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Archive for the ‘Incorporation’ Category

Win a Free Incorporation Package from BizFilings!

Posted on November 1st, 2011 by Joey Donovan Guido
Category: Entrepreneur, Incorporate a Business, LLC, S-Corp, Small Business, Small Business News, Start A Business

BizFilingsSmallBusinessLoveSweepstakes

BizFilings Small Business Love Sweepstakes

Are you an entrepreneur or small business owner interested in taking your company to the next level? Whether you’re looking for limited liability protection, or the tax benefits some business formations offer, BizFilings is here to help by giving away a free incorporation package every week through December 31, 2011.

How to Enter
Go to BizFilings Facebook page, like us, and fill out a brief sweepstakes form. That’s it, you’re done! Enter the sweepstakes once per week to increase your chances of winning.

Additional Info on Business Formation
Have questions regarding the different formation types?  Visit the Incorporation Options page on our Website for more info. You can also download our Free Guide to Incorporating Your Business, which offers in-depth insight regarding the different types of business entities, where to incorporate, ongoing compliance requirements and more.

At BizFilings, we’re dedicated to providing all of our customers with outstanding service at an affordable price. We wish you the best of luck in the sweepstakes, and with your small business!

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Taking the Long View with Your Small Business

Posted on October 3rd, 2011 by Joey Donovan Guido
Category: Entrepreneur, Grow a Business, How To Information, Incorporate a Business, LLC, Small Business

http://www.bizfilings.com/blog/wp-content/uploads/2011/10/TakingTheLongView.jpegAlthough taking the long view is a critical element to long-term success, it isn’t always at the forefront of a small business owner’s mind. When it is, the focus is usually on products, services or the competition.

But there’s another facet to your small business that needs attention: business formation — often referred to as incorporation. This article is not a detailed synopsis of incorporation types. Instead, today’s focus is on your company’s long-term vision, and how your decisions regarding business formation can affect you — both personally and professionally. Let’s start off at the beginning …

Forming a Sole Proprietorship or General Partnership

If you’re a one man or one woman operation, your company instantly becomes a sole proprietorship as soon as you make revenue. The same is true if you’re a general partnership, which is a company that has more than one owner.

The Benefits: In both instances, your company can conduct business, make a profit, deduct expenses and file your business tax return as part of your personal return.

The Downside: The greatest pitfall to running a business as a sole proprietorship or general partnership is that you have no limited liability protection.

What is Limited Liability Protection?
In a nutshell, limited liability protection shields a business owner against being held personally responsible for their company’s debts and liabilities. With limited liability protection, creditors cannot pursue the personal assets (home, savings, etc.) of the business owner to pay off business debts.

As a sole proprietorship or general partnership, owners and their business are legally considered the same — leaving personal assets vulnerable.

Since this is obviously not a good thing, what’s a small business owner to do? One option is to form a Limited Liability Company.

What is a Limited Liability Company (LLC)?

As the name implies, when you form an LLC, your company enjoys limited liability protection. This is the most popular business formation choice for small businesses owners because of its ease of operation and the fact that it is relatively inexpensive to form.

Other benefits include limited compliance requirements and a flexible management structure, as compared to S corp and C corp formations.

Over time, you might find that the next logical step in the progression of your business is to elect S corp status for your LLC. The reason why some LLCs do this is simple:

Taxes

If your LLC operates an active trade or business, and payroll taxes (SECA taxes) on the owner or owners are high, you may find that an S corporation election is your best choice.

Although you might want to leave the taxes to your accountant — who by the way is an excellent resource to discuss formations with — knowing which business formation will grant you the best tax breaks could save you thousands of dollars.

No matter which business formation you choose, it’s important to have a crystal clear understanding of each option to make sure it’s the very best choice for you — both today and down the road.

Good luck!

Related Links:
More on Sole Proprietorship

More on LLCs

LLC Elects S Corp Status — The Best of Both Worlds?

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New Federal Trucking Regulations Could Increase Opportunities for Independent Owner/Operators

Posted on August 9th, 2011 by John L. Duoba
Category: General Contractor, Incorporate a Business, LLC, Small Business, Small Business News, Work For Myself

http://www.bizfilings.com/blog/wp-content/uploads/2011/08/Trusk-1-iStock_000009557999Small.jpgNew federal trucking regulations, aimed at increasing driver and driving safety, are set to take effect soon, possibly by October 2011. Unfortunately for many trucking enterprises, these rules will be extremely costly and disruptive to their operations. But for truck drivers who are independent owner/operators, this situation may present opportunities to capture additional business with these companies.

