Small businesses are an important part of the American landscape. They’re a major driver of the American economy – 55% of all jobs are created by small business - and the entrepreneurial spirit is as much of a part of our culture as baseball and apple pie. Here at MyCorp, we thought it’d be great to celebrate our upcoming Independence Day by featuring some of our favorite quotes about entrepreneurial independence!
“If money is your hope for independence you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience and ability.” —Henry Ford, Founder of the Ford Motor Company
Foreign bank accounts are one of the most misunderstood tools of business banking. When people hear about foreign bank accounts, they picture shady, offshore Cayman Island accounts, or the strict, private banks of Switzerland. The reality is much less exciting. There are plenty of reasons why a business would want a foreign account. International banks facilitate international business, which helps pay for foreign contractors, cover payroll, and invest in emerging markets. However, because offshore banking is so heavily associated with tax dodgers, the federal government keeps a close eye on any business with a foreign bank account, and requires entities with such accounts to file an annual Report of Foreign Bank and Financial Accounts (FBAR).
What is a FBAR?
This is a simple form that some entities with foreign bank accounts must file with the Department of Treasury. Officially called FinCEN Form 114, it asks for the filer’s personal information and the information related to any foreign accounts overseen. The bank’s name, type of account, and the maximum value of the account all have to be disclosed. (You can download the form at the Department of the Treasury’s website.)
Your business needs a website – end of story. In 2014, only 53% of small business had an active website, and yet 97% of consumers reported searching online for products or services. That discrepancy is absolutely insane! The most commonly given reason for not having a website is that the business doesn’t need one which is far from true: a small business without a website will fail to reach a huge part of its market. So if you don’t already have one, you need to start building a business website now. We can’t tell you what to put on that site, but we can help you plan it out by covering four things your site should have.
This one is pretty obvious – you need a domain name if you’re going to build a site. Anyone without a site is already late to the game, but as long as your business’s name isn’t too common – i.e. John Smith Flowers or Jane Smith Tires – you should be able to grab a domain name that’s fairly close to your DBA name. However, if you’re too late and your desired domain is taken, you can choose a domain that doesn’t directly match your ‘Doing Business As’ name. You just need to remember that it’s now your job to make it clear what business your customers are dealing with, so make sure your DBA name is clearly seen on your site.
Famous for white water rafting, coal mines, and the Appalachian National Scenic Recreational Trail, we’re taking a closer look at how to incorporate in West Virginia today, and all the great benefits it has to offer small business!
Home to West Virginia University, the 95th best public university in the country, and to Morgantown, a city ranked by Forbes as #10 for being one of the best small cities in the country to conduct business in (ranking from 2010), West Virginia also has a corporate income tax rate of 7%, which has been scheduled to be reduced to 6.5% in 2014.
If you’re a west Virginia resident, there’s a good chance you’re involved in the coal business. In terms of coal-producing, West Virginia is ranked the second biggest coal-producing state in the U.S. (first place goes to Wyoming). So if you want to start a business in the coal industry, West Virginia could be the perfect place for you and your business.
We decided to do something a bit different with our weekly business basics post this time around, and instead look at a new service we’ve just started offering – business license compliance packages. We’ve covered business licenses before, but we thought it’d be a good idea to revisit the topic and explain why we decided to start offering this service to our customers. Our team kicked around the idea for awhile, trying to figure out whether or not there was any demand for this type of service, and we realized that there were three questions we’d have to be able to answer before launching.
Why offer business license compliance packages?
MyCorporation has always aimed to meet all of the needs of new business owners. The next logical step after creating your business is to apply for all of the licenses you need to legally open your doors. Without the right licensing, you’re effectively dead in the water. So expanding our offerings to include licensing just makes sense.
If there is one thing we’ve learned from over a decade and a half of helping small business owners, it’s that every business is different. For new small business owners, it’s important that you choose the business entity that will suit your unique needs. There are four basic entities that you can choose from, each with its own advantages and disadvantages. While there is no “right” choice, depending on what you sell, where you plan to take your company, and how ownership of the company is divided, there will be certain entities that will fit your business model better than others.
