How to Your Start Your Offline Business From Scratch

People always have ideas flying in their heads but what matters most is getting to make their ideas a reality. Little wonder, there is a saying that the grave is the richest resource on earth as people who had great, life transforming ideas had them either aborted prematurely, tried, failed and never tried again or just did nothing about them.

Despite all the pitfalls and challenges involved, there's been lots of success stories about businesses that started small and are doing pretty well today.

TIP: The businesses that usually thrive well are those built around the basic human needs - food, shelter, clothing etc. Find a need, provide a solution and you will be in for serious mega returns.

So let's get your offline business started

1. Get A Viable Business Idea

Coming up with an idea is not an issue, the real question is, 'how viable/workable is that business idea?' You need to be very realistic and not sentimental or emotional about the facts on your business idea. Will the business thrive in your environment? Is the market already saturated with your competitors? How much of the business do you know?

These and many other questions are what you need to answer.

2. Do Your Research

You can't just start your business without knowing the involvements. You need to do your research to know how many customers will be willing to buy or subscribe to your service. Ask questions, go on the internet, read, observe and learn. Get to know your target market, your competitors and your customers.

3. Develop A Business Plan For The Business

Virtually every successful business today has a business plan. A business plan is your blue print or your map. Here you make everything clear.

The basics of you business plan should include;

The Executive summary (say what the business is all about in a few words)
Your vision (What you intend to achieve from the business)
Mission (How you intend to go about achieving your goals)
Your unique selling proposition etc

4. Get A Business Name And Register It

Different laws are applicable to different areas. Here in Nigeria, apart from the general CAC (Corporate Affairs Commission) registration, if you were to go into products that are medicinal in nature, you would need to have a NAFDAC number or if you were to go into telecommunications, you would need to have registered with the NCC.

Be sure to be on the right side of the law, don't get caught up in it...it's enough distraction to get your business to fail.

5.Raise Your Start Up Capital

Every business needs capital to get started but most entreprenuer usually face challenges in this area. Here are a few tips on how you can raise capital for your business.

Sell some of your assets
Develop a good savings habit
Partner with investors
Talk to your friends and relatives
Talk to some suppliers who can give you credit facilities etc.

6. Select A Good Location For Your Business

This factor should not be overlooked as it is critical to saving you over-head cost on advertising.

If your sales office is located in a place that is hidden or difficult to access, you would be losing your customer-market share to other smart competitors who have theirs strategically placed.

Watch all well brand names and see where they locate there business, it is usually on the road or at the beginning of a street.

7. Advertise Strongly

Business experts say that you need to invest at least 50% of your capital into advertising. What is the use of opening shop when you don't have customers to buy or subscribe to your service?

Especially at the pioneering stage, your business needs 'Aggressive Marketing'. In online businesses, it is a well known fact that traffic is the life source of every website.

TIP:

At business start-up, what you should be bothered about most is getting more customers to subscribe to your service and not how beautiful your office looks.

8. Fix Your Prices Right

The price of your product or service has got to be set right or you would loose your customer base. When fixing your pricing(especially if you already have competitors), the wise thing to do would be to make your prices cheaper than that of your competitors (give your customers a good reason to patronize your service. The truth is, you might not be making profit at first but you will after you have gotten a good part of the market share.

9. Keep Accurate Records

You must have accurate financial records about your income and expenditure, your client database, your overhead costs etc.

These records will help you project for the future and have a grasp of your business' cash flow pattern.

10. Start Now

If after planning and planning, you don't give your business idea a shot, that would just be another dream in a man's heart that never saw the light of day; a dream that never got to impact lives or change people's financial status.

The Worth of Business Development Service For Professional Firms

Business development service is always used in a broader sense & enables the professional firms to strengthen ties with their existing customers as well as attracting new customers in other areas of the business market. In order to achieve this objective, the business development service providers go beyond the traditional means of marketing, sales, operations, customer care & business management to help their clients promote the business expansion at multiple levels. It needs the business development strategy maker to have certain level of expertise in different areas of business so that he could easily recognize & utilize the opportunities for business growth.

One of the basic requirements for business development is to evaluate the current business value as it is more related to the growth & maintenance of the business. For this, the development service providers appoint business development specialist who will work along with marketing & sales professionals to develop an effective strategy. This business strategy is based on the degree of popularity that the business is already enjoying in other areas of the customer base.

The business organizing specialist will sought for customer feedback from the customer care executives. These executives will help the strategy maker to gather data from the existing customers on their view about the company & its services. Such type of action often helps the development specialist to find out more effective ways of business promotion that can replace the current marketing strategy & target more number of customers in the market sector where the business is already present. Moreover, the acquisition of client testimonials through the channel of customer care executives will assist the business organizing specialist to identify the areas for the new range of products & develop a suitable marketing strategy for them. This strategy will lead to the quick promotion of new products & services later.

The role of business development service provider is not limited to an increased sales or customer satisfaction. While these things come naturally with the development service, the development strategy maker will have to ensure the best utilization of company fund, refine the operation of management & different departments and address any legal issue that may arise as the business continues to grow. Many professional firms give the business development strategy maker the right to collect business related information from any level of business structure & utilize it to induce more business.

Every small to large scale business organization can opt for development in business service. It brings guaranteed success for every kind of corporate condition. Many small time companies have tried it out & achieved a firm footage in their own sector. In most of the cases, businesses have been able to capture the targeted sector & achieve growth due to the efforts of business development specialist. So, companies need to concentrate more on their development & hire for development professionals if it seems impossible for them.

Corporate maintains their own wing for business growth & development that will deal with all development related activities. But small businesses can't afford to do that. So, they may ask a development consultant to work for them. The consultant will help them assess the present situations & develop strategies for bringing more business growth in future.

Step by Step Guide to Creating an Effective Small Business Plan

Having a good small business plan will ensure that your journey to success is much smoother. All successful business owners know that having an organized, well thought plan is essential to see the results they expect. Even if the business plan doesn't give the results that you would have thought in the beginning, you can tweak and change different areas of your process to perfect it.

I thought I would go through a step by step guide to what you need for an effective small business plan. Many people try and start a business without any true expectations for the future other then 'oh this is going to work'. You have to know exactly what "should" happen so that the surprises are less. In most cases surprises in business aren't positive.

You must have a plan for many different areas of starting a small business. How are you going to fund the start up fees? How do you expect to sell your product/service? How do you expect to pay your employees? How are you going to promote your company effectively? Most importantly and what most business owners don't think about is where do you want your business to be in 5...10...20 years?

Creating the right small business plan is all about creating effective systems. A system is something that you can use over and over again in different situations to receive expected results. You at least have some idea of what's going to happen if you have the right systems in place.

