate income tax, franchise tax and personal income tax.  It also has relatively low fees.

However, if you incorporate out-of-state, such as in Delaware or in Nevada, but do much of your business in your home state, you will most likely need to foreign qualify in your own state. You will then be subject to the same fees, taxes and regulations as if you had incorporated there in the first place, and you will have paid filing fees (and, perhaps franchise taxes) to more than one state.

Example: If you have a small business and are going to be conducting a substantial amount of your business in California, it will likely be beneficial to incorporate in the state of California. If you incorporate out-of-state, such as in Delaware or in Nevada, but do much of your business in California, you will have to foreign qualify in the state of California. You will then be subject to the same fees, taxes and regulations as if you had incorporated in the California in the first place, and you will have paid state filing fees (and, perhaps franchise taxes) not only in the state of California but also to the state of Delaware or Nevada as well.

 

Q: What is the process to foreign qualify?

A: You will need to file a Certificate of Authority, which grants a foreign corporation/LLC permission to transact business in a state. In most cases, you will need to show a Certificate of Good Standing from your state of incorporation/formation in order to get a Certificate of Authority.

 

Do you have a question regarding Foreign Qualifications? Call the CorpNet.com team today for a free business consultation at: 888.449.2638

 

 

What Every Small Business Should Know About 1099s

Every year when tax time rolls around, I field questions from business owners about whether or not they need to send 1099s to their vendors. As common as 1099 forms are, they remain one of the most misunderstood Internal Revenue Service (IRS) requirements.

To make sure you understand the circumstances under which the IRS requires issuing 1099-MISC forms to vendors, I’m going to provide some basic “must-know” information here.

What Is A Form 1099-MISC?

You must issue an IRS Form 1099-MISC to each person you’ve paid $600 or more in services (including parts and materials), prizes and awards, rents or other income payments. The 1099-MISC only applies to payments you made in doing business; it does not apply to payments made for personal purposes.

To Whom Do You Need To Send A Form 1099-MISC?

If your business paid more than $600 to a vendor or sub-contractor [individual, partnership, Limited Liability Company (LLC), Limited Partnership (LP), or estate], you are required to send a Form 1099-MISC to document what you paid them throughout the year. In general, anyone who worked for you—other than your employees—will need a 1099 from you.

Also, unless an exception applies to them, you need to issue a 1099 to your landlord if you are paying rent for business purposes. You must also issue a 1099-MISC to your attorney if you paid for legal services that amounted to more than $600 during the year.

Are There Any Exceptions?

There are. The list is rather long, but most commonly these types of vendors do not get 1099-MISC forms:

Also, you don’t have to send 1099-MISC forms to vendors to whom you made your payments via a credit card, debit card, gift card, or a payment network like PayPal. The onus to report vendor compensation is on those payment companies.

How Do You Figure Out If A Vendor Needs A 1099 From You?

I recommend before you request vendors to do any work for you, ask them for a completed W-9 form. The W-9 will give you all the information you need for filing taxes. It supplies a vendor’s mailing information, Tax ID numbers, and business structure (so you’ll know if the vendor is incorporated or not and does or does not need a 1099).

When Is the Deadline To Send 1099s?

By January 31, 2017, you must do two things to comply with your 2016 tax year 1099 obligations:

  • Submit Form 1099 to each vendor (reflecting what you paid that vendor in 2016).
  • Submit a copy of the Forms 1099 you sent to each vendor, along with a Form 1096 that discloses in total what you paid to all vendors who received 1099s from you.

Make sure you check on your state’s rules, too. Some states require they also receive your 1099s.

What Happens If You Miss The Deadline? 

Sending the required 1099-MISC forms late (or not at all) could cost you. The penalties vary depending on how far past the deadline you wait to issue the forms. If your business had gross receipts of $5 million or less, the amount you’re smacked with could range anywhere $50 to $260 per form (for tax years 2016 and 2017). If you’re caught intentionally not providing a payee with a correct statement for tax year 2016, you could face a fine of $520 for each form not submitted (that amount will increase to $530 for tax year 2017).

Where Can You Get 1099 Forms?

Unfortunately, you cannot download 1099 Forms from the IRS website. You can, however, order them from the IRS site and have them mailed to you, or you can pick them up at an IRS service center, post office, or another location that supplies them.

