You are starting up a new business. Congratulations. This is a very exciting time but it is also a time to make many decisions. This could possibly be a time when you will make more decisions at one time in the entire duration of your business. And one of those decisions will be the structure of your business.

There are several choices available to you and all have pros and cons to consider. You can choice from Sole Proprietorship, General Partnership, Joint Venture, Limited Partnership, Limited Liability Partnership or LLP, Limited Liability Company or LLC, Corporation, S Corporation, Not-For-Profit Corporation or a Professional Corporation. So what is the right structure for your business?

The first step is understanding what defines each of these business structures. A sole proprietorship is operated by a single person and that person is not considered an employee. It can be set up by an individual with little legal requirements and depending on the business may or may not require business licenses or permits. The owner reports the income or loss on their personal income tax return using a Schedule C.

A General Partnership requires at least two partners and should be defined by a legal partnership contract. Partners, like sole proprietors are not employees. Both personal and the partnership assets may be at risk. No separate income taxes are paid as income flows through the individual partner’s tax returns. Although a separate return (1065) must be filed. As with all business structures, certain permits and/or licenses may be required.

A Limited Partnership contains one or more general partners and one or more limited partners. A limited partner differs from a general partner in that they are only personally responsible up to the amount of capital they contributed to the business. They are also not directly involved in the management of the business.

A Limited Liability Company combines the advantages of a corporation and a partnership but maybe more complicated to set up. It also allows for a choice of how it will be taxed – as a partnership with income flowing through the individual partner’s returns or a corporation. Also non-U.S. citizens, resident aliens and other business entities can participate as partners. An unlimited number of partners are allowed and its owners are not usually held responsible for the entity’s debts.

A Corporation gives the participating owners some protections from the entity’s debts. Only one person needs to be a shareholder. This structure must be set up under the state law by filing documents. The corporation files and pays its own income taxes. Any income the corporation earns that is distributed to the shareholders is called a dividend and the shareholders must pay a tax in addition to what the corporation pay.

A S-Corp provides many of the same protections for its shareholders as a C-Corporation. However the income the S-Corporation earns flows through the individual shareholders returns with the business filing an informational return but not paying any taxes. This is true even if the business does not distribute any funds to the shareholders. The limit for shareholders is 100 individuals who are either U. S. citizens or Resident Aliens. There are no Social Security taxes due on the income flowing from the business to the individual shareholders

A Not-Profit Corporation is just what its name implies. This is a company formed for the express purpose of is to not earn a profit. They may pay employees including the organizers of the business and expense those expenses against funds earned or collected. There are forms and permits required and you should confer with your individual state for their requirements.

Professional Corporations or PLLC’s are created under their state’s legal requirements and provide limited protections for its members against personal responsibility for the business’s debts. All the partners must be licensed to practice the profession the business is set up to provide and all partners are liable for their own malpractice insurance and any possible liabilities incurred from malpractice. This business entity can be set up as a regular corporation or a professional corporation.

The choice you make is dependent on whether you are going alone or choosing to have partners or investors, how much protection you want or need from having your personal assets protected and how the tax requirements effect your personal or your partners own tax situations. This is not a decision to take likely. You can change the format of your business structure in the future, but making a change after you have been in business may require you to meet certain legal and tax requirements.

It’s not as hard as it may seem. And the people at

can guide you in your decision with making the right choice.

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You have a great idea for a product or service that you know will make you the next multi-millionaire. Your family and friends either think you are brilliant or crazy. Perhaps you are not happy with your current employer or career and desire more control of your work and career. After all if you are like me, there is no better boss to work for than yourself. So how can you fail? Wrong question! The question you should be asking is how can I succeed?

It takes not only a great innovative idea, but a passion for success and an attitude to do whatever it takes to reach your goals. And planning, planning, planning.