The first step to your business plan is knowing exactly how much money it's going to take to start your company. None of this has to be a professionally written up small business plan that costs thousands and thousands of dollars hiring an "expert". Take out a piece of paper and write down your plan. The main thing is that you know exactly how you are going to fulfill your dream of being a successful small business owner.

So what are your opening expenses? Here are some questions you need to answer to find out your estimated dollar amount:

How much money does your product or service cost you?
How much money will you charge for your service/product?
How much money do you require to live for two years with no profit coming in from your business (safety precaution)?
How much will it cost for your employees for 2 years?
What are your legal fees?
What are your CPA fees?
How much will getting a physical location cost you (if needed)?

Every business is going to be different so think about anything that you need to spend money on to get it running. The next step you must consider is how are you going to get this start up money. Are you going to go to a bank for a loan? Are you considering finding a partner that can cover the costs with the agreement you can buy out the company later down the road? Do you want to talk with a wealthy family member about your business? Anyway you choose to get the money doesn't matter.

Having a thorough small business plan is going to help you get that start up money though. As long as you can show the lenders how you plan on getting a return on their investment, you will be set. It doesn't matter if you have horrible credit or don't know anybody that will lend you large amounts of money. You can always find a way. Think outside the box!

Alright the next step should be the simplest for you. You want to write down your complete sales funnel for how you plan to sell your product or service. Go through every step you expect a customer to go through to reach your bank account. What are you selling exactly? How are you packaging the items? Are you providing multiple services and products? What do you expect to be your number one seller? What's your specialty?

Once you have all these areas done, you have to know how you are going to promote your business and keep the business coming in. This seems to be the biggest problem most business owners have. You know everything there is to know about your products/services, but you know nothing about marketing. That's expected too. Marketing is an expertise in itself.

If you've read much of my blog, you know how I preach about smart marketing. Smart marketing is all about spending your hard earned dollar and getting more then you spent in return. In other words, big return on investment (ROI). Every market will be different and different marketing tactics will work in each of them. You have a huge list of options too.

Newspapers, Yellow Pages, Radio, Television Ads
Fliers, postcards, promotion coupons
Referral programs
Internet marketing
Email marketing
Holding seminars and special events
Business to business referral programs

These are just to name a few of the options you have. You can never go wrong working with other local businesses. It's beneficial for both businesses and can be something that explodes your business quickly. It should definitely be part of every small business plan.

No matter which direction you take your marketing in, remember to always be able to track your marketing method. You always want to know how effective each method is for your business. Don't spray and pray! In other words, don't just buy what that marketing salesman is selling you if they can't show you how many customers you are getting in return.

Creating your small business plan with all of these areas covered is a great start to having a successful business. You can go in deeper and deeper to have an even more effective plan and you should, but this is a great start for anyone. Once you have the plan, you just have to follow it step by step. It makes your job so much easier. You have too much to worry about already. There is no reason to have to constantly be wondering...'what am I going to do now?' You need to know what you're doing beforehand.

How To Pick A Home Based Business For You

Are you considering starting a home based business? This article will provide you with honest information that will enable you to pick a business opportunity that's right for you.

If you're thinking about getting started a business from home you're not alone. In this economy many people are turning to this industry to replace jobs that they lost, provide more income for their families or achieve a better standard of living.

The first questions that you need to ask yourself when thinking about starting a home based business are: What do you like to do? What are you interested in? What are you passionate about? The reason why you should ask these questions is because many people are lured into starting businesses that have nothing to do with what they are interested in and their businesses ultimately fail because they didn't have the drive or passion to keep their businesses going.

If you love what you do and are passionate about your business your business won't seem like work at all and it will fun working on it instead of it becoming a chore to you.

The next question you need to ask yourself is are you thinking about a from home business just to make money? Every business has to make money but money shouldn't be the only reason why you're starting your business. Your 'why' should be something tangible like you're starting one to provide a better lifestyle for your family or provide for your children's education, take a dream vacation every year, buy a new car etc.

With these questions answered you should start your search by doing some research online. Use your favorite search engine, type in the word home based business and see what search results come up. Remember to find a business that offers a product or service that you have some level of experience with or passion for because if you love your business you won't have any problem talking with people about the products or services that you have to offer.

Once you find several interesting home business opportunities take your research a step further by researching the business opportunity online with the Better Business Bureau to see if it's a legitimate opportunity or not. After you do your research with the BBB the next step is to type in the name of the business opportunity or company name into your search engine and see what search results come up.

When you search under the company or product name the search results on page one will show you what feedback there is on that opportunity. You should also look for message boards, forums or any type of website with comments on the opportunity that you're in. A word of word of warning though, many online marketers will use the word scam when doing pay per click advertising or keyword optimization for their websites so be prepared to see the word scam next to the business name or product that you're searching on even if the home business you're interested in is a scam or not.

As you're searching for the right opportunity you should also look out for false income statements like: "My system makes me $100,000 per month" if you see an income statement that looks suspicious like this, be on your guard and also be prepared to ask for proof or verification that the income claim is real or fake. Many people get suckered into bogus income or business opportunities thanks to false income claims and the hype that comes with them. If you do your due diligence you won't lose money.

After you've found several prospects for you to investigate further the next thing you should look for is does the business you're investigating have an actual physical product or not? The reason why it's important to have a physical product is because it's easier to grow a business if you have a real product that people can actually use and re-order regularly.

Many opportunities are classic pyramid schemes that offer no value at all other than income to the person who recruits you into the 'opportunity' and as with all pyramid schemes the only people who make money are those who get into the pyramid scheme at the very beginning. A lot of the income opportunities online today will offer a bundle of e-books and software if you invest but what you're getting is usually out dated information that won't work today.

Once you've found a home based business opportunity that has you excited the next questions to ask are: how much does it cost to get started? Are there any reoccurring monthly fees to stay active in the business? Does the company offer any training or support? How long will it take you to recoup your investment in the business?

Before you invest in the business the most important question you need to ask is will you have to do any selling? It's important to ask this question because if you've never sold anything before in your life and you get into a home based business where you will have to make sales you're going to have problems.

Selling is not hard at all and anyone can start making sales even if they have no experience in the very beginning. If you don't have any sales experience you should go to your favorite bookstore or check online for "how to" books that will teach you how to sell. You should also make sure that the home based business opportunity that you're going to invest in offers some sort of sales training or quick start guide that you can follow to quickly start making money in your business.

The Small Business Jobs Act

The Small Business Jobs Act of 2010, signed into law by President Obama in late September, is designed to tackle America's continuing high unemployment rate by bolstering that sector of the American economy that has traditionally been responsible for the creation of the most American jobs: the small business sector. Small businesses, defined by the Small Business Administration (SBA) as any commercial concern with fewer than 500 employees, employ slightly over half of all private sector employees and over the past 15 years have generated close to 65% of all new jobs.

