Are you a potential entrepreneur considering venturing into starting up your own business? If so, it’s important that you start familiarizing yourself with information on how to succeed in the current business climate right now. Operating a small business requires you to possess the necessary skills to plan and manage the business efficiently and a vision that seeks to grow from nothing to something substantial after a period of time. Here are the top 5 things an entrepreneur needs to know before starting up a small business.
1. A perfect business plan is indispensable.
A business plan is the foundation of any successful company today. It serves to chart out the goals of the business as well as the possible ways of achieving them and acts as a blueprint that outlines the road to the future of any business. It’s also a necessity when seeking financial help to set up your business, hiring future employees, and keeping track on how you run your business once it’s operational.
A Limited Liability Partnership is a very interesting type of business structure. Limited Liability Companies already combine the ease of running a partnership with the protection of a corporation, and the IRS originally ruled that LLCs would be taxed as partnerships. So what is the difference between a Limited Liability Partnership and a Limited Liability Company? And which one would be the best structure for your company?
What is a Limited Liability Partnership (LLP)?
We’ll answer the easiest question first. An LLP is very similar to an LLC – both protect the company’s owners from lawsuits and debtors, and both have a pass-through tax structure, meaning anything the company earns passes through it, directly to the owners, without being subject to any corporate income tax. However, a Limited Liability Partnership offers an extra bit of liability protection to each partner. So, just like in a Professional Corporation, the other partners in an LLP will not necessarily be liable for the consequences stemming from another partner’s actions.
Do all states recognize LLPs?
Yes, though the laws recognizing LLPs vary from state to state. The majority of the states have adopted the Revised Uniform Partnership Act, which includes a provision for LLPs stating ‘An obligation of a partnership incurred while the partnership is a limited liability partnership, whether arising in contract, tort, or otherwise, is solely the obligation of the partnership.’ In layman’s terms, that essentially means that the company, and not the individual partners, is responsible for any obligations stemming from contracts or torts. The states that haven’t adopted the RUPA instead opted for their own laws to recognize LLPs, but all follow the same basic pattern.
Corporate seals are a remnant of the middle ages, back when official documents were legitimized by a hot wax imprint of a seal or crest. The practice of ‘sealing’ documents kept on throughout the centuries, though the hot-wax method eventually gave way to rubber stamps and paper seals. Today, corporate law still allows for the use of corporate seals, though they are no longer as important as they once were. This week in business basics we answer a few of the most commonly questions we receive about corporate seals, and let you know if you should get one for your own corporation.
What is a corporate seal?
A corporate seal is essentially a signature for your business. When you incorporate, you turn your business into its own, legal entity. Since a corporation cannot sign anything, a corporate seal is used to mark legal and official documentation. These days, most corporate seals are either rubber stamps or steel embossers, and are normally designed to fall apart if tampered with to help avoid fraud.
Do I need a corporate seal?
One of the biggest reasons why many people don’t put additional thought into starting up a business is because they believe that it’s expensive to do so. In actuality, starting a business is far cheaper than these individuals realize. Of course the startup costs are dependent on the type of business you’re planning in terms of equipment and/or inventory. However, the initial paperwork to start your own corporation is quite nominal in comparison.
A C-Corporation is an entity that is taxed separately from those who set it up, such as owners and shareholders. It is regarded as a separate entity that can hold its own credit rating, liabilities and assets. Personal liens and debts cannot influence a C-Corporation’s assets or bank accounts because it is its own entity owned by the shareholders and not the founding individual.
Why You Would Want a C-Corp
Forming a C-Corporation has many advantages that are ideal for businesses. As there are many types to choose from, you should have an idea of what you need to form according to your ultimate goals. The C-Corporations have benefits such as:
- Unlimited growth potential
- Private shareholders and investor accountability
- Limited liability
- Perpetual existence – A C-Corporation has perpetual existence meaning that it will continue to operate even if the owner quits his or her position. The corporation will continue to conduct business as normal and doesn’t require the founding member to be a part of the staff. For example, Steve Jobs left Apple in 1985 although he was a founding member. Without his influence, Apple continued to conduct business.
As your small business grows, measures to track your performance as a whole become more and more important. Analyzing the output and performance of your team will be an integral part of your regular management schedule. This is where performance tracking tools come in.
1. SWOT Analysis
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It was originally devised by Albert Humphrey, a prominent business consultant who worked for the Stanford Research Institute.
