Next Steps For Your Home Based Business As A Corporation

Once you've chosen the type of corporation you want for your business, most entrepreneurs are ready to stop worrying about the details and move onto more pressing matters, like developing your product or service, however, there are a few more corporate formalities that must be addressed before proceeding.  As a corporation, you'll be required to hold annual meetings with your shareholders which must be documented.  Also, while this isn't required for LLC's, it's still a good idea; if you ever do run into trouble with your business (IRS audit, legal matters, etc) the more documentation you have, the better.  With corporations, neglecting to properly document these annual meetings can lead to what is commonly referred to as "piercing the corporate veil" which can lead to you, your partners and shareholders being held personally responsible for the debts and liabilities of the business, rather than being shielded by the corporation.  Although this is uncommon, it is a definite possibly when a corporation is mis-managed. 

At this point, the high-D, super driver, entrepreneurial leader in you may want to check-out or simply hire someone to take care of all of these details, and that's really a great idea.  A board of directors is responsible for overseeing the activities of the corporation, but this typically does not mean that they can overrule you when it comes to product decisions.  Giving up the decision making power can be a scary proposition for an entrepreneur, but hopefully if you are able to choose the right team and setup the bylaws appropriately, you'll be able to continually innovate and drive the company while the board of directors watches your back, weighs in on important decisions and protects the company and its shareholders from additional liability.  Additionally, pursuant to the Sarbanes-Oxley act (SOX), many corporations will also employ internal auditors who will ensure that the company is completely above board with all of it's legal and financial actions, this is more important now than before SOX because now board members can face large fines and prison time in the case of accounting crimes. 

Coming up with a great idea for a new business and actually launching it is a great achievement, and continuing to develop and innovate is what entrepreneurs live for.  The corporate minutia shouldn't grind your business or corporation to a halt and that's where finding and employing the right people that you can trust will make your business more effective and more importantly, keep you, your partners and your shareholders safe. 

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Different Types of Corporations For Your Home Business

If you're just starting out in business, you may hear the word corporation and think of a huge, multi-department, publicly traded company, but, in fact, even the smallest home businesses can benefit, in many situations, from incorporating.  There are several different types of corporations, each with it's own benefits and drawbacks, as well as legal requirements, so it can be a little intimidating to decide how to incorporate your business, particularly if this is your first time starting a company.  It's a good idea to consult a lawyer or business mentor before beginning the incorporation process, but here's a quick primer that should give you enough info to get started.

General Corporation

This is typically what people imagine when they think of a corporation, and it's the most common type.  General corporations can have an unlimited number of shareholders whose personal assets are protected from the debts and liabilities of the business.  Other advantages of a general corporation include various tax deductions for all kinds of business-related expenses, the corporation continues to live on even after the death of the owners, and raising funds is made relatively easy through the sale of stock.  The disadvantages include a hefty amount of federal and state regulations and a higher cost associated with incorporating than many of the other options.

Close Corporation

A close corporation (or C-Corp), as the name implies, is much more closed than a general corporation.  Most of the rules are the same, however there is generally a maximum number of shareholders in the 30-50 person range and stock must first be offered to existing shareholders before being sold to new ones.

S Corporation

An S-Corp is actually just a different tax strategy for existing corporations to be able to take, and if you are starting a home business, this is one to pay particular attention to.  In a traditional corporation, profits would be taxed at the federal level, then dividends would be paid out to the company's shareholders, who would then report their earnings as income and pay taxes on that income.  You can see how if you were a sole proprietor, you would be subject to paying tax twice on your profits under the general corporation rules.  The S-Corp was created to avoid this double taxation by allowing all gains/losses to be reported once on the personal tax returns of the shareholders.  You can see how this would be difficult for a large corporation with many shareholders, but works perfectly for a sole proprietorship, or a very small group of owners/shareholders.

Limited Liability Company

The LLC is perhaps the best choice for a home business, however, because it takes many of the advantages from all of the above.  Like an S-Corp, LLC's are authorized for pass-through taxation, however an S-Corp has a long list of IRS restrictions that LLC's do not.  LLC's still provide protection of personal assets from business debt and plenty of flexibility at the management level.  Some potential disadvantages are LLC's do not have stock, which may make fund raising more difficult, they cannot exceed 30 years and many states require 2 or more members to form the LLC. 