It's no secret that the recent economic downturn has hit business where it hurts. Even in prosperous times, business formation is a risky endeavor: over half of all small businesses fail within their first year, in part because their owners have an incomplete knowledge of the business law necessary to guide them through business formation. In the year 2008, the first year of the recession, almost as many of these businesses closed as were started, and many of those businesses had been in operation over ten years.

The 2008 $825 billion economic stimulus package contained very few provisions aimed at helping small businesses. The Act sought to rectify that situation by extending loan enhancements first put into place by the American Recovery and Reinvestment Act of 2009. Among other things, the Recovery Act allowed the SBA to raise the government-backed guarantee on its 7(a) loans to 90% and it also allowed the SBA to waive its $1,000 packaging fee on both its 7(a) loans and its 504 loans.

While loan modifications such as these make SBA loans a more attractive and useful option for entrepreneurs, it also makes the already complicated process of transacting an SBA loan even more complicated. Dealing with the SBA can already be problematic for startups, particularly those involved in non-traditional commercial ventures such as online businesses. In order to take the best advantage of the loan modifications, tax breaks and accelerated pay-outs offered under the new business assistance bill, startups and other businesses would be well advised to engage the services of an experienced business attorney who understands exactly how the Act can aid business formation.

Provisions of the Business Jobs Act

In addition to the loan modifications the Act contains other provisions designed to help small businesses attain access to the capital they need for operations and expansion. These include:

- A permanent increase in the size of the maximum loan available under the 7(a) and 504 loan programs from $2 million to $5 million; a corollary increase in the maximum loan amount available through the 504 loan program specifically targeted at manufacturing from $4 million to $5.5 million.

- A permanent increase in the microloan cap from $35,000 to $50,000 specifically designed to help entrepreneurs and startups.

- A temporary increase in the loan amount available to SBA Express loan recipients from $350,000 to $1 million.

The bill also introduced eight significant tax cuts for small businesses:

- The elimination of all capital gains taxes for business investments held five years or over.

- An increase in the write off for capital investments from $250,000 in Year One and $25,000 in Year Two to $500,000, and increasing the threshold for these write-offs to $2 million.

- An extension of the 50% bonus depreciation through the close of 2010.

- A health insurance deduction for the self-employed.

- Simplified rules regarding the deduction of cell phones and cell phone-related expenses.

- A temporary increase in the deduction for start-up costs from $5,000 to $10,000 (with a ceiling of $60,000.)

- For certain businesses, the ability to offset taxes - including the Alternative Minimum Tax - through business credits from the past five years.

- A decrease in penalties for tax errors that disproportionately affect businesses and small business owners (particularly sole proprietors.)

An Experienced Business Lawyer Can Help

The Small Business Jobs Act of 2010 provides significant new advantages to small business owners and to entrepreneurs who are in the process of forming a new business. Counterintuitive though it might sound, historically recessions have been excellent times to launch startups. Just ask FedEx.

However, the SBA process is extraordinarily difficult to navigate without the assistance of someone who is well versed in business law. Traditionally, the SBA has been very reluctant to make loans to startups: without a proven track record, the new small business owner is seen as a loan risk. An online business may be viewed as even a greater risk since in many cases it lacks the equipment and other capital that is viewed by the prospective lender as collateral in the worst-case scenario that a repayment schedule cannot be met. If you want to leverage the many benefits offered by the Small Business Jobs Act of 2010 on behalf of your startup, your wisest course is to consult with an experienced business attorney.

A Culture Chasm: Education and Business

Why is there such a chasm between academia and the business world to address the organizational culture phenomena? The following article covers 3 main points relative to organizational culture. First, organizational culture is defined and put into context for better reader perspective. Second, the contextual problem facing business schools along with the disconnect between internal organizational culture and what is actually taught to graduates. Third, the solution that focuses on internal dynamics at the business school, borrowing academia research and business world practice. Ultimately, once internal organizational strategy is bridged with the classroom strategy, graduates move on to incubate more prosperous entities and shunt the growing trend of health cost drivers.

Organizational culture: It's not a new idea in business schools or in enterprise. lowly but surely researchers and industry experts alike are putting together a mounting body of evidence on the importance of organizational culture. Organizational culture is not simply about managing a healthcare trend, productivity indicator, injury trend or insurance premium cost drivers or touchy feely things. Organizational culture refers to the overall leadership quality and impact on the workforce, surrounding community and connection between workforce job duties and company mission. Ask yourself: Is worksite wellness and organizational culture written (formally or informally) into the mission statement of the company? Are managers supporting workers appropriately? How does the workforce perceive the company culture and the support from the manager? How do you know the answer to any of these questions? In 2002 Accenture and Wirthlin Worldwide, found that 35% of the companies surveyed said the workforce neither knew the company strategy, nor knew how their day-to-day responsibilities aligned with the strategy. While businesses must address their own problems with people strategy and organizational culture, I'm convinced that one of the roots of the problem exists in colleges and universities.

A workforce that understands the organizational mission and perceives their company's culture to be largely supportive will be more productive than their peers at a competing company. A supported workforce will also demonstrate a stronger sense of connection to the company, the company mission, and how each individual job responsibility is tied into the company mission. According to a Gallup survey, at least 22 million American workers are extremely negative or "actively disengaged" - this loss of productivity is estimated to be worth $250-$300 billion annually. Are business schools insulated? Of course the answer is no.

Since the first MBA program started between 1900 and 1908 (depending on whether you give credit to Harvard University or Dartmouth College), business schools have likely not demonstrated the same environmental enterprise knowledge they teach their graduates about organizational culture, productivity and communications. Schools are naturally good at reacting to what the consumer wants. Good business move, but they don't graduate leaders adept at building organizational culture, nor are they themselves great examples of organizational culture. Just doing a quick search of US and International business schools' courses, I found a number of courses covering organizational culture and case studies dating back over 30 years. So why is the news of a curriculum change at Haas School of Business at the University of California-Berkeley (Haas) so revolutionary?

The problem: Business schools aren't practicing what they preach, or maybe they're preaching the wrong strategy. According to Robert Kaplan and David Norton, developers of the Balanced Scorecard, 95% of a company's employees are unaware of, or do not understand, its strategy. If the course work is in place and case studies available to provide evidence that organizational culture is a foundation to build a lasting business, why have business schools not acted similarly? Why have so many business leaders treated organizational culture as a line item of employee benefits? This leads me to believe that either the world of Business School education is flat or the navigational instruments need calibrating for the 21st century. Either way the proverbial ship that incubates leadership and innovation is traveling aimlessly at sea. The single most important foundational point to correct course is to learn, teach, live and support organizational culture.