Eliminate Headaches—Do It Right From The Start!

Whether you’re in the early stages of launching a startup or already running a small business, I recommend you talk with a tax professional who can share more details about 1099s and the other aspects of filing your tax returns.

Starting a business or ready to change your current business structure? Contact us about making the registration process hassle-free and as fast as possible. We’re here to handle all of your legal document filing needs!

Five Steps To Becoming An Empowered Woman (Or Man) Business Owner

As a woman business owner, I’ve found that empowerment comes to us in two ways:

1. Access to external sources of inspiration and knowledge

2. Self-respect and self-confidence

You can sit around and wait for someone to empower you, or you can take the bull by the horns and take action to empower yourself. I will always vote for the latter of the two because it gives you more control over your entrepreneurial destiny.

Although women own nearly 30 percent of U.S. small businesses (according to the Status of Women in the United States website), I find that many of us still struggle with accepting it’s OK to seek empowerment on our own. We often think of it as something that is handed to us. That doesn’t seem very empowering to me!

So, what can women entrepreneurs (and men, too) do to boost our level of empowerment and reach our personal and professional potential?

1. Recognize what knowledge and skills you lack, and find tools and resources to increase your proficiency.

This requires a commitment to honestly assessing your strengths and weaknesses. After you’ve done that, actively seek blogs, books, webinars, podcasts, conferences, mentors, and other resources that will help you get up to speed.

2. Align yourself with positive people (professionally and personally).

I cannot emphasize enough how much this affects morale and motivation. Chronically negative people drain your energy and enthusiasm. When they direct their skepticism and sarcasm at you and your endeavors, they deplete your self-confidence and leave you feeling defeated. As much as possible, minimize your exposure to them so you can fill your life with people who truly care about you and who will encourage rather than discourage you.

3. When you meet people who exude empowerment, ask them if they’ll share their insight about attaining that level of confidence.

I’ve found most people who have an empowered aura about them are immensely gracious and open to sharing about how they’ve helped themselves. I encourage you to reach out to them for inspiration. Even though their approach may not work with precision for you, you will no doubt take away some valuable ideas to apply in your own quest for empowerment.

4. Start the day on a note of gratitude.

I make it a point to devote a few minutes every day to consciously thinking about everything I have to be thankful for. What better way to get a positive start? It immediately puts me in the right frame of mind for dealing with whatever work and life will bring my way. This is so simple to do. I dare you to find an excuse as to why you can’t try this!

5. Acknowledge that mistakes and setbacks happen.

Because they will. The good news is they won’t make you a failure unless you dwell on them. Get beyond goofs and misfortunes by treating them as lessons learned and by remaining agile so you can shift gears and move in a new positive and productive direction.

6.  Don’t be afraid to say “no” or voice your position. 

If people ask too much of you, learn to say “no.” Overextending yourself will create excess stress and pull you away from what really matters. Also, don’t be afraid to voice your opinion when you disagree adamantly about something. Although initially you might meet criticism, in the long run you’ll gain more respect. Most importantly, you’ll respect yourself—and that is mission critical for feeling empowered.

Empowerment Begins With Embracing Its Power

Whether you’re a female or male entrepreneur and regardless of whether you’re just starting a business or have been running your company for years, empowerment wields great power. I urge you to embrace its potential to help you mold your vision and achieve your goals and dreams.

Providing legal document filing services at affordable rates, CorpNet.com helps business owners save time and money. Empower yourself by knowing your business registration and compliance filings are in capable hands. Contact us today!

Should You Buy A Business Or Start One From Scratch?

Hope your New Year is off to a great start! As you’re looking to make 2017 a year of prosperity, have you set your sights on becoming a business owner? If so, you’re probably wondering whether buying an existing business or starting your own company will offer the best chances of success.

Both have their advantages and challenges, so how do you choose? I wish there were an easy answer, but I’m afraid you’ll need to do some research and put some serious thought into your decision. As you explore your options, consider the following pros and cons of starting a business from scratch and buying an established one.

