/Tag:start an LLC

All About the Limited Liability Company (LLC)

705_3546162Here at CorpNet, one of our biggest services is helping business owners form an LLC and manage the business filings to register their business with the state authorities. Deciding to form an LLC can be one of the best business decisions you’ve ever made, especially if you want flexibility with regards to taxation, ease of including partners or operating as a sole proprietor, and most importantly, the “limitation of liability” to protect your personal assets from the debts or liabilities of your business.

Since we work so often with entrepreneurs who want to form an LLC, we’d like to dedicate today’s blog post to tell you all about this unique, flexible, adaptable corporate structure.

What is an LLC?

LLC is short for “Limited Liability Company,” (NOT a Limited Liability Corporation)  which is an interesting definition – unlike a C-Corporation or S-Corporation, an LLC is not technically a “corporation” in the same sense. The LLC acts like a hybrid business entity, giving the owner some of the same characteristics as a corporation, but with the pass-through taxation and flexible operations of a sole proprietorship.

What are some of the main advantages of incorporating a business as an LLC? Continue reading “All About the Limited Liability Company (LLC)” »

Want More Customers for Your Small Business? Give them what they want!

In the movie, “Big Night,” Stanley Tucci and Tony Shalhoub play two Italian brothers who run a struggling restaurant in New Jersey. Primo, the chef, is insulted when a guest wants risotto and spaghetti in the same meal. Real Italian chefs do not want to serve two starches in the same meal – it’s considered vulgar and undignified. Primo feels disrespected and demands to speak to the customer to persuade her to order the “correct” combination of food.

Secondo, the waiter, tells his brother to make the pasta. Even though his feelings are hurt, he knows that the restaurant is struggling and that the customer is always right. Secondo says to his brother, “We have to give people what they want before we can give them what we want.”

This scene is a good example of how sometimes as entrepreneurs, our expectations of what customers want do not always align with the reality. Sometimes the “can’t miss” new product or “in-demand” service we expected people to love does not find its audience. Sometimes customers want something that we don’t expect – sometimes the customer’s favorite item on the menu is the one the chef least expected.

How can your business learn from the lessons of “Big Night?” Continue reading “Want More Customers for Your Small Business? Give them what they want!” »

By | June 15th, 2012|Marketing Your Business, Running A Small Business|0 Comments

3 Reasons NOT to Incorporate as an S Corporation

285_2811074The S Corporation has become one of the most popular business structures in America because of its tax advantages and other benefits – but what if you are trying decide how to incorporate a business and you’re not sure if an S Corporation is the right choice for you?

If you’re trying to choose a business structure, there are several reasons why an S Corporation might not be the right choice.

  • You’re a sole proprietor who doesn’t want the hassle: If you’re a solo entrepreneur or sole proprietor with a “payroll of one,” it might not make sense for you to set up the extra structure and formalities and compliance obligations that go with an S Corporation. If you incorporate as an S Corporation, you need to set up a board of directors, file annual reports and other business filings, hold shareholder’s meetings, keep records of your meeting minutes, and generally operate at a higher level of regulatory compliance than your business might need or want to deal with. You also will need to “do payroll,” to pay your employees, even if you’re the only employee. This can create extra costs and operational challenges. Instead of dealing with all this red tape and complexity, forming an LLC might give you greater simplicity and ease of doing business. With an LLC, as a sole proprietor you don’t have to create a board of directors or jump through as many regulatory hoops.
  • You want venture capital: S Corporations offer important tax advantages for small business owners – but there’s another side to that coin; the IRS only allows S Corporations to issue one class of stock. With an S Corporation, there are no “preferred shares” or specialized tiers of stock with special privileges or benefits for the shareholders. If your company wants to attract venture capital or “angel investor” financing, you might be better off as an LLC or C-Corporation, since venture capital investors often want “preferred shares” of stock in your company (as a condition of giving you their money).
  • You want to grow and go public: S Corporations are designed for smaller businesses and so there are limitations on ownership of an S Corporation. An S Corporation can have a maximum of 100 shareholders (married couples and families count as a single shareholder for this purpose). In contrast, big publicly traded companies that incorporate as C Corporations can have millions of shareholders. So if you have big growth plans for your business, incorporating as an S Corporation is probably not the best choice for your long-term future.

Continue reading “3 Reasons NOT to Incorporate as an S Corporation” »

Ways of adding value with your small business marketing

609_3564269A much more comfortable place to be is to have a business that adds value. The more value you add with your business, the bigger your profit margins.

One example of a commodity business vs. a value-added business is in the farming sector. Most people’s idea of a “farm” involves big tractors and long rows of crops. This is the “commodity” side of the farming business – you need vast amounts of land, lots of expensive equipment, and you sell massive volumes of corn, wheat or soybeans for a small profit margin.

But recently, there is a growing trend for smaller-scale farmers to grow organic crops using more environmentally friendly farming methods. The organic foods that these farms produce are able to command a higher price, enabling these smaller farms to be successful without as much land and capital investment. This is an example of adding value to a “commodity” business.

Most small businesses are an exercise in finding a way to add value and avoid becoming a commodity. If you’re running a small business, chances are you want to be more like an “organic farm” than a large-scale “commodity crop farm.” Small business success is all about carving out a niche where you can be profitable, and competing on a different playing field than the big players and “800-pound gorillas” in your industry.

 

Continue reading “Ways of adding value with your small business marketing” »

The 3 Biggest Tax Advantages to Forming an S Corporation

775_4402069As anyone who has ever decided to start a business can tell you, paying taxes is one of the biggest challenges and drawbacks of being in business for yourself.

If you’re self-employed, you have to pay an extra share of self-employment taxes (the payroll taxes that pay for Medicare, Social Security, unemployment benefits and other ongoing government programs).