Again, while business schools are accommodating consumer's requests for shorter, intensive programs in order to return to work quicker and offering seminar driven learning and even specialty degrees in executive management, few are looking at their own philosophy of organizational culture and how it translates into developing leaders and thinkers who will then cultivate their own organizational culture. However, a couple of institutions seem to be trending along the paradigm shift of course correction. Haas School of Business recently announced a new curriculum that focuses the business school's attention on organizational culture and the Columbia Business School (CBS) which utilizes lecturers with Indian background and philosophy to teach some of its courses. In general, Indian philosophy stresses controllable actions and processes instead of focusing solely on outcomes that are not within our control. Interesting side note: these two institutions also have a joint Executive MBA programs (EMBA). Since they both have similar outlooks and mission, it's no wonder they've partnered.

In contrast to business schools on the whole, large businesses like General Electric, Proctor & Gamble and Southwest have started scratching the surface of organizational culture and producing tremendous case studies to learn from. If the business world can address organizational culture by borrowing the research from universities and colleges that indicate its importance, why is there such a chasm between academia and the business world to address the culture phenomena? The answer may lie somewhere in the vast sea of humility.

I recognize that academic institutions and businesses don't operate in a vacuum, nor is every business leader doing better than their counterpart at every Business School. That said, innovators in the business world tend to recognize when they are not the smartest person in the room, need help leading and consequently remove themselves as obstacles to the process of progression. Look no further than General Motors or Ford Motor Company when both top executives stepped aside, in favor of new leadership to drive a new business model. Historically, Business Schools tend to get tunnel vision on solely producing graduates and not evaluating internal culture. Leaders have held themselves out to be the smartest person in the room and lead via authoritative means. In a working paper, Jean-Pierre Benoît and Juan Dubra cited, "...Dozens of studies show that people...are generally overconfident about their relative skills."

The solution: Remind your workers and team daily why their work is important. Woody Johnson (owner of the New York Jets football organization), borrowed the example his family used to build Johnson & Johnson. When building their new facility, the team owners designed nearly every office to look out onto the practice fields, to remind everyone, everyday, that they were in the football business. Business schools may not have their own literal practice field, but within their own design models, business schools can utilize a set of three solutions in 2011 to change course and affect organizational culture at the root as learned from my experience in worksite wellness solutions and organizational culture analysis.

#1: Lose the job description and think amalgamated business model. Every person in America, who holds a job, knows they do more than is in their job description. Job descriptions isolate groups of workers and fail to allow for effective communication flow. Whether you're working with new hires or existing employees, the process of shifting from a job description business model to one that more closely resembles an amalgamated model leans on communication.

#2: Produce an organizational audit. Audits take on many different forms. However, they don't have to be complex or lengthy. Simple employee surveys, for example, can provide necessary black and white commentary about a litany of issues including: workforce morale, teamwork, worker perceptions of the company, worker understanding of their own job responsibilities as well as workforce strategy and business strategy.

#3: Emphasize the organizational culture within the school and the classroom. Organizations with a lengthy business history often mistake reputation for culture. Colleges and Universities are certainly no exception. A business school with a great reputation for graduating innovative business leaders may not have a great internal culture that incubates good communication flow, worker understanding of the greater mission, etc. This reinforces the need to perform some type of audit (see #2). The future of organizations lies in the ability not only to innovate, but for decision makers to understand the worksite culture and to over communicate the business strategy to its workforce. To be certain that each individual worker understands the affect their responsibilities have on the success of the company. The time to chart a better course is now. For if not now, when?

Why It Is Necessary to Keep Your Business Bank Account Separate From Your Personal Bank Account

Now a day there is a debatable issue regarding the bank accounts. When we talk about the finance and cash flow of our affairs, it comes to hear that we should maintain a separate bank account for our business instead of using our personal account for our business purposes. The points that I would like to discuss here is that why we need a separate business bank account for our work, commerce or related affairs? Is it prohibited to use your personal bank account or your business purposes? What are the draw backs for using the personal account for your business purposes? Here below we shall discuss these entire questions in detail but in short.

First of all I would like to clarify that this is not an essential to maintain a different business account for your work corporation. You can use your personal bank account for your business matters only if you are running a small scale business and you feel it convenient to use your personal bank account for your work matter.

When we start a business we utilize a specific amount that is of course provided by the owner, although the owner is the only person to whom all the finance of a business belongs to. But if we use the personal account of the owner for his racket affairs there will be a very confusing situation when we would be in need to reach the business revenues and expenses. We shall never be able to reach the exact figures of the business. It shall be very hard to identify the business expenses among the personal expenses of the owner. We shall never be able to reach out that either the entreprise or commerce is doing good figures, better or bad figures. But if it comes to partnership or corporate level business entities, it is a requirement by the IRS to maintain the separate business bank account for your business affairs so that the exact figures can be extracted for taxation purposes.

One more reason behind maintaining your best business bank account separated from personal account is the accounting concept which is known as "separate entity concept" which explains that the business and the business owner are two different bodies. This concept separates the responsibilities of a business from the responsibilities of the business owner. In this way if the business entity ever goes solvent only the business assets will be taken into consideration. So in such a situation the personal account of the owner will never be looked for raising the funds of a solvent business.

When we use to be in a business environment we use to practice specific circulation of funds. It is not necessary always to utilize the funds that only belong to the business. Sometimes the business goes out of funds. In such cases what should be done? Should the business go to the silent phase and wait for funds that the owner will generate in unexpected time limit? Can it be possible to stay out of market for a while jus for waiting for necessary funds? No, definitely this can't be happened. May be we shall never have a second chance to step in the business market. In such situation we take credit figures from banks and many other financial institutions to keep the business running smoothly. So the banks and financial intuitions provide loans to the business entities. For getting this facility it is highly recommended to have a business bank account.

Looking for a Real Christian Internet Business Opportunity

Recently I was searching on the Internet for an online Christian home based business. Needless to say, the search was somewhat disappointing simply because of the huge number of websites all claiming to offer the perfect solution to my home based business needs. Unfortunately, very few of the companies I researched were actually founded by Christians. Fewer still were built around Christian business standards and ethics. The majority of companies offering home based business opportunities were simply Christian home business owners looking for Christian customers. Sorry, that's not what I was looking for. Anyone can claim to be a Christian, just as easily as anyone can claim to be a true Christian business owner. I didn't want to become part of an online business opportunity unless it was truly a Christian-based business, founded by Christians, operating on Christian biblical principles, and an online business that would allow me to be my own boss.