Pros Of Starting From Scratch
• You begin with a squeaky clean slate, establishing and building your brand reputation from Day 1.
• You build your team fresh and new, selecting the right people for the right positions.
• You create your workflows to maximize productivity, without having any inefficient past processes to “fix.”
• You choose and develop the products, services, and packages you’ll offer to your customers.
• You establish your pricing to ensure profitability from the start.
• You choose your business’s legal structure to ensure the degree of liability protection you need and the most favorable tax situation.

Pros Of Buying A Business
• You have customers and incoming revenue immediately.
• You have employees who already know how to do their jobs and don’t need training.
• You have built-in processes and systems to operate your business efficiently.
• Your services and products are already to market, and you have established sales channels to get them into customers’ hands.
• Your business is already registered and has the necessary permits and licenses to operate legally in your state.

Cons Of Starting From Scratch
• You do all the legwork, including researching the registration requirements to form an LLC or incorporate your business and filing your state, federal, and local paperwork to operate legally.
• You don’t know for certain that your business idea will be viable and sustainable.
• You have to develop and put into place all the internal systems and processes needed to operate your business.

Cons Of Buying A Business
• Existing employees may be resistant to accept your leadership.
• If you find processes aren’t working efficiently, it may be difficult to initiate change because everyone is used to doing things a certain way.
• You may discover the legal business structure the former owners selected isn’t ideal.
• You may find your brand’s reputation isn’t as positive as you’d like it to be—that might be difficult to turn around.

As you can see, there’s a lot to think about as you weigh the options of starting your own business or purchasing one that is already up and running. I advise you to do your homework before deciding which route to travel. And consider seeking the guidance of respected and reputable professionals (attorneys, accountants, business consultants, etc.) who can help you understand the financial and legal aspects of what’s involved.

Remember, whether you’re starting a business or opt to buy and run one that’s already established, CorpNet is here to assist you with all your business registration and compliance obligations. Contact us today to help you take care of your filings so you can take care of business!

 

 

Dos And Don’ts When Transferring Leadership Responsibilities: Lessons To Learn From Obama and Trump

Changes in leadership don’t always happen seamlessly—or amicably. As is evident with the imminent transfer of leadership from President Obama to President-Elect Donald Trump, many factors influence how smoothly (or not) a change in authority will happen.

Whether you’re taking over running a business or handing over the reins to your responsibilities to someone else, expect some bumps in the road. But be careful not to become a source of agitation and dissent through the process. This recent presidential election, which has been simultaneously entertaining and frustrating at times, can teach us some valuable lessons about what to do and what not to do during a leadership transition.

 

Lessons Learned From Obama and Trump: The Dos And Don’ts Of Changing Leaders

  • Don’t undermine the capabilities of either the incoming or outgoing leader.

If you’re the new boss in town, bad-mouthing the outgoing person in charge won’t sit well with those loyal to their incumbent leader. And if you’re the one passing the baton, lack of confidence in the new leader will create distrust and distract employees from performing to their potential. To minimize the stress your team may already be feeling over the change, resist the impulse to undercut the qualities and strengths of one another

  • Don’t expect everyone to be enamored with the change.

While some of your staff members might be excited about the new era ahead, you can bet others will be anxious, annoyed, or angry—possibly all three. Prepare to bear the brunt of their harsh criticism whether you’re the new leader or the one leaving your post.

  • Don’t underestimate the power of words.

I saw a quote online that really resonates with me, “Words are free. It’s how you use them that may cost you.” Keep this in mind as you navigate the challenges of handing over or accepting leadership responsibilities. Through this recent presidential election, we’ve seen how choosing and using words reactively can create animosity and negativity. Before speaking and before writing, pause to think about your words and choose them carefully before you share them with business colleagues, employees, vendors, customers, and the public at large.

  • Do show enthusiasm for continued progress toward common goals.

Find points of agreement where you and the other leader can demonstrate unity. Sure, you may not see eye to eye about plenty of things related to how the business should be run, but now isn’t the time to dwell on that. Your employees need to have some sense of consistency and common ground.

  • Do provide/accept information and insight to make the transition fluid.

As the outgoing leader, be cooperative by openly sharing essential information with the new leader so she can more adeptly step into your shoes. As the new leader, be open and receptive to the insight the outgoing leader has to share. Put ego aside and realize your predecessor has knowledge and experience that can help you lead more effectively.