If you’re an employee, these taxes get withdrawn from your paycheck and you might not notice how much you’re paying. But even as an employee, payroll taxes add up to about 7.5% of your income (up to $90,000 – any income over that amount is taxed at a lower rate for payroll tax purposes).

When you start a business and become your own employer, if you’re paying taxes as a sole proprietor, you have to pay TWICE as much payroll tax as you used to pay as an employee – both the 7.5% employee share and the 7.5% employer share. This means that about 15% of your business income is going to payroll taxes. Continue reading “The 3 Biggest Tax Advantages to Forming an S Corporation” »

6 Mistakes To Avoid When Incorporating Your Business

 

35_2516978The portrait of today’s worker is undergoing a fundamental shift. Fueled by advances in cloud-based, social and mobile technologies, companies are choosing to gain agility and savings by leaning on an always-on virtual workforce of contingent employees.

According to Freelancers Union, there are approximately 42 million Americans who make their living independently—that’s 30 percent of the workforce.

Forget about a traditional 9 to 5 at the office. Workers in this new freelance economy find that they need to become their own marketing experts, accountants, sales and IT gurus. And somewhere along the way, small business providers, contractors and freelancers need to grapple with selecting a business structure.

Forming an LLC or corporation can be a relatively quick and easy process, but most small business owners aren’t exactly experts in tax and business law. There are a bevy of mistakes that can have a significant impact on their business; here are six of the most common. Continue reading “6 Mistakes To Avoid When Incorporating Your Business” »

How to Avoid Double Taxation: S Corporation or LLC?

804_4160245Here at CorpNet, we hear from entrepreneurs every day who are trying to decide the best way to start a business or incorporate an existing business. We offer free business consultations to help people learn the ins and outs of choosing a business structure, and one of the most frequently-asked questions we get is “How can I decide between an LLC and S-Corporation?”

Most small business owners want to limit their personal liability and protect their personal assets from those of the business. Any business structure, whether it’s an LLC, S Corporation or C Corporation, can achieve this goal of personal asset protection.

The biggest differences between forming an LLC and incorporating as an S-Corporation arise when you start to look at the more complex issues of taxation, corporate structure and regulatory compliance.

If you’re a new entrepreneur or longtime small business owner who’s trying to figure out how to choose between an LLC and an S-Corporation, here are a few considerations to keep in mind: Continue reading “How to Avoid Double Taxation: S Corporation or LLC?” »

By | May 7th, 2012|Forming An LLC, Incorporating a Business, Taxes|0 Comments

To succeed as an entrepreneur, “Think like an immigrant.”

At my last corporate job, one of my favorite co-workers wasn’t actually a “co-worker,” he was one of the janitors. His name was Fidencio, and he was an immigrant from Mexico who was part of the team of custodians that cleaned the building and mopped the floors outside my row of cubicles. Fidencio had a wife and two daughters back in Mexico, and he sent money to them every month.

Most people might think that being a janitor is a lowly, dead-end job, but Fidencio made the most of it. He was always making friends with people at the company, he was always talking with people (he could talk to ANYONE from entry-level staff to senior executives, and everyone knew his name) and was generally just a very outgoing, friendly, positive presence at the office.

Fidencio was always happy to be at work. I always asked him, “Fidencio, how are you doing today?” And he’d say, “I’m awesome!” I talked with Fidencio about all sorts of things, whether it was work or family life or more serious topics; one time, after a friend of mine had committed suicide, I told Fidencio about it while we were walking out to the parking lot after work, and he said, “That’s so sad, you know? Because life is so good!” And I really remember being impressed by that statement. Continue reading “To succeed as an entrepreneur, “Think like an immigrant.”” »

By | May 2nd, 2012|Business Tools, Running A Small Business|0 Comments

Starting a Business? Make it Personal!

A lot of people think, wrongly, that deciding to start a business is all about money and technology and processes and managing details. This couldn’t be farther from the truth.

While all those other things are important, the truth is, when you decide to start a business, you’re not just taking a financial risk or trying to make more money or have a nicer car – you’re putting your heart and soul on the line.

Lots of people think that running an online business is impersonal or mechanistic or “cold” or even “hands-off” and “easy”– you just set up a website and watch the money come in, right?

WRONG. The truth is, as I’ve learned from starting a business online, is that running an online business is not an impersonal, arms-length endeavor. If anything, running a business online and marketing your business online means that you have to make your business more “personal” than ever before.

People can find out about your company via your website, Twitter, Facebook or other social media, but the difference maker is the human element – the personal touches and insights into your character (and your company’s character) that make people want to identify with you and buy from you. Continue reading “Starting a Business? Make it Personal!” »

By | April 13th, 2012|Starting a Business, Startups|0 Comments

Why Choose CorpNet instead of a “Cheaper” Incorporation Service?

Here at CorpNet, we often hear from prospective customers who are asking for a discount, or who are trying to get the lowest price on incorporation services.

I know that the economy continues to be tough and businesses of all sizes are trying to cut costs. Especially if you’re an aspiring entrepreneur who’s decided to start a business for the first time, we know that every dollar counts and you need to spend smarter than ever before.

But ultimately, we believe that if you want to start a business the right way and incorporate your company on time, with accuracy and reliability and helpful advice, it’s worth paying a bit extra for high quality incorporation services.

CorpNet already offers highly competitive prices, and we often offer special discounts for occasions like Black Friday. But the reason we charge the prices we do – and the reason we won’t go any lower – is that we offer a premium service. Not only do you get a good price from CorpNet, but you also get unmatched expertise, responsiveness and timeliness. We get the job done the right way, on time, every time!

Continue reading “Why Choose CorpNet instead of a “Cheaper” Incorporation Service?” »