If you search Google for "christian home based business" most of the top websites are not Christian businesses at all. Most are Christian business directories. That's fine if I were searching for a typical job working for a traditional business, or wanted to start a typical "bricks and mortar" business. But I was searching for a true home based business where I could work from home on a part-time or full-time basis. I like the idea of working from the comfort of my own home, around my own schedule, and without making a huge investment and all the risk that goes into operating a typical "bricks and mortar" business

So, if you're like me and wanting to start your own Christian home based business, let me share with you some things I've learned. There are a few ways you can start this kind of business, but only one is truly a home based business.

You can always find a particular product or service that would have a wide appeal to Christians, and then market your business through traditional marketing methods such as print or media advertising. Of course the most effective marketing tool is the Internet. But unless you really know how to tap into the power of the Internet, you're basically at a loss. Even if you build a website, it will quickly become lost among the millions of similar sites on the worldwide web. It's sort of like planting a tree in a rainforest. You need to learn all the unique ways of driving Internet traffic to your website.

The most effective online Christian business opportunity is one that not only offers products or services that appeal to everyone - including Christians - but which also provides you with a complete turn-key operation, and will then teach you everything you need to know about Internet marketing. It should also be affordable. It shouldn't cost you a small fortune to get started. The up-front costs of getting into a good Internet business can range from several hundred to upwards of two-thousand dollars or more. Usually, the more you pay, the more you get. Just make sure there are no additional hidden costs for services you must purchase at a later time. Any additional costs, if there are any, should be purely optional and should not have a negative impact on your businesses ability to attract customers if you chose to opt out of those additional services. Plus, a credible online business should allow you to generate a fairly steady income stream within a reasonable amount of time. No Internet business opportunity, Christian or otherwise, can promise immediate profits. If they do, there is usually a catch. But you should be able to start generating real profits within 4 to 6 months after you start - assuming you are putting in the time, and following through on all the training you need to be a success.

But what if you're not "computer literate?" What if you barely know how to log onto your computer and surf the Internet? Can you still have a successful Christian home based business online? It all depends if the business opportunity you choose offers a truly comprehensive training program. Of course, some online businesses provide services where they do all the work of marketing and talking to potential clients. But those services cost, and will very quickly eat into your profits.

If you really want to be successful in business, especially online, you need to be patient, and take the time to learn how to do it all yourself. That doesn't means you must always do it all by yourself. You just need to know how to effectively market your business and talk with potential clients. Once you've learned those skills then you can decide how much of your own time you want to spend doing those tasks yourself, and how many you may want to outsource to others. But the bottom line is you need to have a team of real professionals backing you up, and offering you the best and most up-to-date Internet marketing strategies as part of a comprehensive training program. You not only need to learn marketing methods and strategies that will require an investment of your own money, but also effective marketing methods and strategies that are absolutely free. Also, that training should be available to you 24/7. Beside scheduled online training seminars, you should have access to a complete library of online training courses offering expertise in all areas of Internet recruiting and marketing. And perhaps most important, make sure you also have customer support 24/7. You should be able to get issues resolved within 24 to 48 hours of the time you submit a request. You should also have access to a comprehensive knowledge base or question and answer library where you can find solutions to issues on your own.

The bottom line is simply this. To find the right online Christian business opportunity will require a lot of due diligence. You need to approach the whole process objectively. That means look past all the fluff and all the glitz and glamour of claims, and thoroughly examine the basics of the business. Does it offer products and services that have a wide appeal to people searching for an online business? Does it offer a turn-key setup that will put you into business right away? Does it allow you to get into business without a huge expense? Does it provide you with a comprehensive training program so you can truly learn all the ins and outs of Internet marketing? Does it offer a 24/7 customer support and a thorough knowledge base or Q&A library? And perhaps most important of all, is it really a Christian business? Was it founded by Christians, and does it operate on sound biblical Christian principles of truth, honesty, fairness, and the Golden Rule of doing unto others as you would have others do unto you?

Business Creditworthiness

Criteria for Business Creditworthiness

Creditworthiness is probably the single most decisive factor whether companies will lend, increase line of credit, or sell to a business. Creditworthiness is not only based on your company's business reputation but also the company's overall financial strength. Banks, suppliers, and others who provide credit for your business, will examine the business credit report to determine the company's creditworthiness.

Your company's creditworthiness depends on 4 basic criteria,

Financial strength
Character Traits of the business
Economic environment

Financial Strength

The financial strength of the business is one of the most important variables to infer creditworthiness as it measures whether the company has the financial resources to repay its creditors. Fundamentally, it is the financial resources available to the business, which could be in the form of cash, funds from debt or investment. Business capital can be in the form of short or long-term. Short term Working Capital is the measurement of the availability of liquid assets of a company has to fund its day-to-day obligations, such as,

Repayment of interest on loan
Bill payments to suppliers
Employee salaries
Tax liabilities

These are elements in the business cycle that can quickly absorb cash. If working capital dips too low, a business risks running out of cash. The availability of a bank credit line is often used to smooth out peaks and valleys of a business cycle.

Long-term capital is usually a loan obligation with maturity date that is more than 1 year. When utilize properly, a company can optimize the use of the borrowed money to finance long-term investments and use the earned profit to pay for the interest of the borrowed money.

Lenders also calculate specific financial ratios to determine where the business stands within the industry and in comparison to other businesses that are similar in size. This portion of the credit business report closely examines the financial statements for items such as; working capital, debt to equity, cash flow and net worth.

Character Traits of the Business

Lending institutions compose an evaluation on whether the business has the management ethics to stand behind its business transactions. Character in business consists not only of ethical attitudes (such traits as high moral values, diligence, determination, confidence, perseverance, responsibility, resourcefulness, trustworthiness, efficiency, and respect), but also the company's credit history and other operational traits.

Business character is frequently determined by analyzing the credit history or credit score of the business. To acquire a business FICO score a business will require at least 4 trade references. Factors affecting a business credit score include:

Timeliness of payments
Unpaid accounts
Outstanding debt
Available credit

Although credit history is major factor, there are other factors used to judge business character and they include:

Owner's know-how and experience
Structure of business
Size of business
Years in operation

Economic Environment

The economic environment surrounding the business will have external events that can affect the operations of a business. These circumstances are all examined by the lending institution to determine creditworthiness. These external factors will include the overall economy, growth within the industry, government regulatory changes and more.

The business credit score is used by creditors to establish the risk versus reward of granting a business credit, and is also used to establish the interest rate on loans and business lines of credit. As the business credit report affects the operations of the business, it is within your best interests to build an excellent credit rating.

As it is with the individual credit scores, it is important to review your business credit profiles from credit bureaus at least once or twice a year. Make sure the information is accurate. Upon finding errors, contact the appropriate bureau and report the errors immediately with proper documentation.