You will wear many hats as the owner of your own business – innovator, inventor, marketer, sales, executive, financier, purchase agent, production manager, bookkeeper, office administrator, advertising manager, and the list goes on. Even if you are out-sourcing some of these functions you need to know if the people you hire are providing you with the information and services needed. This doesn’t mean you need to be an expert in all the areas needed for a successful business, just that you understand the basics of each. The more knowledge you accumulate, the more successful you will be. The president of a large corporation surrounds himself with a highly trusted group of advisors. But it is the president that hand picks these people based on the knowledge and experience he has accumulated within each area. You need to assume the same responsibilities for your business.

And if you think you will have more free time, well think again. There is no room for a 9-5 mentality in the start-up and growth of a new business. Long hours, working on weekends, holidays and nights are more the norm. And while you might not be servicing customers during these hours, you will certainly want to be taking care of all the non-direct tasks. And this is where the planning, planning, planning comes in. Plans to finance your business. Plans to market your business. Plans to grow your business. And following the planning are the tasks of putting the plans into action.

Almost every waking moment of your life should be filled with thoughts of how to move to the next stage of success. Conversations at breakfast or over the dinner table will center on the business. You never know when a breakthrough will arise and you need to take advantage of those thoughts when they pop up or you will forget and never get back to them. Carry a tape recorder or notebook around with you at all times. I keep one by my bedside as I sometimes wake in the middle of the night with a wonderful idea and I know from past experience if I don’t write it down then and there it won’t be around in the morning. If I am watching television a program or advertisement might inspire me to action so again a notebook is right there on my coffee table.

This all consuming attention to your new business doesn’t mean you don’t enjoy your personal life however. Do take what I call mini vacations. Times during the day to regroup, rest, spend time with your family. Take a walk, do a short stint of exercise, read a book for pleasure, play with your kids, plan a meal where no business is discussed, go for a drive, call up a friend. These activities will clear your mind and rest your body and you will return to your business tasks refreshed anew and you will be reminded that living a full life is not just about how much money you make, but also how you treat those you love and enjoy the pleasures we are meant to experience.

Starting a new business is hard and time-consuming work, but it also fun, exciting and fulfilling. If you have what it takes and are willing to put in the time and work, then welcome to the world of Entrepreneurship!

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You are likely familiar with the term business plan, but just what is a business plan and how do you put one together? It is not as complicated as you might think. And if you prepare one segment at a time, than it won’t be an overwhelming task.

A business plan includes the following topics:

A basic business concept
A description of your product or service
What advantages your product or service brings to the market
The competition
A marketing plan
Your business background and experience within the field
Partners and/or key employees and what they can add to company
Financial budgets, forecasts and funding needs

The basic business concept is a clear description of your proposed company. For example if I were to open an art gallery I might phase my business concept as follows:

I propose to provide an art gallery in which local artists will rent wall space. I will provide sales staff, opening nights with refreshments and a unique, well lit environment to showcase their artwork. The artists will be responsible for providing a mailing list, invitations and mailing costs, opening night advertisements and carrying insurance on their artwork. All work must be original, owned and copyrighted by the artist and framed. All art and framing must be approved before hung. I will collect a 50% commission on each sale.

The description of your product or service is a specific description of the products you will carry or the services you will provide. Going on with the art gallery business I might say that “The gallery will be showcasing the original art of local artists and offering a unique selection of subjects”.

The answer to what advantages your product or services brings to the market will depend upon the competition within your market area. It may include statements such as “There are no other galleries in this area that offer original art” or perhaps “By showcasing art from local artists only, our customers will feel pride in supporting their local culture”. Or perhaps your easy to reach location, or the uniqueness of your building brings value to your product or service.

Just who is your competition? Look around; visit their places of business if at all possible. Ask those who might use their services or visit their store why they like doing business with them and what they might like to see improved. And don’t stop with the businesses in your immediate area; expand beyond to locate your competition. In this day of Internet access, it would also be smart to do a search for competing businesses. In this segment of your business plan, list your main competitors and describe how your product or service will stand out from the crowd.