The proposed Transportation Department rules would reduce the daily driving limit from 11 to 10 hours per day, with a required 30-minute break after 7 straight hours on the road. Other new rules would require drivers to be off-duty for 34 straight hours (covering two nights) once the weekly driving limit is reached. Trucking companies that violate the new rules could be fined as much as $11,000 per incident.

Federal regulators say the new rules are needed to help prevent driver fatigue and accidents associated with it. Recently, a high-profile truck/train accident in Nevada, killing six people, garnered national headlines and calls for increased focus on driving rules. Meanwhile, the trucking industry opposes the new rules, citing the Transportation Department’s own data showing truck fatalities and accidents declining by nearly one-third in recent years under the current rules.

Under the new rules, shorter routes and adjusted workflows will be required to accomplish the same tasks and deliver the same shipments. This also will mean many trucking companies will need to bring on additional drivers to meet the new driving standards.

So what can independent owner/operators do to prepare for these upcoming changes? Here are a few ideas:

  • Incorporate to make your services more attractive—When these trucking companies look to add drivers, they will likely prefer to work with incorporated entities and not Form 1099 independent contractors. And for good reasons. An independent O/O, formed as a limited liability company (LLC) or corporation, will reduce the trucking company’s liability for your driving, making you a more attractive partner. It also offers you important protections as well. Ultimately, every trucking company (large or small) should form a formal business entity to take advantage of the limited liability protections offered under law. All judgments and debts incurred by the business will be owed by the business alone, and will not be attached to the owner’s personal finances. Further, the use of 1099 independent contractors by employers is closely scrutinized by government authorities, so avoiding this arrangement also enhances your attractiveness.
  • Update insurance coverage—As your formal business status changes, your insurance needs will likely have to be reviewed. Be sure all new elements of your operations are considered when making insurance changes, so you can maximize your proper coverage.
  • Network with owners in the industry—All trucking companies will be required to follow the same new rules. So stay in touch with other owners grappling with the same issues. Maybe new partnerships could provide economies of scale, allowing more efficient scheduling and shared resources among companies to meet the limitations in the new rules? At the very least, you may learn some new best practices for dealing with the issue.
  • Keep everyone informed—Ignorance of the law is no excuse for not following it. So be sure all drivers are aware of the new rules and are following them exactly. Institute internal controls and record keeping, ensuring your company stays in compliance and everyone is safe on the job. As leader of your organization, make sure you set the right example and others will follow.

John L. Duoba is the publisher and managing editor of Business Owner’s Toolkit at www.toolkit.com, and he has been know to frequent a Waffle House or two (or ten) in his interstate travels across America’s highways.

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A Few Notes On Incorporating a Sole Proprietorship

Posted on June 8th, 2011 by The BizFilings Team
Category: Incorporate a Business, LLC, S-Corp

Most entrepreneurs start companies as sole proprietorships, which is essentially a default business entity. This filing status is a sensible option for solo professionals such as freelance photographers, graphic designers and contractors.

However, as a business grows and begins to take on more employees, finances, customers and general business responsibilities, owners will need to protect themselves from the threat of legal and financial liabilities.

Proprietors in a general partnership also run the threat of being liable for debts incurred from lawsuits, as such statuses are seen as indistinct from individuals under the law.

Not only can incorporating a businesses with an S corporation or LLC status help protect proprietors’ personal assets, it can also alleviate tax burdens, in certain circumstances.

“Owners of Subchapter S Corporations, a common format for professional service businesses such as accountants, attorneys or physicians, can receive compensation in the form of dividend distributions,” points out Marla Brill for Reuters Wealth. “Such distributions aren’t subject to Social Security tax, which is 10.4 percent of the first $106,800 in wages this year and 12.4 percent in 2012.”

For more on the advantages and disadvantages of incorporating visit the BizFilings Learning Center.

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Why Are You Paying Employment Taxes on Your Investment Income?

Posted on April 5th, 2011 by John L Duoba
Category: Cash Flow, How To Information, Incorporate a Business, S-Corp, Start A Business, Taxes

Form an S corp to lower unemployment taxes Being a small business owner requires the wearing of many hats. As the lead employee of the company, you must produce for today (creating products/services, managing employees, dealing with vendors and customers, etc.) and for tomorrow (strategic planning, raising capital, forging partnerships). And for all of these efforts, you receive monetary compensation.

But there is another role you serve for your business, separate of traditional employment: You are an investor. And part of the annual compensation you take home is tied to your investment in the company. Yet, many business owners still classify virtually all of their compensation as employment income, not investment income.

And for this oversight, those very business owners are penalizing themselves by paying higher taxes than required by law.