Buying a Business

Before getting into business you will need to find what type of business you believe you are qualified to run and would enjoy owning. This should be based on your own skills, interests, personality and location (unless it is an online business) but in saying that you should still take an interest in the business overall. Working out this first hurdle will help you determine which type of business will provide you with the life style you desire, and hopefully turn a profit in your new business venture. Finding a business to purchase should be the final step in a process that begins with self-evaluation and a deep financial assessment.

When you have established a budget and the location you would like to be in, you should start searching for businesses for sale in local newspaper advertisements and online websites. In most metropolitan areas, the Weekend papers will have a large 'Business Opportuntiy' or 'Business for Sale' section and you can contact owners directly. Alternatively, you can also place an ad stating that you are looking to purchase a specific type of business.

Some websites these days even allow you to sign up for free and create a business wanted profile or even set alerts for the type of business you are looking for, this can be a great tool when looking to find your business of choice.

You can save your self considerable headaches by buying businesses which are already established, its always easier and safer then starting a business from scratch, not only that a huge saving of your own time.

Statistically a large number of start-up businesses will fail within the first 12 months, with those surviving often being sold to have their new owners make the real gains. So let the hardened entrepreneurs take the risk, develop the market, and find out what works and what doesn't. In buying an existing business you are getting;

(1) History Of the Business

The previous owner has operated this business and will be able to show you it's financial records, it's cash flow, sales and expenses. All this lessens the risk to you and your bankers, showing the companies performance and providing you with a platform on which to build.

Before starting out decide what you want, what your objectives are, and understand your strengths and weaknesses. Plan the process. This can also be found by looking up the businesses ABN using ABN lookup or other online tools

(2) The businesses database

These are the people or businesses that already do business with you. This means cash flow from day one.

(3) Existing products or services.

They have already been developed and accepted into the market place.

(4) Existing employees

Experienced and skilled staff who understand the business and it's customers, most valuable to any going concern. Save time recruiting new members of staff.

(5) Operating Systems

These are key in any business activity. How the business operates, what keeps the customers coming and the cash flowing? This ties everything together. It's your business formula developed by the previous owners; it may be perfect, or it could be in need of major changes.

The Purpose of a Business

When purpose is unknown abuse is inevitable. An understanding of the purpose of the Christian business will help us in our approach to handling and running our businesses.

Many say they have a Christian business, without fully understanding the concept of a Christian business.

The truth is, a business entity is neither Christian nor non-Christian. A Christian business is one run by a Christian, who engages Biblical values and principles as taught in the word of God, in the day to day running of the business.

The key to running a Christian business is a commitment to making decisions on the bases of scriptures and not on situations, feelings or what is acceptable to society.

As we run our businesses in the way of the Lord, we honor God and ultimately bring glory to His name.

This is the purpose of every Christian, in business or otherwise- to glorify God. And this also, is the primary purpose of every Christian business.

"........whatsoever ye do, do all to the glory of God."1cor 1o:31

Our businesses must bring glory to God!

This can be achieved, as we use our businesses to serve God's purposes on the earth.

Early in a business career, the most important thing to the entrepreneur is how to break even and keep the business running. Later it becomes important to make profit and build a bigger business.

And this is why, it is crucial for the Christian business man and woman to have a priority system, that will help to maintain balance. Maintaining balance is important in a spiritual sense just as in a material sense.

If all other functions of successfully running a business organization are neglected in the pursuit of evangelism, the business would run aground.

We must position the business to generate revenue and make profit. God is interested in our businesses making profits. He wants us to prosper in whatever we do.

"Thus saith the LORD, thy Redeemer, the Holy One of Israel; I am the LORD thy God which teacheth thee to profit, which leadeth thee by the way that thou shouldest go."Isaiah 48:17

"And he shall be like a tree planted by the rivers of water, that bringeth forth his fruit in his season; his leaf also shall not wither; and whatsoever he doeth shall prosper." Psalm 1:3

Yet we must not neglect using the business to serve God, as we propagate the Gospel.

Therefore, the priorities really mean what are my goals, and can my goals be balanced to achieve the overall objective of serving God while meeting material needs.

Business as Instrument of Evangelism: When placed side by side, the profit of a business is rather trivial compared to the value of a soul. But if used properly a business can be used to change the lives of countless lost people.

"For what is a man profited, if he shall gain the whole world, and lose his own soul? or what shall a man give in exchange for his soul?" Mat 16:26

An entrepreneur can use his business as a tool to influence people within his sphere of business dealings and operations by helping them to hear the Gospel of Christ. And thereby many are led to Christ.

Financing the Gospel: We can also set apart, a certain percentage of the profits from our businesses, for kingdom work. Sponsoring Gospel crusades, mission work and building worship centers are commendable and laudable things we can do for the kingdom of God, as God helps us to make profits in our businesses.

By this, our businesses are bringing glory to God, as lives are being transformed and impacted.

".....My cities through prosperity shall yet be spread abroad;...." Zec 1:17

Carrying out all these, will not be difficult if we understand that all we have, we received of the Lord.

"For who maketh thee to differ from another? and what hast thou that thou didst not receive? now if thou didst receive it, why dost thou glory, as if thou hadst not received it?"1cor 4:7

Also worthy of note, is the fact that all God has ever done, and He will ever do, will be done for His pleasure.

The business and the profit He gave you, He gave for His pleasure.

Lack of a Targeted Business Plan Causes Small Business Failure

Traditional thought about business plans is that you must have one to be a successful entrepreneur. However, there have been recent conversations by some business professionals that challenge this contention, instead recommending that entrepreneurs should spend their time running their businesses rather than creating plans. This exchange of ideas can only be a good thing, and the debate about the relevance of business plans will probably continue for some time.

Writing a small business plan is viewed as a burden by many entrepreneurs who see it as something that is done and then filed for future reference (actually, never to be seen again). Most of the business professionals who suggest that plans aren't necessary probably fall into this group. However, people who support the need for plans most likely see them as part of a process for business growth and development-a tool to use in truly understanding the business' mission, what needs to be accomplished, and how the business will meet targeted goals and objectives.

The decision to make or not make a plan may rest on how the term is defined. Business plans actually come in all shapes and sizes and meet diverse needs depending on if the entrepreneur just wants clarify about what needs to be done or if the goal is to attract financial institution or angel investor capital. Some entrepreneurs even use plans to create marketing campaigns or to attract stellar employees. All of the priorities listed here will play a critical role in how the term business plan is defined by individual entrepreneurs. Therefore, the idea of a rigid definition of what a plan is and what it does is not very practical.

The title of this article suggests that the lack of a business plan will spell doom for an entrepreneur. Why is this true, especially when many professionals in the business community don't think they are necessary at all? Well, the business plan concept actually represents the belief that an entrepreneur must take a honest, analytic view of her business, its operations and marketing models, and financial stability to determine what needs to be done-both present and in the future-to be success and profitable. It's hard to image this process occurring effectively if there isn't a plan of some kind in place (and in writing) that can be read, reviewed, and changed as needed.