Your marketing plan should consist of a clear description of how you plan to get customers to your door. Will you place ads in the newspaper, on the radio or television or do direct marketing? Consider signage, logo design, web site development, mailing lists, business cards and brochures. Will you join organizations that might lead you to contacts? Do you have previous contacts that are willing to sing your praises? Will you have a grand opening? What ever methods you choose to use this is the place in your business plan to put it all in writing. It is not only what you will do, but when and in what order you will do it, and what you expect to reap from your efforts.

What do you bring to the table in this venture? Have you many years of experience in this field? Have you studied and worked in this area of business before? It’s time to toot your horn. Describe everything that makes you unique to succeed. Sell yourself!!!!

If you have a partner or key employees joining you in this business, then describe what they can add to the overall success of your business. List their relevant experience, education and knowledge.

And now the financial part. All of your forecast reports should be broken down by month. The first part is a sales forecast for at least three years. How do you know what you may sell over the next three years? Well you don’t, you do a best guess estimate. Don’t be pie in the sky, but also don’t be too conservative. Your estimate should show gradual increases over time and may adjust upward or downward if your business is seasonal. And remember, this is a good faith estimate and is expected to need adjustment as time goes by.

Next set up a spreadsheet listing all the expenses you might incur over the first, second and third year. This will include the cost of the product being produced, any tools or equipment you might need, labor and related tax, insurance expenses and all other expenses you will incur to bring your product to a ready to sell state. Your Cost of Goods Sold should coincide with the estimated number of units listed in your sales forecast. Also include general expenses such as rent, utilities, business insurance, advertising and marketing costs, loan interest, vehicle expenses, taxes and any other expense you might occur. And don’t forget to include paying yourself in this budget.

During your first year of business you will most likely be operating with a negative cash flow. Most businesses do not show a profit until after year three and some not until their fifth year in business. This will be apparent when you put your forecast profit and loss statement together. A Profit and Loss Statement is a document that lists income less expenses for a specific period of time. The net result is either your Profit (income exceeds expenses) or Loss (expenses exceed income). You need to come up with a plan to cover the time periods when there is not enough cash coming in to cover your expenses. This plan might include using your personal savings, borrowing from family members or friends, taking in partners, selling off personal assets, working a second job, or maybe scaling back a bit. Making this plan will involve taking a close look at all your available ways to raise money for your start-up. It also may involve borrowing money from a bank. Try to refrain from mortgaging your home if at all possible. You don’t want to be in the position of losing your business dream and the roof over your head at the same time. Look into SBA loans, local business loans and grants. SCORE, a division of the SBA (Small Business Association) can be a great deal of help not only in finding financing but in all other areas of starting up your business including preparing your business plan. SCORE consists of volunteer business people who offer free business help.

Remember in Chapter Two, Educating for Success I mentioned how handy index cards would be? Well now is the time to break them out. Your first set should be dedicated to your business plan. Start a card for each segment of your plan and as you gather information or an idea pops into your head, write it down on the appropriate card. You may need several cards for each part of your plan as you go along.

All in all, your business plan provides a written document to guide you through your start-up and will keep you focused on your goals. Also if you are looking for funding, a well thought out business plan will show you are serious about the success of your business.

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A Business Start-up (Chapter Two)-Educating for Success

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Are you ready to roll up your sleeves and get to work? The first place to start is acquiring knowledge. You need to know all you can about business in general and your product or service specifically. And there are many ways to find this information, some of which will only cost you your time and energy. But before you invest any money in your new business you need to invest in information.

So what do you need to know? First and foremost is whether your product/service is unique or if not can your company provide a better, more reliable and/or less costly version of your competition’s version. Know who your competition is, the market area they cover, their price points, warranty coverage, marketing campaigns, etc. And then ask “can I be a worthy competitor?” “Will my product/service stand up and exceed what they provide to their customers?” To be successful your company must stand out in the crowd in the areas of quality and customer service. And to stand out in the crowd you need to know just what the “crowd” is doing.