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Lessons Learned From Successful Entrepreneurs

Succeeding in business, no matter how big or small, isn't like rolling the dice or winning the lottery, it really in the end always comes down to a combination of talent, hard work, and the humility to always keep learning.  Even for the most wildly successful companies of our time (the Apple's and Microsoft's of the world) while there was certainly an element of 'right place/right time' what allowed their businesses to succeed when so many others were competing in the space was largely due to the skills and abilities of their CEO's.  As a small business owner, you're the CEO (and often, the only employee when you're starting out) so it's important to understand that no matter how good of an idea you have; how strong your business plan is; in the end, the success or failure of your business is going to fall squarely on your shoulders.  With that in mind, here are a few quick insights for the budding entrepreneur.

Do What You Love or Love What You Do

That statement might sound a bit recursive, but what I’m getting at is that if you cannot, for one reason or another, do 'what you love' then you have to learn to love what you do.  Countless studies have found that the affectivity and productivity of people doing what they love to do skyrocket and that should make perfect sense.  Think about the subjects in school that you got the highest marks in; now think about your favorite subjects, are you seeing a correlation?  Now, if you find yourself in the situation where you are stuck doing a job you don't love, your goal is to try and figure out how to love it. 

Fail Harder

A giant mural comprised of over 100,000 thumbtacks sits in the lobby of the immensely successful advertising firm Wieden and Kennedy and greets guests with the somewhat cryptic phrase, "fail harder".  If you start a business and never make a wrong move, hit a brick wall or feel like you're in over your head, then you're either oblivious or incomprehensibly lucky.  Failure, in one form or another, is often the best way to win, and while some may say that you don't have to fail to learn, and I would tend to agree, chances are that over the course of your business, you will make at least one wrong move, or make the right move at the wrong time, and this is where you have an incredible opportunity to learn from the failure, make the necessary adjustments and keep pushing forward until you succeed.

Ultimately, no business startup will pan out the exact same way, but there are definitely trends that you can pick up on if you look at the successful (and even if you look at the unsuccessful) businesses out there.  Learn as much as possible, put the knowledge into action and be sure to keep trying, even when it gets tough. 

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Your Clean Future Shows How To Own An Office Cleaning Business

Maybe you want to earn a six-figure income or higher working your business full-time. The Express Office Cleaning Manual, DVD and Forms Package will show you how to make an incredible amount of money by owning your own commercial office cleaning business! This package is featured in many small business magazines such as, Home Business Magazine, Home Based Magazine, Opportunity World, Small Business Opportunities, Money Magazine, and others. These magazines have given Your Clean Future a rare find 5 Star Rating.

This is a real business and not a fantasy, make $50,000 a month multi level marketing, or a foreclosure cleaning business where there are only sporadic and limited areas of work. You will quickly notice, these companies are not members of the Better Business Bureau. Can you guess why? Most operate outside the U.S. so be careful and realistic. Real businesses sell something tangible or provide a needed service!

In every city you see office buildings everywhere and commercial cleaning services are being paid well to keep them clean! There is plenty of demand, just not enough good cleaning services to fill the demand.  If you would like an opportunity to build a real future for you and your family owning a recession proof cleaning business, keep reading.

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How To Decide On A Home Business Idea

You may think that before you decide to start a home business, you need to know exactly what type of business you’ll be starting.  While certain business ideas can pique your interest and spur you on to starting the best home business for you, all you really need to get started is a desire to start and run a successful business and the drive to keep going, even when it gets difficult.  Here are some quick questions to ask yourself that should help you find the right home business in no time.

Knowing which field you want to go into can be half the battle when it comes to choosing a home based business.  Sales and service businesses are typically readily available for the would-be-franchisee, however, if you come from a business background, there are also plenty of professional options such as business consulting and financial services.

