Category Archives: ABCs of Small Business

X is for Xenodochial… or (e)Xcellent Customer Service!

Posted on by

Obviously, we struggled a little bit with the letter X. There aren’t a lot of topics that lend themselves well to this particular letter, so unless we wanted to discuss the ins and outs of running a xylophone business, we had to expand beyond our normal vocabulary. Enter xenodochial, a long word that essentially means being nice to strangers – a quality that businesses must exhibit if they ever hope to attract new customers! But for simplicity’s sake, you can also think of X as standing for (e)Xcellent customer service.

Truly the most confusing letter.

There are a lot of theories on how to best serve your customers, but in reality there is no one answer on how to provide good customer service. Instead, there are multiple factors that have to built into how a business interacts with its customers.

First, though, it us up to the business owner to determine what their customers expect from them in terms of interaction. After all, what works in a restaurant may not necessarily work for a tire shop. Part of finding your niche is learning what your customers expect, and then working to meet those expectations. After you figure that out, you can begin training your employees on how best to interact with the customers. Do they want to be greeted at the door? Updated on new products? Treated like close friends? Part of running a business is organically zeroing in on answers to those types of questions. While a business book can give a laundry list of recommendations, customer service expectations and policies should be built on your experience with your customers.

Of course, good customer service goes beyond your interactions with your customers. You also need to make sure your employees are happy and treated well by the management – yes, they should always work in the interest of the company and people that pay them, but you can always tell when someone hates working somewhere. A disheartened, unmotivated employee may not treat customers poorly, but they certainly won’t work to make sure they have an excellent experience.

Finally, there are three parts of customer service that advisors and analysts constantly harp about – knowledge, body language, and anticipating needs. Though these three things border on cliché, they can be useful as long as they aren’t the only three parts of customer service focused on. Everyone who works for the business should be knowledgable about what the business sells, should be able to make eye contact and smile, and should be able to anticipate common customer needs so that customers feel that the business went “above and beyond” (if you will pardon another cliché) while helping them.

Xenodochial may be a complicated word, but customer service doesn’t have to be. Honestly, a lot of what creates a good customer experience is common sense. Treat your customers well and know what you are talking about. When you hire people to work for you, make sure they know and do the same. Small businesses have an advantage over giant corporations because they can still inject a bit of that personal touch into how they interact with their customers. And, as long as your employees feel as though they are an important part of your business’s success, they will be willing to work hard to maintain that level of customer service you worked so hard to build.

Share!!!

W is for Withdrawal

Posted on by

Today on the ABC’s of small business we’ll be covering the basics, and the benefits, of what it means to file for a withdrawal for your company.

As previously covered here on MyCorp, corporations or LLCs that have previously foreign qualified in a state other than their home state to legally operate and conduct business in, file for a withdrawal in order to stop doing business in that state. By filing for a withdrawal, this ensures the business will have no further obligations to that state and the sooner the withdrawal is filed for review, the better. The more changes a business undergoes, it may become necessary to stop operating within certain states and expand to others instead.

Filing for a withdrawal provides more benefits than simply being able to stop conducting business within that particular state you withdraw from. Additionally, you’ll be able to prevent late fees and additional changes and avoid paying unnecessary taxes and annual state fees for your business within that state. Once your withdrawal order form has been filed and approved by the Secretary of State, you will have terminated the corporate existence in that state.

As a quick side note, before you start filing, remember that all required fees, penalties, and costs must be paid in order for the application for withdrawal to be considered complete with most jurisdictions.

Share!!!

V is for Venture Capital

Posted on by

Venture capital is a bit misunderstood due to the press venture investments often receive. It seems like every week or so the news is covering some start-up that raised an inordinate amount of venture capital for an idea that sounds, at best, a bit shaky. 

But that tenuous relationship between a business idea and its application is what turns an investment into an injection of venture capital. Venture capital is, in a nutshell, the money that is invested into an early-stage, high-risk company that is believed to have the potential to yield huge returns, if it succeeds.

Normally, the businesses that secure venture capital have to be novel – so IT, biotech, software, and other technology based companies are the ones we hear about. Occasionally the focus on a particular type leads to what we call ‘bubbles’ – the dot-com boom and bust of the early 2000′s, for example, was partly due to an high level of venture capital being invested in fledgling internet-based companies that, usually, weren’t worth as much money as people thought. When these companies inevitably failed, a lot of VC firms, funds, and investors lost money. These various investment groups are now, perhaps thankfully, a bit more cautious with the types of business they invest in.

Obviously, securing an investment from a venture capital fund or firm is not like getting a traditional loan – you do not have to pay that investment back. Instead, a business that has received venture funding gives the investors a stake in the company, typically in the form of shares. If the company does well, these shares will increase in price. A venture capitalist or firm then, usually, sells their shares when a larger company comes around offering to buy the start-up. By then the shares have increased in worth, and everyone gets their money back, plus a substantial return on their investment.