 

Your Top Priority As A Leader

Both outgoing and incoming leaders have one thing in common: a job to do! Pointing fingers, making snarky remarks, and stirring up drama will only distract you from doing right by those who work in your business and those who do business with your company. If you keep that in mind through every step of the process, the transfer of leadership will go much more smoothly.

 

Remember, Corpnet.com is here to help leaders of businesses in all industries take care of the business filings needed to legally run their companies. Check out our FREE Corporate Compliance Tool, and contact us today about how we can save you time and money.

 

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By | January 13th, 2017|Corporate & Business Law, Entrepreneuring|0 Comments

To-Dos When Starting a Part-Time Business

So you’re not ready to quit your “day job,” but you want to start a business? Many entrepreneurs dip their toes to test the waters by launching their businesses part-time. In some ways, it’s the best of both worlds; you pursue your dream of business ownership while still bringing home a steady paycheck.

Although there are some considerations unique to starting a business part-time, you’ll find other aspects are the same as when starting a company full-time.

For example, you have to take the necessary steps to operate your business legally.

 

  1. Make sure you can legally use your business name.

Either check your state’s Secretary of State database or do a corporate name search to see if anyone else has registered the name you want. I also advise using CorpNet’s free trademark search tool to see if someone has already filed for a trademark on the name.

  1. Select a business structure.

By default, your business will be considered a sole proprietor unless you file for a different legal structure. Operating as a sole proprietorship offers simplicity, but it does not separate your personal and business finances and liabilities. That means if your business is sued, your personal assets might be in jeopardy.

I recommend considering formally registering your business by either forming an LLC (Limited Liability Company) or incorporating (C Corporation or S Corporation) to protect yourself. Doing so shields your personal assets from the liabilities of your company.

Before talking with an attorney for guidance, you can start learning about the advantages of different business structures by using CorpNet’s Business Structure Wizard.

Note that the different structures offer different taxation pros and cons, so I suggest also talking with an accounting or tax professional to explore which structure will work best for you in that respect.

  1. Register your business name.

When you form an LLC or incorporate your business in your state, registration of your name automatically happens. However, if you choose to operate as a sole proprietor and want to use a fictitious name for your company, you must register your business name by filing a Doing Business As (DBA). Don’t skip this step! It will allow you to operate your business under that name in your state and it will prevent other sole proprietors in your state from using that name.

  1. Get the licenses and permits you need.

Depending on the type of business you’re operating and where you’re located, you may have to secure licenses and permits to legally run your business. Federal, state, county, and/or local licenses and permits might apply to you. To avoid costly penalties and fines, research which permits and licenses you need to have to legally run your business.

 

Part-time Doesn’t Mean You Should Approach It Half-Heartedly.

Aside from the legal considerations in starting your part-time business, keep these things in mind, as well:

  • Know your limits.

There are only so many hours in each day, so carefully assess your capacity to work in and on your business before jumping in.

  • Make sure there’s no conflict of interest or legal restrictions.

Check with your employer about any rules that would prevent you from starting and operating your type of business while still on that company’s payroll.

  • Take it seriously.

Although you may still be working for someone else in your other job, you’ll need to give your part-time business serious time and energy if you ever want to make it a full-time endeavor.

 

Need Help Getting Your Part-time Startup Off The Ground?

If you’re planning to give part-time entrepreneurship a go, CorpNet is here to help you take care of all the business filings required to legally launch and run your business. Contact us today to make sure your part-time business has all of its registration paperwork submitted accurately and on time.

By | January 11th, 2017|Running A Small Business, Starting a Business|2 Comments

Ready Or Not – Is Your Business Prepared For 2017?

Congratulations on what I hope has been another prosperous year for your business! With 2016 coming to a close, now is the time to reflect on your successes and what you still need to do to make sure you’re set to make the upcoming year better than ever.

Do you have all of your business’s end-of-year responsibilities wrapped up?

Here’s a list of questions I recommend you ask yourself, so you can identify what you still need to take care of before the New Year begins:

  1. Have you organized all your accounting and tax records?

Tax time can be painstaking enough without needing to dig through a disorderly pile of receipts, invoices, and other paperwork. The more organized you are with your income, expense, charitable giving, past tax returns, W-9s, 1099s, etc., the less time and fewer headaches you’ll have when working with your accountant or tax preparer.