Lower your employment taxes.

 As outlined in the article, “Operating as an S Corporation Can Lower Your Taxes,” you can legally split your take-home income among salary and dividends. By doing so, you shield the dividend payment portion from payroll taxes assessed on both the employee (you) and the employer (your company)—a more than 15 percent tax savings. Examples in the article illustrate this savings.

But it gets even better. . .

Dividends, for regular corporations, are not deductible expenses. So these dividends are considered corporate income subject to corporate taxes (as high as 35 percent), and then to individual dividend tax rates for the recipient. This is often referred to as “double taxation.”

But if you organize your business as an S corporation, these dividends are not exposed to double taxation, just the individual income tax. S corporations are considered pass-through entities for tax purposes, meaning that all earnings pass directly to the owners and are reported on their tax returns.

Form an S corporation, save money.

The key to this money-saving strategy is forming and electing S corporation status for your business.

To get started: You would need to form a regular corporation in the state of your choosing. Then you would need to elect S corporation status with the federal government, filing paperwork with the IRS to allow usage of simplified, pass-through taxation. Be sure to talk with your professional business advisor, lawyer or accountant when considering this options. You can also choose to use an incorporation services provider to help you with these business filings.

Liability protections save money, too.

Obviously, choosing an entity type for your business requires assessing many considerations. And taxation is certainly one of them—but it is only one. The unique circumstances of your business may dictate a different entity choice. If you plan to “go public” with your business, a regular corporation may be best; if you hope to pass along the company to your family members someday, maybe an LLC would be the choice.

There are no hard-and-fast rules about which form to choose. Some of it may rely on your particular comfort level and how you want to run your business. Just be sure to educate yourself on all of your options and to discuss them with a trusted advisor or professional.

And don’t forget: All three formal entity types mentioned above offer limited liability for its owners—your personal assets are protected from business debts. And these types of protections are hard to put a value on, especially when they are needed.

About the author
John L. Duoba is the publisher and managing editor of Business Owner’s Toolkit at www.toolkit.com, and while he is not a fan of double taxation, he has a soft spot for double-cheeseburgers.

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Confidence Among Small Business CEOs Grew Substantially in Q4 2010

Posted on January 10th, 2011 by The BizFilings Team
Category: Business Inspiration, Grow a Business, Incorporation, Small Business, Start A Business

A study released Thursday finds confidence among the country’s small business CEOs improved substantially in the fourth quarter of 2010. The Vistage Confidence Index grew to 106.3 last quarter – up from 95.1 in the third quarter, 94.4 in the second and 93.7 in the first.

The study, which surveyed more than 1,700 small business chief executives, found that 77 percent are expecting improved revenue over the coming year, while 63 percent foresee greater profits. What’s more, 54 percent plan on hiring new employees, marking the first time in three years that the survey noted the majority of respondents plan to hire.

“Nearly half the CEOs surveyed pledged their personal assets to keep their companies running, their people employed, and our economy from collapsing,” said Vistage International chairman of the board and CEO Rafael Pastor. “They are the unsung heroes of our economic recovery and the brighter days ahead.”

As U.S. small businesses, particularly those within the retail sector, awake from a record-breaking holiday shopping season in which consumers spent more than $32.6 billion – the most in the season’s history – analysts are looking toward small business and entrepreneurial activity to help bolster the economic recovery.

Other recent surveys such as Wednesday’s ADP National Employment Report, which found the addition of 297,000 private sector jobs in December, will help deliver confidence to entrepreneurs forming a company and startups looking to get incorporated.

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New Year May Mean Time to Incorporate

Posted on January 4th, 2011 by The BizFilings Team
Category: C-Corporation, Corporation, Grow a Business, Incorporate a Business, Incorporation, LLC, S-Corp, Small Business

As 2011 gets under way, borrowing among the country’s small businesses is up, unemployment is expected to fall slightly for December, consumer spending is increasing and manufacturing activity is accelerating.

Accordingly, small businesses need to ask themselves a few questions: Is it time to start hiring? Should the marketing budget be expanded? If so, when? Should the company begin a more proactive social media presence? Is it time to get incorporated? If so, does the business need a registered agent service? What about corporation vs. LLC?

If small businesses begin to receive greater access to capital and outside investors – as they are expected to, thanks to initiatives such as the recently enacted Small Business Lending Fund – then it is important for owners to protect their personal assets through a business entity such as an S Corp, LLC, C Corp or other classification.

“The end of the year is a great time to think about the administration of your business,” Charley Moore, founder and CEO of Rocket Lawyer, told Inc. magazine. “Think about your corporate structure and consider if incorporating at this time will give you a new year of different tax treatment, or protect your company as it goes into a new phase.”