So, with all of this in mind, how does a business go about raising venture capital? Well, you first need a really, really good idea – because of their past mistakes VC firms and investors are very wary with their money. They already have to contend with businesses that have a higher rate of failure than most, and they are picky about who they choose to invest with. You also have to be ready and willing to give them something in return for their early investment. They will, after all, be rather large shareholders in your business, which means they probably expect a say in how things are run. When getting your pitch ready for a VC firm, spend some time crafting the answer to the inevitable ‘What’s in it for us?’ question that will be asked.

Despite the frequency at which it appears in the headlines and on TV, venture capital is fairly hard to raise, and only a few specialized businesses will actually be able to find someone willing to roll the dice and invest in the company. It is also just one of many, many different ways to raise money. Before you start knocking on doors, then, remember to weigh all of your options, look into alternative sources of funding, and make sure you truly want become involved with venture capital investments.

Share!!!

U is for… U.S. Small Business Administration

Posted on by

Welcome to the U.S. Small Business Administration edition of the ABCs of MyCorp; a very important component of the small business community.

What is the U.S. Small Business Administration and what exactly do they do?

According to SBA.gov, the USSBA was founded on July 30, 1953. Even from their early days, the USSBA has been dedicated to aiding small businesses in the three Cs: capital, contracts and counseling.

They make all sizes of loans available from helping a business with their debt to just raising capital in general. They focus on federal procurement; their Office of Government Contracting works with other federal departments and agencies to set goals and “reach the statutory goal of 23% in prime contract dollars for small businesses.”

Additionally, they assure that small businesses have a voice in reviewing Congressional legislation and testify on behalf of small business. The chief counsel of this office is decided on by the president of the United States.

As if all of this weren’t enough, the USSBA also offers counseling for entrepreneurs and small business owners. They walk them through how to be the best business owner they can be and they do this face-to-face or internet counseling all for free.

Since 1953, the U.S. Small Business Administration has proven itself to be a great asset for small businesses. Check out their website and see what they can do for you!

Share!!!

S is for S-Corporation

Posted on by

For this week’s post we will get to know one the incorporation options a bit better and learn what it has to offer a new entrepreneur: the S-Corporation!

First off, what is an S-Corporation?

Well, an S-Corporation (also known as the S-Corp) is a special type of corporation that draws its designation from subsection S of the tax code. To start an S-Corp, a small business owner starts a C-Corporation in the state where it is headquartered, then files for S-corporation status with the IRS. While an-S Corporation is similar to a C-Corporation, it has different income and self-employment tax regulations. 

One of the biggest and best differences between an S-Corporation and a C-Corporation is the pass through taxation. Like an LLC, an S-Corporation does not pay taxes at the corporate level. Any income or losses are reported only on the personal income taxes of the business owner’s. As a result, this avoids the issue of double taxation that affects C-Corporations. Since net losses are also passed through, the individual shareholder may be able to reduce his or her tax liability by offsetting other income with any S-Corporation losses.

Though, there is an important caveat to keep in mind: any shareholder who works for the company must pay him or herself reasonable compensation. Basically, the shareholder must be paid fair market value, or the IRS might reclassify any additional corporate earnings as “wages.”

If pass through taxation sounds good to you, consider the S-Corporation for your new business. And no pressure, if you end up deciding you’d like to stick with a regular C-Corporation after declaring your business as an S-Corporation, you can easily drop the S-Corporation status with the IRS.

Share!!!

R is for Registered Trademark and Copyright

Posted on by

This week’s letter-based-topic might seem like a stretch since, really, the subjects are trademarks and copyrights – neither of which begin with an r. But putting registered in front of those terms is not just a cop-out that a lazy writer has used to fit with a weekly theme. There are actually very important distinctions between registered and unregistered intellectual properties.

Technically, you do not have to register trademarked or copyrighted property. An unregistered trademark simply needs the little ™ symbol next to it and, voilà, the property is unofficially trademarked. You can even establish a proprietary right to the mark by using it in the market.

The same general principle is also applicable to copyrights. When the United States signed onto the Berne Convention in the late 80′s, it effectively agreed to see an author copyrighting his or her work as an automatic right. That means that, thanks to the Berne Convention, no registration is required to copyright something in the United States.

However, it would behoove anyone looking to protect their intellectual property to register a trademark or copyright with the United States government. Though you, technically, do not have to register, doing so really bolsters the legal protections afforded to you as the creator of whatever intellectual property that needs protection.

An unregistered trademark, for example, may afford you a small area of geographic protection, ensuring none of your local competitors will be able to rip-off your intellectual property. That protection, however, is limited, which means that your mark could be used somewhere else in the country or, depending on how far apart the two parties are, the same state. The extent to which you can pursue litigation for trademark infringement is also limited, unless you register. To make matters worse for those who forgo registration, the United States typically prefers a first-to-file system, rather than a first-to-use, meaning if someone beats you to the USPTO, they may be able to claim the mark as their own as they registered it first.

Registered and unregistered copyrights have similar distinctions. As mentioned above, you do not have to register a copyright – there is an international understanding of an artist’s natural right to own their work. However, if you want to pursue litigation, you have to register with the United States Copyright Office. In fact you cannot even claim statutory damage unless you registered for a copyright before the infringement took place so, just like with a trademark, make sure you register your intellectual property.