  1. Did you prepare and approve your 2017 budget?

Having a budget for the upcoming year can help steer your finances in a positive direction. Your budget will help you establish limits on expenses related to the various areas of your business. By identifying what you expect to spend throughout the year and how much revenue you expect to take in, you can more quickly recognize what has gone amiss if profitability isn’t where you want it to be.

  1. Is your marketing plan in place for the New Year?

Just as your budget can guide your business’s finances, your marketing plan will provide a roadmap that drives which strategies and tactics you’ll use to promote your business. And it will help ensure you schedule time to execute them. From printing advertising materials to engaging on social media to creating website content to exhibiting at trade shows to launching email campaigns, your marketing plan should identify all of the ways you intend to get your business in front of prospective customers.

  1. Have you assessed your need for new hires?

If you had a difficult time growing your business this year because you were understaffed, maybe it’s time to add employees. It will take some time to create job descriptions, determine wages/salaries (and put them in your budget!), and work through the other considerations that go along with hiring, so begin now. That way you’ll be able to begin accepting resumes and interviewing candidates as early as possible in the New Year.

  1. Have you reviewed your business structure to make sure it’s still the right fit?

If you’d sleep better at night with a greater degree of liability protection or if your business’s tax situation isn’t ideal, it may be time to change the legal structure you selected for your business. This is especially true for sole proprietors. Either forming an LLC or incorporating your business will separate your personal assets from those of your company. So personally, you will have limited liability if your company were to be sued. That means your home, vehicle, savings accounts, etc. will have more protection than if you continued to operate your business as a sole proprietorship.

You can use our Business Structures Wizard as a resource to help determine which structure might be best in your situation. Before making a decision about changing your business structure, however, I recommend talking with an attorney and tax professional to make sure you understand all the pros and cons of each option.

Ready Or Not—The New Year Is Near

How did you fare after answering the above questions? If you’ve discovered you’re not quite prepared for 2017, I say, “Better late than never!” Try to schedule some time between now and the end of the year to tackle at least a few of the to-dos. A little work now can go a long way toward putting your business on the right path in the New Year.

Planning to change your business structure in 2017? Don’t deal with the hassle of completing and submitting all the paperwork on your own. At CorpNet we’re here to take that off of your plate, so you can spend your time and energy growing your business. Contact us today!

By | December 20th, 2016|Business Checklists|2 Comments

5 Ways to Keep On Top of Your Accounting

A small business lives or dies by its cash flow. If you’re not staying on top of your accounting, you could be making significant mistakes that can derail business growth. Failing to reconcile your business bank accounts, not keeping track of income and expenses, or waiting to apply payments to open receivables leads to incomplete or incorrect accounting information.

Business accounting doesn’t have to be an onerous task. With the right mindset, tools, and support, you can stay on top of your accounting and keep accurate track of your business’ income and expenses. These five tips will help you manage your numbers even if you’re not a ‘numbers’ person, and keep careful track of your accounting data.