The debate over the usefulness of business plans to entrepreneurs may be more productive if the focus is shifted somewhat away from the idea of having or not having one to a focus on determining how the plan can be shaped to meet the specific conditions, situations, and priorities faced by each entrepreneur. This change in focus would certainly produce greater consensus among professionals that business plans are critical and not having one causes small business failure.

How to Build Business Credit - Build Your Business Credit Fast

Learning how to start building or repairing credit for your business are imperative. Whether you are establishing a business or have an existing one, building a good credit rating is essential, as it helps to optimize your business operations.

In the initial stages of building business credit, more often than not, it is necessary to use your personal credit background to obtain funding to finance purchases and attain credit. However, the business credit profile should be separated from your personal one, as relying on one's own funding to finance the business leaves you personally liable.

The process to build up credit for your business must commence prior to starting operations. To start building credit immediately you must be looking on establishing the following:

Business as a Legal Entity

To separate your business credit score from your personal credit score it is necessary to establish your business as a separate entity. To qualify as a separate entity the business has to be structured as a corporation or a limited liability company (LLC).

Tax Identification Number

Acquiring a tax ID number (also known as an Employer Identification Number, or EIN) is the next step involved in building valuable credit for your business. Similar to the personal credit score which is associated with the individual's Social Security Number, the business credit reports are associated to a tax ID number. The federal tax identification number can be obtained from the Internal Revenue Service and there are a several ways to reach them:

Call the IRS Business and Specialty Tax Hotline at 1-800-829-4933.
Download IRS Form SS-4 from the Internal Revenue Service website
Download IRS Form SS-4 from the Small Business Administration website and submit to IRS by mail or fax. Directions for the SS-4 forms are provided online.

Business Bank Account

Opening a business bank account allows you to separate business funds from personal funds. Furthermore, a business bank account can also serve as a bank reference when applying for business credit.

How To Start Building CreditWith A Business Credit Card

As a business credit card can be used as a revolving credit line, it is simplest way to build up credit history with on-time payments. Timely payments eventually improve your company's credit worthiness which facilitates your ability to acquire a business loan. Therefore, use a business credit card for payments whenever possible. Unlike personal credit cards, having multiple active business accounts can be positive, provided that they are in good standing. However, limit the number of business credit cards when beginning and as the company grows you can continue to acquire more.

Business Phone Number

Acquiring a business phone line is important as business credit reporting agencies use the phone number to index your business in their databases. In addition, the credit reporting agencies use the telephone number as proof that you are actually conducting business.

Business Listing

Be sure to supply the exact same business address and phone number to every credit agency and trade credit vendor. Ensure that the business address and phone number are also listed in both the 411 Directory (White Pages) and the Yellow Pages.

A D-U-N-S Number

The D-U-N-S Number is a 9-digit number issued by Dun and Bradstreet that most companies utilize it to verify the credit history of businesses. The United States government and many corporations require their suppliers and contractors to have a D-U-N-S Number. Keep in mind that having a D-U-N-S number is just the beginning. You will need to start building your company's credit profile by doing business with creditors and/or suppliers that report to Dun and Bradstreet.

How to Start Building Credit By Registering with Credit Reporting Agencies

Many of your company's lenders and suppliers report information to the business credit reporting agencies about your company, such as how your business pays its bills or loans. There are many business credit reporting agencies such as D&B, Experian Business, BusinessCreditUSA, FDInsight, and ClientChecker. The majority of suppliers, creditors, and lenders pull their reports from Dun and Bradstreet, Experian and, Equifax Business. Registering an account with these 3 business credit reporting agencies is a good start.

Registering enables your company to start building credit through their credit databases. The database can also be used by potential customers, suppliers and lenders to obtain fundamental information about your company. As it is not mandatory, it may be necessary to ask businesses that you work with to report your timely payments to these business reporting agencies. These submissions enhance your credit rating and verify your registration with the business credit reporting agencies.

Compliance

Before conducting business, it is necessary to obtain all registrations, permits and business licenses that are required in your jurisdiction.

In summary, once the above list has been completed, the process of building business credit profile can commence. Obtaining trade credit with vendors is a good place to start. To build up credit score, it is important to seek vendors and suppliers that are set-up to report your company's payment history to the credit reporting agencies. Naturally prompt payments for purchases are essential in leading to a good credit score. If the business has an existing loan, timely payment of the loan can also help you establish a better business credit score.

As it is with the individual credit scores, it is important to review your business credit scores from credit bureaus once or twice a year. Make sure the information is accurate. Upon finding errors, contact the appropriate bureau and report the errors immediately with proper documentation. As the business credit report affects the operations of the business, it is to your best interests to have these agencies present an accurate picture of your business.

Six Simple Accounting "MUSTS" for New Small Business Owners

Every day, we meet with new small business owners. They always have the same questions about their businesses. This paper is to provide some simple answers to the most common questions.

1. What can I claim as a business expense?

Operating a business is similar to going on a safari to Africa. If I asked you "How much did the safari cost?" you would simply add up the receipts for the trip and tell me the cost. As a new small business owner, you are in an adventure of business. Any expense that you pay in order to be on your adventure can be claimed as a business expense.

The most common and straight forward expenses are those of advertising, office supplies, professional fees, insurance, freight, postage, meals and bank fees. These are straight forward because they are typical business expenses and don't require a lot of interpretation or calculation. You simply add up the receipts and you have the total expense.

Other expenses such as office rent, automobile, and wages are all acceptable expenses but are usually a bit more complicated to determine. These areas have various rules that apply that all business owners should know early in their adventure.

2. What do I need to retain to prove my business expenses?

So going back to the example of the safari adventure in Africa, if you were asked to show that you actually were on the trip, you would probably pull out things like plane tickets, hotel bills and meal receipts. Anyone could see from the addresses on the bills, the dates and the descriptions that you were in Africa, you spent money and a general time frame for the trip. This would provide good evidence of your trip to Africa. The same principles hold true for your adventure in business.

One thing that is hard to remember, even for seasoned business people, is to get the proper receipt for each and every business transaction. Many business people know the feeling of walking out of a restaurant or driving away from a gas pump and realizing that they didn't get the receipt that they need. In that moment, the business owner has converted a business expense to a personal expense.

The general rule of thumb in this area is that you need to get a receipt that shows the actual description of the items that were purchased. The receipt produced out of a debit or credit card processing machine that only shows the total amount in not going to cut it with a CRA auditor. Neither will the Visa or MasterCard statements showing a company name and an amount. In short, you need to get a receipt that shows the paper, pencils, gas or hamburger that was purchased to allow you to do your business.