Once you know you have a viable, sellable product/service, than you need to ask “who will be my customers and where do I find them?” This is where demographics can help. Demographics in its simplest form is knowing the answers to who, what and where and how much. Who will purchase from my company, what are they most likely to purchase, where are these customers likely to shop, and how much are they likely to spend on the type of product I wish to sell. The answers to these questions will help you make decisions regarding your business location, marketing plans and pricing formulas.

And finally, you need to educate yourself in the fine art of running a business. This includes financing your business both for the start-up and for growth later on, professionals you will need to rely on, marketing strategies, employee laws, state and federal laws, tax planning and compliance, financial statements and record keeping. And this is the short list.

Don’t get discouraged, there are many ways to accumulate this information and I will be giving you some straight forward solutions in the next chapter. In the meantime, buy yourself a deck of index cards and a container to keep them in. I found some brightly colored plastic boxes that are only slightly larger than a 3×5 index card and are only 1” deep. The have built in dividers and I also purchased multiple color index cards. The bright color of the case enhances my imagination and the narrow size allows me to take the cards everywhere. I use the dividers and different colored index cards to break down my projects into segments. So off to your favorite office supply store because we will be using the index cards in the next chapter.

Chapter One

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A Business Start-Up

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Quite a few of us have a dream of working for ourselves. It goes something like this – I will leave my job and take my idea into the world and achieve great success. But so many just dream. In order to make our dreams come true we need to take action, starting today. So just where do you start? At the beginning of course.

Just what does it take to become your own boss and take your ideas and dreams to the level termed as success? It takes an all consuming passion combined with hard work and long hours. If you think working for yourself will be easier than working in your present job, no matter what you do now, you are wrong. You will work longer hours, give up your present life style, sacrifice life’s extras and keep on keeping on long after you thought you could. Sound like fun? It is and it is also rewarding in ways you can not imagine.

First let’s break down some of the sacrifices you will be making for your dream. If you now work an eight hour day, five days a week, realize your new business will take a commitment of 10 to 12 hours a day every day of the week. Any many new business owners work even longer hours to get started. Is this hard? Not if you have a driving passion to succeed.

Your current life style probably needs some adjustments. If you are putting in all these hours, you will not have time to hang out with your friends, occupy the couch watching television. If your hobbies are shopping, club hopping, sport participation or watching then you will be getting a new hobby – it’s called your new business. Although any activity that allows you to get some exercise on a solo basis (such as walking, running, etc) will bring multiple benefits. While you are getting healthy or staying healthy, you can be running ideas through your head – ideas that put into action will make your business succeed.

If you don’t have any responsibilities now except yourself – keep it that way for awhile. While having a mate and/or children doesn’t make success impossible, it will make it harder for both you and them. Family members will need to be onboard with your plans, as they will be making sacrifices as well. Money will be tighter and you will have less time to spend with them. But please do not sacrifice the ones you love for this dream, if it can’t be done now, you can plan for the future now. Or you can take it slower than you would if you were single. However, do sit down and talk this out with your family (include the kids as well). Perhaps they have talents that can be of help. And if you are all working together towards a common goal, they will feel a part of your life, not excluded from it. Also, as much as I love pets of any kind, they also require your attention and care. And you are better off not taking on any kind of responsibility at this time in your life if at all possible. You may need to travel; you will be working long hours. Giving a pet the care it needs and deserves will be problematic. So if you don’t have a pet, now is not the time to get one. If you do, than line up some friends or family members that can pitch in when you can’t. And remember you are not going to have the extra money to pay for pet care in the beginning unless Uncle Harry left you a fortune or you were lucky enough to win the lottery.

About this time you are probably thinking that your job isn’t all that bad. But if your dream is still beating strong within you, then know that the rewards that come from the sacrifices are wonderful. Should you succeed you will not only be rewarded with more money and a better life style, but also the unbeatable feeling of winning against all odds.

In the next chapters, we will be covering planning for your new business, financial issues, legal and tax matters, marketing and once you have gone through the start-up phase how to continue to grow.

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