Five Ways to Handle Small Business Accounting

  1. Hire an accountant: Some business owners have neither the time nor the inclination to complete their own accounting tasks. For these business owners, hiring an accountant makes sense. Look for a local accountant so it’s convenient to meet with your accountant on a regular basis. Make your accountant’s life easier by collecting all of your paperwork in a folder or envelope, and organizing it before your meetings. Keep track of all expenses, save receipts, and include bank statements and other payment indicators. To find a small business accountant, ask at your Chamber of Commerce or local business meetings, look through local listings, and schedule interviews and appointments with a few to find someone who has the skills and experience you need for your small business accounting needs.
  2. Purchase and use accounting software: There are many excellent small business accounting software packages on the market today. Each can be customized for your business needs. Accounting software makes it easier and simpler to track expenses, apply payments to open receivables, and track customer expenses. If you aren’t sure how to set up your books for the year, speak with a local accountant. Some are certified by accounting software providers such as QuickBooks to teach and manage the software packages and will set up your system for a nominal fee. This service may even be free of charge if you use the same accountant for your taxes and end of year accounting, depending on who you work with. While QuickBooks may be the popular software, there are plenty of alternative options to choose from to fit your business needs.
  3. Set reminders: Common small business accounting mistakes include not updating your books regularly, failing to send invoices on a timely basis, and leaving open invoices unpaid. Set weekly or monthly reminders for accounting tasks. Block and hour or two to update your books regularly and track down unpaid invoices. A simple calendar reminder on your smartphone or in your calendar tool on your computer can help keep you up to date and on-task with your accounting needs.
  4. Set and keep an invoice schedule: Make sure you establish a schedule to invoice customers or clients. Each business owner must evaluate and determine a schedule to invoice customers, but make it a routine to keep your cash flow even and regular. A service provider may send invoices upon completion of the service. Others may choose to invoice customers on the last day of the month or the 15th. The schedule itself does not matter, but having a schedule does. The more you can make invoicing a simple routine, the easier it is to stay on top of it.
  5. Organize your paperwork: By far the biggest hurdle many small business owners have to leap is staying organized. This can be especially problematic for businesses on the go, such as lawn care companies, mobile food trucks, and others who work in a non-traditional office setting. Many items can be organized and stored on your laptop, smartphone or a cloud-based file system such as Google Docs, but others involve paper receipts. These should be stored in a central location until you are ready to tackle your accounting. You don’t need a fancy storage system; a shoebox or an envelope can suffice. Just be sure to use it regularly and store it in a safe place until you are ready to input your data into your accounting software or drop it off at your accountant’s office.

Professional Advice Is Invaluable

Even if you choose the do-it-yourself route and handle your own basic accounting, a yearly ‘checkup’ with a professional accountant or CPA is highly advisable. Small business accountants are both numbers-ninjas and business strategists. They can advise you on how to use accounting software, the latest IRS rules, changes and requirements, state taxation laws, and other issues pertinent to your accounting needs. With a good accountant by your side, you can be sure that your business’ financial information is handled competently.

What Should You Do If Your Business Is “Inactive”?

Just because you’ve stopped working with customers, taken down your website, and aren’t making money from your business, it doesn’t mean your company is considered “closed.”

Closing a business, whether an LLC or corporation, requires formally dissolving it with your state. If you don’t, you could be stuck with the responsibilities of filing your inactive business’s annual reports and state/federal tax returns. And you may be legally obligated to renew your business licenses and permits, too. All of that costs time and money. So if you’ve stopped doing business and are sure you want to retire your company, the sooner you legally dissolve it the better.

With the end of 2016 around the corner, now is a wonderful time to take action and close your business if it’s inactive. Wouldn’t it be nice to set yourself free from any tax and filing obligations related to that inactive business in the New Year?

But, what’s the right way to go about closing your company?

 

Here’s a checklist of what you need to do:

 

  1. Formally Dissolve The LLC Or Corporation.

You’ll need to formally dissolve the legal entity with your state.

  • With a corporation, all business associates need to vote on closing the business. If your corporation hasn’t issued shares, you need the approval of your Board of Directors to dissolve your business. If your corporation issued shares, two-thirds of the voting shares need to agree to dissolve the company.
  • With LLCs, dissolution rules vary from one state to the next. Make sure you review the requirements in your state’s Limited Liability Company Act.
  • Depending on the state where your LLC or corporation is registered, you’ll either need to file an “Articles of Dissolution” or “Certificate of Termination” with the Secretary of State’s office.

 

  1. Pay Your Debts.

To properly close your business, you must settle all your company’s financial obligations. Typically, LLCs and corporations need to pay their debts before they can legally distribute money or assets to their members. If your business falls short with its resources to pay its debts, seek an attorney’s help to determine your options.

 

  1. Contact Your County To Cancel Your Business Licenses And Permits.

Don’t forget to cancel your business license, seller’s permit, and any other types of licenses and permits your business filed for to operate legally. If you neglect to cancel them, the county will think your business is still in operation and they may continue to charge you fees and taxes.

 

  1. File Final Tax Returns And Close Your Business’s Federal And State Tax Accounts

In addition to your state, the IRS will also need to know you’re closing your business. File your final state and federal tax returns. On your tax return, you can indicate it’s your final return by checking the box that specifically identifies it as such. Also, cancel your Employer Identification Number (EIN). If you have/had employees, make sure your business’s payroll withholding taxes are current. If you don’t, you or other owners/members might find yourselves personally liable for paying any outstanding payroll taxes.

