| Many people work in jobs that pay you just enough so | | | | What's the Best Form of Business Entity? |
| you come back on Monday morning. That means | | | | The vast majority of business owners operate as a |
| you're working in someone else's business, helping | | | | 'Sole Proprietor' - meaning that they do not choose to |
| them grow revenues and adding to their net worth | | | | form either a corporation or LLC but rather operate |
| rather than your own. | | | | solely in their own name. That is certainly the least |
| By contrast, owning your own company is the most | | | | expensive way to start a business. It requires little in |
| direct way to control your economic future. Whether | | | | the way of capital. It has only the most minimal of legal |
| you are a business entrepreneur or a real estate | | | | requirements. Yet though it is inexpensive, it is also |
| investor, working for yourself and focusing on financial | | | | potentially the most financially unstable due to the fact |
| goals that are personal to you and your family gives | | | | that if you and your business are legally |
| you several advantages. This article is a short course | | | | one-and-the-same, then any liability arising from the |
| on doing just that. | | | | business can result in complete financial devastation to |
| Is Owning a Business in Your Future? | | | | you - since all of your personal assets are 100% at risk |
| Look at your own financial situation. Are you satisfied | | | | and can potentially be taken away from you. |
| with it? Does it provide you the freedom to control | | | | It makes much more sense to use a company to start |
| your own time and financial choices? What are your | | | | with. Having a company of your own provides a |
| talents and strengths? If you have the desire to be | | | | separate identity - that is, you are not the company |
| more in control of your financial future, then you may | | | | and the company is not you. Plus, a company gives |
| very well possess the necessary attributes to have | | | | you a better way to control your taxes. There are |
| your own business. | | | | approximately 4 times the number of tax deductions |
| Many small business owners start part-time. That is, | | | | available to a company than are available to a sole |
| they keep their 'day jobs' and begin developing their | | | | proprietor. In addition, you can do so much more for |
| own business on the side, on their own time. That | | | | yourself financially in retirement planning through a |
| might be having an eBay® business - as do some | | | | company than you can on your own as a sole |
| 1.5 million others. Or it might be investing in real estate. It | | | | proprietor. |
| might be providing a local service to your neighbors | | | | There is clearly a national trend today towards the |
| and community. Either way, you have lots of | | | | formation and registration of more Limited Liability |
| resources - from both the federal and state | | | | Companies ('LLC') than corporations. This is primarily |
| departments of commerce, to the national and local | | | | due to the fact that corporations require far more |
| chamber of commerce, and the Small Business | | | | formalities and have far less flexibility than do LLCs. |
| Administration. | | | | Using a corporation is still a viable option for many. It is |
| What's the SCORE? | | | | perpetual in nature and can be an effective and |
| Your community probably has access to a local | | | | tax-efficient way to do business for many. |
| chapter of SCORE - the Service Corps of Retired | | | | Corporations are used by many business owners and |
| Executives. This is a volunteer-based service initiative | | | | if you plan to take your company public for shares to |
| of the Small Business Administration. Retired business | | | | be sold on a stock exchange, you'll want to use a |
| executives who still want to contribute voluntarily join | | | | corporation rather than an LLC. |
| together to serve as mentors and consultants to new | | | | However, there is no denying that the number of LLCs |
| business owners starting out in their local community. | | | | formed every year now exceeds the number of |
| They hold monthly seminars for new business, review | | | | corporations being formed on a national basis. With an |
| and make suggestions for business plans, and often | | | | LLC, the Operating Agreement drafted by a |
| help open doors by using contacts and resources you | | | | competent attorney will be a key element to the |
| may not know about. | | | | management of your business. It will set forth who is |
| Where Do You Start? | | | | responsible for management, the sharing of profits and |
| The start-up phase of any business can at first seem | | | | losses, the contributions of additional capital to the |
| daunting, yet exciting. Choose a name for your | | | | business, the nature of the business investments and |
| business and check the website of your secretary of | | | | holdings, and much more. |
| state to see if that name is available. Get a business | | | | You cannot overlook the wisdom of having a solid |
| license in your city or county in that name, and follow | | | | business plan, however. It should set forth a clear |
| any local requirements such as filing a Fictitious | | | | mission statement and set of goals, as well as a |
| Business Name statement in the local legal newspaper. | | | | description of how you and your business will achieve |
| You're going to need a business plan - one that helps | | | | those goals. It should set forth a financial picture, |
| you get focused and get financing. Though many | | | | including what you need in the way of financing so that |
| business minimize the importance of a dynamic | | | | your loan application to a small business lending source |
| business plan, those willing to devote the time and | | | | will have credibility and can be funded. It would make |
| attention it takes often see longer term success. Many | | | | sense to attend live-training events that show you |
| of my clients over the years have come to see the | | | | step-by-step exactly how to prepare a dynamic |
| wisdom of updating their business plans and financing | | | | business plan and how to build a small business loan |
| arrangements so as to make their business as | | | | application that a lender will find credible enough to |
| attractive as possible to potential business lenders. | | | | fund. |