Once you've chosen your ideal franchise, much of the hard work will be taken care of by the franchisor, including the business plan, monetization structure and product development.  These three key elements are what make or break a business startup and why on .06% (or 6 in 1000) businesses ever even make it past the planning phase.  Now, franchisees still will need to work hard, it is still a startup after all, but starting out with a proven business model gives you a few steps in the right direction and a much higher success rate.

If you have the drive of an entrepreneur, the ability to raise the initial startup funds and the skills to adapt as your business evolves, a franchise can be a great way to wade in to the world of startup businesses.  With reported numbers as high as 95% success rates for franchisees, it's no wonder that so many people are interested in taking the risk of starting a home based business franchise rather than the gamble of trying to start a small business from scratch. 

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When To Seek Legal Advice In Your Home Business

As the title of this article suggests, getting legal advice related to your home business is not an 'if', but rather a 'when’.  Among other things, having a lawyer review any legal documents or contracts you may draft or sign, while expensive, will more than pay for itself if you should ever run into problems down the road.  Think of it as homeowner’s insurance for your home business; hopefully you’ll never have to defend a patent or dispute a contract, but if someday you do, you’ll want to know that you have an airtight case legally.

The typical approach for most first time entrepreneurs is to only bring a lawyer into the situation when they feel it is getting out of hand, however much of the work a lawyer can do for your small business will preempt problems that may arise down the road.  It is not uncommon for a small business to work regularly with a lawyer and in many cases, bringing a lawyer onto the team can be a great idea to keep you legal from the beginning and every step along the way.  This is often cost-prohibitive for new small businesses, however giving away even a small piece of the company (perhaps 1 or 2 percent) will be well worth it if it buys you legal expertise from the outset.

If you neglect to consult a lawyer at the beginning and even decide to draw up your own contracts and foundational documents without a lawyer, if someone decides to take legal action against you and your company, this is where you will absolutely need to seek the help of a lawyer.  Depending on how you incorporated your small business, you may have left yourself liable personally, and if you neglected to properly patent any technologies you are selling in your business, it may be a game ender for your business.  The moral of the story is, find a way to get legal counsel at the outset of your business, if you can’t afford it when you’re starting out, reach out to a relative or friend who is a lawyer and simply asking their advice on which type of corporation to form will help protect you personally if you run into trouble down the road.

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The Cost Of Starting A Home Business

Like anything in life, neglecting the small things, when it comes to your business, can ultimately be your undoing.  You can have the smartest idea for a breakthrough product but forgetting to patent your new technology leaves you vulnerable and ultimately all you have left is a product that a big company will come along and scoop up, and you’re right back where you started.

Setting up your business the right way from the start is the same way; missing one small step (or even doing the steps out of order) can leave you vulnerable and, in some cases, personally liable for any potential lawsuits and damages.  One of the first things you’ll need to do when starting your business is to incorporate.  An LLC will often be the best option when starting a home based business, as it will provide a great amount of protection, it’s fairly painless to setup and is a fairly inexpensive way to incorporate.  Incorporating is much cheaper if you do it yourself, but hiring someone to do it for you will ensure that you don’t forget to dot the i’s and cross the t’s.  The last thing you want is to find out 5 years down the road that you’re not protected because you filled out the paperwork incorrectly.  A service like this will typically cost around $500-$1000.

Taxes and fees can also add up when starting a new business.   You’ll need to pay a filing fee for your corporation, fees to the secretary of state (if applicable), and first year franchise taxes.  General excise taxes and quarterly state taxes are ongoing taxes, but will add even more to the initial costs; keep these in mind when planning your first year’s budget.  Hiring a CPA is recommended to make sure that you don’t forget anything and so you can take advantage of any tax breaks specific to your business/industry. 

Fees, taxes and filings can be overwhelming (especially since the majority of entrepreneurs are strong leaders, but not necessarily detail-oriented).  This is perhaps the strongest case for starting a franchise, because the franchisor will provide guidance, assistance and in many cases will handle the initial paperwork and first year budget planning.  If you’re apprehensive about starting your business after reading this article, make sure you look into the option of a franchise and ask the franchisor what support services they provide.

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