The four elements fall into a 2×2 matrix: the helpful and the harmful, and the internal and external.
Photo courtesy of Fiona King
Strengths and weaknesses fall under the internal category. These are the elements that a business has full control over such as strong marketing fundamentals or a high attrition rate, and can be fixed at the management-level or below. Discuss these issues with your employees, and find out how these can be assessed and fixed.
There are roughly 95 million cats in the United States that are currently allowing their owners to think they’re in charge. That’s because they’re smart – really smart. As entrepreneurs, we could learn from their innate savviness.
There’s a reason the Egyptians worshiped the feline, and the most ordinary domestic cat can still get what he or she wants using some Cleopatra-inspired shrewdness. Today, we’re going to consider five of the ways our furry little friends can help us get a leg up in business and make some “scratch.”
#1: Cats Are Incredibly Independent.
If you’ve ever tried to get a cat to change its mind about anything, you know you’re debating with the wrong species. Cats do what they want, and woe to the human who stands in the way! As the owner of a company, you should likewise operate full-steam ahead and avoid distractions by toxic friends or family members who want to steal your thunder or excitement. The more focused you are on your end goal, the better the chances you’ll reach it.
This week’s 50 States series is brought to you by one of the most famous beef, pork, corn and soybean producers in America… none other than Nebraska! Today we’re taking a look at what it means to incorporate in Nebraska.
Nebraska has a population of about 1,860,500 residents and is the 9th least densely populated out of the states. Famous for its intense seasons (for which thunderstorms and tornadoes are quite common), the state also has a prominent agriculture sector. Outside of beef and pork, Nebraska is noted for its freight transport, manufacturing, and insurance sectors as well. And companies like ConAgra, TD Ameritrade, and InfoUSA also call the state home to their headquarters.
As far as starting a business goes, Nebraska is actually a pretty great place to start a business. On the Forbes list of “Best Places to Start a Business” it’s ranked at number six of the 50 states, and on Thumbtack.com, it received a B grade. These scores can likely be attributed to the state’s positive rankings in business costs, economic climate, quality of life, and college attainment. Nebraska also received A+s in regulations, health and safety, employment, tax code, licensing, and training programs.
We have written on non-profit corporations before, but as we only dedicated a sliver of a paragraph to how you actually form a non-profit, we felt the topic was worth revisiting. A non-profit corporation is a great way to fulfill a philanthropic pursuit, and if you are looking at dedicating your life to charity, then running a non-profit may be right up your alley. Forming a non-profit corporation is actually very similar to forming a regular corporation.
Step 1. Find a business name
Your non-profit is going to need a name just like with any other standard corporation. That name needs to be unique and, typically, has to include the a designator like ‘Corporation’ or ‘Incorporated,’ though not all states require that.
Step 2. File your Articles of Incorporation
After you’ve confirmed that your corporate name is available, you have to actually form the corporation by filing what is normally known as your Articles of Incorporation. The forms usually aren’t too complicated, and normally just ask for the names and addresses of the corporation, its registered agent, and its directors, as well as the corporation’s purpose for existing.
Not everybody is attracted by prospect of jobs with fat pay packages, especially if they have a desire to live life on own terms. There are numerous examples of people starting small sized ventures at home which blossomed into large companies in long run. PC giant HP’s founders started operating from a garage in Palo Alto and it grew into one of the world’s leading IT giants. If you have an entrepreneur’s spirit and teamwork and customer service skills, starting up your own business may be the best option.
However, you may want to try venturing into lesser known niche areas to make a mark for yourself and the company. Rather than joining an industry laden with cutthroat competition, changing taste of consumers and other hiccups, you may tread into uncharted territories and tap the potential.
People assume they will have to pump money into their start-up business, but what they don’t always know is that to continue to keep their business strong and thriving, they also need to continue investing in their growth and internal development. The question, then, becomes how to afford keeping their growing business from becoming stagnant. Here are a few strategies and financial options for managing business expansion without sinking the ship.
First, you must decide what it is that you are looking to invest in. Do you want to update a software system? Open a new business location? Remodel your existing one? Add a product line, or develop a new product? Expand your marketing outreach? Decide where your focus lies, and then you can strategize how much you’ll need to invest. You may not be able to tackle all of your goals at once, but choosing one or two specific paths will help you to be intentional when it comes to your money and other resources.