3. How does office rent work in a new business?

While you are traveling around Africa, you are going to need to have a place back home to store your belongings while you are traveling. Some people might put this all in a storage unit and pay rent. Others will put their belongs into a friend's house and pay rent. Others might simply lock the front door of their house and continue to pay the rent or mortgage payments. This location, though, will be where you return when the trip is finished.

New business owners need this same type of space when they start their businesses. Most people will use some space in their homes. This space will usually be a den, converted bedroom or part of the basement. The Canadian tax system has a system to recognize the costs associated with this space.

The very general rule is that you will be able to recognize a portion of your home expenses as office rent in your business. The first step is to calculate the total costs associated with your home. This should include the mortgage interest, rent, the condo fees, the home insurance, the utilities, property tax and maintenance costs. Once you have these numbers, you calculate the total amount of space used in the house for the business. This amount in then divided by the total space available in the house. The ending result is the percentage of home expenses that can be claimed as office rent. For most of the businesses we deal with, the percentage amount is usually 10 to 15%.

4. How do automobile expenses work in a new business?

Pretend that you decide to take your compact car to Africa on your safari. If you were asked "How much did you spend on auto expenses on your trip?" you would probably come up with a total for the gas, the repairs and the maintenance while the vehicle was physically in Africa. You wouldn't add in the expenses of gas and repairs in Canada as these would not be costs associated with the Africa trip. Business auto expenses work in a similar manner to this.

Automobile expenses are very complicated for business owners. We won't try to explain all of it here. The important thing to remember is that you need to keep a lot of information in order to properly record the auto costs. You need to keep good records of how much you drive for business and how much you drive for personal. You also need to keep all of your gas and maintenance receipts. These receipts need to be the one from the gas pump or from the cashier. You cannot rely on your credit card statements to provide the evidence for these purchases. This then gives you the basic information that your accountant can use to calculate the auto expense for you.

The next step in the calculation is to identify those expenses that are business expenses and those expenses that are personal expenses. This is similar to our Africa metaphor in that you need to figure out how much of the overall costs for the auto are for business only. This is done be determining the total kilometres driven for business and the total kilometres driven for pleasure. These numbers are then used to determine what percentage of the total automobile costs can be claimed for business.

The other question that most new business owners ask is "What is a business trip". This is fairly easy for a new business owner as most of them operate out of their home. Thus, a business trip is any time that you leave the house to deal with a business matter. This can include traveling to meet with clients, getting supplies, depositing money in the bank or traveling to other cities to attend conferences. The amount of the mileage is basically from the garage of the house to the parking stall at the destination and back.

5. Do I need a business bank account for my new business?

If we did do a trip to Africa, it would be easier and simpler if you had one bank account for the trip only. If there were any questions about what you spent on the trip, you could simply go to the bank account and get a lot of the details that you would need. This is similar to your adventure in business.

Our suggestion is that you have a separate bank account that is used to record the deposits and the expenses for your business adventure. If you operate under a name other than your personal name, you will need a business account. This will probably require you to register a trade name at your provincial registry office. The separate bank account makes it much easier for your accountant to identify business only transactions. This ensures better accuracy.

6. What is a business meal?

On your African safari, you would include in your total costs all of the meals that you had while on the trip. You might also include those meals that you had before you left where you met with others to plan and organize the trip. You might also include a few meals after the African safari if they are a result of the trip. These might include meetings with a book publisher who is interested in your travel book or maybe meeting with an investor to review the results of the trip. In short, any of the meals that were required in order to plan or organize the trip can be claimed as an expense of the trip.

Sometimes it appears as though some small business owners go into business to simply claim all of their meals. They claim every meal they have as business meals whether the meal is at a restaurant, at home or in a field with the family. This is not very prudent.

So what can you claim as a business meal? Well, a business meal typically occurs in a restaurant. It usually involves two or more people although there is an exception. The reason for the meal is to allow the individuals involved to discuss topics related to the business. Typically, one person is trying to convince another person of a position or plan of action to follow to generate more sales.

How to Decide What Structure Is Best for Your Business

There are several factors to consider when deciding what structure is best for your business. Although cost and convenience of your business should be a consideration, it is not the major consideration that will affect your business in the long run. The business structure you choose will affect your ability to control the decision-making and management, your liability to third parties, and the taxes you pay personally for your business. It is therefore important to understand the basics about the different business structures and affects of each, when deciding what structure is best for your business.

LIABILITY

Depending on the business structure you decide is best for your business, you can be either "jointly and severally liable," or virtually not liable at all to third parties. Under most circumstances, LLCs and Corporations are liable to third parties, thus freeing the business owner from liability. However, there is an exception where the courts can Pierce the Corporate Veil, which has the affect of passing the liability of the business entity to the individual owner(s). Conversely, Sole Proprietorships and Partnerships hold each owner "jointly and severally liable." This means each owner is individually liable. Creditors and parties that may win suits against the business can collect the full amount from any and all of the owners to the extent the liability is resolved. The owners can then seek recovery from the other owners according to liability agreements among owners and/or fault.

TAXES

Pass-Through Taxation

The type of business structure that you decide is best for your business will affect your tax liability in two ways. Either you will experience "Pass-through Taxation" or "Corporate Taxation" (Double Taxation). In "Pass-through Taxation," the earnings/losses are passed from the business to the business owner, thus giving the affect of only being taxed once, on the business owner's personal taxes. Choosing this business structure can have positive and negative consequences depending on the productivity of the business. If there are losses, those losses are passed to the individual owner, offsetting the tax liability from the owner(s)' personal earnings. However, if there are larger profits, those profits also pass through to the personal tax liability of the individual owner(s). This can propel the owner into a higher tax bracket, thus forcing the owner to pay more taxes, even if the owner is not cashing out the money for personal use. The entities that bring this effect to the business owner are Sole Proprietorships, Partnerships, S-Corporations and sometimes LLCs.

Corporate Taxation (Double Taxation)

Under "Corporate Taxation," earnings are taxed twice. Earnings are taxed at the corporate level, and then at the personal owner level when the earnings are distributed. This is usually less desirable for smaller start-up businesses because it leaves less money to be used either for the business or by the business owner. However, there are some other tax benefits from choosing a business structure that has corporate taxation. The business entities that use this taxation are C-Corporations and sometimes LLCs.

CREATION

The creation of the different business structures varies according to which structure you decide is best for your business. Sole Proprietorships are created by merely acting as one, even without filing anything with anybody. LLCs and corporations typically cost under $1,000 to create, unless you have needs for complicated shareholder agreements (for Corporations) or operating agreements (for LLCs).
Subscribe to: Posts (Atom)