 

Wrapping It Up

Besides the four steps I’ve mentioned above, also inform your customers, contractors, and vendors that you’re officially closing your business. Even if you haven’t actively worked with them for a while, it will show consideration and respect if you proactively communicate the dissolution of your company.

While your current business may be closing, don’t underestimate the power of maintaining and nurturing the professional relationships you’ve built along the way. As you move on to a new career or start a new business, keeping the lines of communication open may open the door to new and exciting opportunities, as well.

Do you have an inactive business? File your Articles of Dissolution with CorpNet and get the peace of mind that your dissolution paperwork is filed accurately by asking CorpNet to help!

Do you need help filing your dissolution or have a question regarding the process? Call the CorpNet.com team today for a free business consultation at: 888.449.2638

Will Your Business Need Financing in the New Year?

As you plan and set goals for your small business in 2017, one area to look at is financing. Will you need additional funding at some point in the New Year? If the answer is yes, how will you raise the money? Take a closer look at the two primary means of raising capital — equity financing and debt financing — and what you need to know about each.

Equity Financing

In equity financing, you give up a piece of your business (equity) in return for an investment of capital. Equity investors may be private investors, venture capital companies or even your friends and family.

Angel investors are the most realistic source of investment capital for most small business owners. Angels are private investors; some invest individually, while others form angel groups to pool their money. Generally, angels are experienced business people, former business owners or professionals. In addition to the capital they can provide, they can also offer much needed business guidance and expertise.

If your small business has strong growth potential in an industry such as technology or healthcare, you may be able to get venture capital. Venture capital firms tend to focus on businesses with a track record of success and potential for rapid growth with a high return on investment. They make large investments, but in return, will want to have a strong say in your business and possibly even take over management.

If you plan to seek capital from investors, it’s important to make sure the business structure you chose will allow what you want to do. For example, if you operate as a sole proprietor, you won’t be able to take on equity investors, since there is no separate “company” to invest in.

A general partnership, C corporation or limited liability company (LLC) form of business all enable you to sell shares in your business. However, if you have an S corporation, the number of shareholders you can have is limited to 100, which could be a problem. In addition, the S corporation form limits what type of person or entity can be a shareholder or owner, which could cause problems either in raising capital or transferring ownership of shares down the line.

While taking on investors may seem like an easy solution to getting the money you need, you should think carefully before giving away equity in your business. Depending on the amount of equity they control, investors can make it more difficult for you to make decisions about your business without their input. Your relationships with investors, even those you are currently close to, may change in the future, leading to unforeseen difficulties. If you give up too large a stake in your business, you may eventually lose control of it altogether.

Debt Financing

As the name implies, debt financing means taking on debt that you need to repay at some point. Typically, this means a bank loan. However, debt financing can also take the form of loans from friends and family, credit unions, or alternative financing sources or even taking credit cards advances.

Business loans can be secured or unsecured. Secured loans require you to put up some collateral, such as business equipment or your house, to obtain the loan. Unsecured loans don’t require collateral, but are often more difficult to get and have higher interest rates and fees.

If you’re seeking a bank loan, the best place to start is with a bank that makes Small Business Administration (SBA) loans. SBA loans are partly guaranteed by the SBA, which makes banks more willing to lend to small businesses they otherwise might consider risky borrowers.

Other sources of debt financing include:

  • Equipment financing: If you are purchasing business equipment, the company that makes the equipment may have financing options available.
  • Invoice financing: Invoice financing companies advance you money based on the amount of your outstanding invoices.
  • Factoring companies: Similar to invoice financing, factors purchase your outstanding invoices for a percentage of their value, and then take over collecting on the unpaid invoices for you.
  • Merchant cash advances: If your business makes most of its sales via credit cards, such as an e-commerce business or retail business, you may be able to get a merchant advance based on the amount of your average credit sales.

The Right Choice

To make sure you’ve selected the right form of business for your financing needs, it’s best to discuss it with your attorney and accountant before making any decisions. If you need to make changes to your business structure before seeking financing, start now so you’ll be ready to go after the capital you want in 2017.