Determining what entity suits your small business is dependent on a number of factors including growth rate, investment, size of staff and assets – both liquid and illiquid. Owners should consult legal or filing experts to determine if the time is right to form an LLC or corporation.

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5 New Year’s Resolutions for Small Business Owners

Posted on December 29th, 2010 by BizFilings Team
Category: Business Inspiration, Grow a Business, Incorporation, Small Business, Start A Business, Work For Myself

Are you going to hit the gym more often in 2011? Or are you going to quit smoking when the clock strikes midnight Dec. 31?2011_opt

Well, good for you.

But what are you going to do to improve your small business in 2011?

Here are 10 suggestions to help you start the New Year off right:

  1. Toss it. Walk over to the trash. You can do it! I am a firm believer in getting rid of things. My philosophy: if you don’t miss it, don’t wonder where you put it or don’t know that it even exists – toss it. Toss or file that mound of paper; enter those business card contacts and then expose of them; and audit your inventory for throwaways.
  2. Educate yourself. Research free online courses that many websites offer. Look into taking classes at your local community college or through community groups. You might even learn something useful along the way!
  3. Prepare for it. Take precautionary measures for your small business in the New Year. For instance, if your small business is not incorporated, consider forming a company to protect your personal assets and to possibly benefit from tax savings.
  4. Save money. Take a long, hard look at your finances – even reducing transaction costs – ecommerce charges and bank fees – can make an impact on your bottom line.
  5. Learn from your employees. Listen to what your employees have to say. Everyone has something to bring to the table whether it be money-saving tips or creative campaign ideas.

So what about you? What would you like to improve upon for 2011 for your small business?

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San Francisco Startup Works as a Marketplace for Experiences

Posted on December 14th, 2010 by The BizFilings Team
Category: Grow a Business, Incorporate a Business, Incorporation, Start A Business

As far as web startups go, most tend to glue users to their screens, clicking away at user profiles and the latest shared buying offer. But a new San Francisco startup does quite the opposite.

Skyara is essentially a marketplace for experiences, wherein users offer their own services and skills and other users buy those experiences or lessons with 12 percent of the transaction going to Skyara.

Some examples include lessons in marksmanship, extreme kiting, Army fitness training, culinary tours and then some more obscure experiences such as tea with MC Hammer and angel investor Ron Conway.

“We built Skyara with the concept that everyone has something interesting to share, whether it’s a fun hobby, job or a skill that other people would be interested to learn,” co-founder Jonathan Wu told the Los Angeles Times. “Most people offering experiences are not doing it for the money. They are doing it to share their hobbies and have some fun and meet new people.”

The company – not even a year old – is in its testing phase in San Francisco, but already the service has caught the attention of investors and potential customers alike, earning acceptance into the startup incubator I/O Ventures to help the company get incorporated.

One feature has caught on faster than the founders had anticipated: the option of donating the experience’s payment to charity. Wu recently told VentureBeat that 80 percent of Skyara’s bookings have been donated to charity.

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Attention Independent Fashion Designers: Strut Your Stuff for a Chance to Win

Posted on November 30th, 2010 by BizFilings Team
Category: Business Inspiration, C-Corporation, Corporation, Grow a Business, Incorporate a Business, LLC, Marketing, Promote My Business, Small Business, Start A Business, Work For Myself

fashionAre you an aspiring designer itching to make your mark? Well, we have just the thing.

Blazetrak and Nolcha, a leading platform for independent fashion designers, have teamed up to launch a contest that will give one designer a once-in-a-lifetime opportunity to participate in Nolcha Fashion Week: New York in February 2011.

Fashion designers are invited to take part in this online competition by submitting up to six photos of your best work through Blazetrak now through Dec. 17, 2010. You will then be officially entered and guaranteed a review by Nolcha’s team of experts. Images can be drawings, models wearing garments and just garments.

According to www.fibre2fashion.com, the winning fashionista will receive: complimentary exhibition space for awesome exposure at the Nolcha Fashion Lounge: New York; a two-hour consultation regarding target, retailers, supply chain, breakeven and scale of the line by Global Purchasing Group; free membership to Afingo.com plus featured spotlight and interview; a complete business formation package by BizFilings.com for you to form an LLC or form a corporation; and a sourcing package that includes premium level membership to Source4Style, including complimentary swatches and sourcing consultation.

The winning fashion designer will debut live on Ustream on Jan. 17, 2011.

So what are you waiting for? Spread the word. Do you know of any other contests like this targeting independent business owners?

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