Sole Proprietorships and Partnerships
Sole proprietorships and partnerships are the simplest type of business entity. They are also the default option. It doesn’t take much to start a sole proprietorship or a partnership either. Just file for a ‘Doing Business As’ name, apply for the right licenses and permits, and open your doors. If the business is run by two or more people, you will also need an Employer Identification Number (EIN) and you’ll have to file another form come tax time. But this simplicity comes at a price. Everything the business owes and owns is tied to your personal assets. In other words, you, and your partner if you have one, will be held liable for the business’s debts if it fails. Also, if you do have a partner, you may not be protected if they decide to walk away from the business. So, while running a sole proprietorship or partnership is a lot simpler, it does put an undue amount of risk on the owner(s). To limit your liability, consider forming a corporation or limited liability company.
One of the most common questions we get here at MyCorporation about forming a limited liability company or corporation is, “How hard is it to actually run this type of business?” Running an LLC or corporation is very different than running a sole proprietorship, and the government will expect those running the business to adhere to certain rules. It should be noted that the only governance document need for Corporations and LLCs is an Articles of Incorporation or a Certificate of Organization. However, there are other types of governance documents that should be kept and maintained.
Articles of Incorporation and Certificates of Organization
In order to form a corporation, you have to file your articles of incorporation. And in order to form an LLC, you have to file what is normally called a certificate of organization. In both cases, these documents act a sort of birth certificate for the new business entity. They disclose the entity’s name, address, registered agent information, and the information of any managers or owners. A lot of states actually offer a “fill-in-the-blank” type of form on the website of their Secretary of State or department of corporations. However, these forms only meet the minimal requirements for a corporation or LLC as set by the state. They also don’t set the rules for how your company will actually be run. Along with these formation documents, you should consider drafting a set of bylaws or an operating agreement.
Entrepreneurs are always going to be protective of their business’s name. After all, this is the name under which all of the goodwill and branding they’ve worked so hard to accrue will go. But there is still some confusion about the best way to protect that name. On the one hand, registering a ‘Doing Business As’ name does keep other businesses in your area from using the same name, and for some businesses that’s enough. While a trademark on your business’s name offers a lot more protection, filing a trademark does take more time and money. So we decided to take a look at both DBA names and trademarks, and help explain what the pros and cons of each are.
Doing Business As Names
A DBA name, which is also referred to as a trade name, is just that – a name. It’s a quick and easy way to identify a business or entity, and filing for a DBA name is pretty straightforward. Continue reading
Operating agreements are one of the most vital, and overlooked, tools in running a limited liability company. We’ve actually covered operating agreements as part of our ‘ABCs of MyCorp’ series, but we never delved into what an operating agreement should actually say. As a quick refresher, an operating agreement is essentially a document that defines how the LLC will be run, and the SBA recommends that every LLC draft one. The trouble is that only a couple of states, like Missouri and New York, legally require new LLCs to have an operating agreement. But without the rules, structure, and regulations an operating agreement provides, your LLC could be in serious trouble if partners disagree, a member wants to leave, or if the state starts questioning the validity of your LLC. Operating agreements are also pretty easy to draft and only need to cover a few key areas.
The term ‘Foreign Corporation‘ sometimes confuses people. Though it can also refer to a corporation from a different country, when business advisers refer to a Foreign Corporation or LLC, they are usually talking about a domestic company with permission to operate in a state other than the one the company was formed in. This permission is often called a ‘foreign qualification,’ and it effectively registers your company with the new state so the state can collect taxes. With it, you can open up another branch of your company, or move your base of operations, without changing states. But why would a business want to do that?
Why would you want a foreign qualification?
There are a few reasons why a business chooses to qualify as a foreign entity in other states. One of the main ones being that the company simply wants to expand its operations – sales could be strong in their home state, and they figure they’ll take a crack at opening another store or office in a neighboring state. Since you need permission to do business in another state, they pursue a foreign qualification. However, some business owners also believe that they may save money on taxes by forming a business in a state like Nevada or Delaware, and then qualifying in the state they actually do business in. There are pros and cons to incorporating in another state, so be sure to weigh your options carefully.