It is all too easy to rationalize not registering a trademark or copyright. You are, after all, afforded some protection for unregistered intellectual properties, and pursuing registration can be costly and time-consuming. But seeing your property used for someone else’s gain and not being able to do anything about will be far more distressing than the registration process ever could be. So when you begin to use intellectual property that can qualify for a trademark or copyright, begin the registration process immediately and protect those properties.

Share!!!

Q is for Foreign Qualifications

Posted on by

We’re onto one of the trickier letters of the alphabet today in our ABC’s of small business segment, but it couldn’t be paired better than with the foreign qualification which answers the question of what a small business should do if they want to legally operate their business in a state that may not be the same one they created the formation in.

Foreign qualifications break down a little like this. If a business wants to operate outside of the state that they formed a formation with, they need to register their business as a foreign corporation in order to obtain that kind of authority. And in many cases, this is a requirement, especially if your company expects to transact business outside of the state lines that they were formed in.

By registering their business, and working alongside a company that can help them file, all foreign qualifications documents are prepped for your review and submission to the appropriate state agency in any state so that your corporation or LLC may operate as a foreign entity within that state.

Still have further questions (that’s our second “Q” reference, turns out it’s not a tricky ABC of small business after all!) about filing a foreign qualification? Give us a call at 1 (877) 692-6772 and we can help you get started!

Share!!!

P is for Protecting Your Personal Assets with a Professional Corporation

Posted on by

The name of the game this week is “Professional Corporation,” which happens to help protect your personal assets. That’s right, we have a triple “P” ABCs of MyCorp post, so buckle up for some serious alliteration.

A Professional Corporation is one of the more common types of entities for business owners to choose. The paperwork is a bit on the extensive side (especially compared to an entity like a Sole Proprietorship) but all that paperwork is well worth it because, as our title suggests, a Professional Corporation protects your personal assets.

A Professional Corporation does this by separating you (and your personal assets) from your business. This means that if your business were ever in deep trouble and owed some big time money, you wouldn’t be obligated to hand over your house or other assets.

This can make accounting trickier than if you opted for a simpler entity but, like I said, the protection makes it well worth it. You’ll also be paying taxes based on what you choose to pay yourself from your business. This means more money towards growing your business, and what business owner doesn’t want that?

So if you’re doing some entity shopping, be sure to keep the Professional Corporation as an option, especially if you’re looking for something protective.

 

Share!!!

O is for Operating Agreement

Posted on by

This week on the ABC’s of MyCorp, we’re focusing on the letter “O” for operating agreement. State laws are fairly lax when it comes to operating agreements – a handful of states require that an operating agreement be drafted, and even fewer require that Limited Liability Companies hold onto written copies of it. So, typically, LLCs choose to either forgo creating an operating agreement, or simply say that their operating agreement was agreed to orally.

However, the lack of government oversight for operating agreements does not make them any less important or valuable. Even if your LLC was created in a state without laws governing operating agreements, it is still a good idea to draft one and keep copies of it on hand for a few important reasons.

First, it cements your company’s status as an LLC and protects your, and your partner’s, personal liability. Yes, filing the paperwork and making your business an LLC in the eyes of the state does separate your assets from the business’s, but if debtors push you into court, having an operating agreement on hand will help to ensure that the court will see your company as a legitimate LLC.

It also helps to protect you if a business partnership turns sour. Oral agreements are all well and good when everyone likes one another, but how do you prove something was agreed to orally without a tape of the conversation? It is better to be safe than to be sorry, and putting all of the agreements between the members of an LLC into writing will help protect the interests of each and every member.

You should also be sure to clearly outline how ownership of the LLC is distributed amongst its members. Usually the percentage of ownership corresponds to how much investment capital a member gave to the LLC, but LLCs can divvy up ownership percentages on its own terms, and putting those terms and the corresponding percentages in an operating agreement is extremely important, especially if percentage of ownership is not directly influenced by investment.

The same concept is applicable to how an LLC distributes its profits and losses, especially if the LLC chooses to create its own system for its distributive share scheme. Profits and losses for an LLC are normally recorded as income for the LLC’s members as an LLC typically has a pass-through tax structure, and so the operating agreement should outline the system for, and frequency of, the distribution of profit and losses.

Finally, in the case of a member’s death, any agreement on the re-distribution of ownership should be made explicit in the operating agreement. An unexpected death or severe illness can cause a lot of turmoil within an LLC, and the last thing you want is for your business to be torn apart from internal bickering or threats of lawsuits. You can also take steps towards protecting your LLC from being dissolved by specifying specific conditions under which dissolution would be acceptable.

Clearly, an acceptable, comprehensive operating agreement is an essential part of forming a Limited Liability Company, even if your state’s government does not require LLCs to have one. Operating agreements are a great way to protect your assets and your interest in the company, so when you begin preparing to form an LLC, take the time to draft an operating agreement, or have one prepared for you. You’ll be happy to have that extra bit of insurance if things get a little rocky down the road.

Share!!!