Location Location Location

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Real estate is the key cost of physical retailers.  That’s why there’s the old saw: location, location, location.  Jeff Bezos

We have all heard the creed ‘location matters’ and it does for our home and our business.  Selecting the best location within your budget is key to launching a successful business.

Options:

Businesses have a wealth of location options in today’s marketplace.  Where a site is selected depends upon budget, type of business, and availability.  Here are some choices to consider when selecting a business location.

Location is Everything

Home Business

A home business is an ideal choice if the business does not need a store front (such as a toy store).  Many business professionals have businesses located in their homes; either a room dedicated to an office, another building on the property for business purposes, or some other space devoted to business.

elle decor pretty office

Elle Décor — Beautiful Office Space

Great Option if:
  • You can concentrate on work, not home tasks
  • Quite space to work and use the phone
  • Flexible work environment
  • Comfortable having clients & employees in the space

Sample businesses using the home model:

  • consultants
  • web-based businesses
  • artists
  • online retailers
  • therapists
  • lawyers
  • accountants / CPA

 Retail space

Retail space is a rented store front space.  We typically think of clothing stores, coffee shops, shoe stores, etc. as retail spaces.  Often other types of businesses use retail space such as yogurt / ice cream shops, floral shops, dentists, etc.  A retail space is perfect if the business is selling a product or service that requires visibility.  These spaces are more expensive than a home office, however, some businesses must be in a retail space to succeed.  Consider the neighborhood, traffic flow, neighboring businesses, schools, and other businesses surrounding the area.  Just as you do not want to buy a house near the city treatment plant nor do you want your business located in a seedy area of town.  Costs to consider are signage, fire inspections, city inspections (if required), lighting, product displays, technology systems, alarm systems, and POS systems to name a few.

imagesQN11S9XZ

Pretty Retail Space via Retail Design Blog

great option if:
  • Business needs visibility
  • Business needs space
  • Appeal to potential customers
  • Parking and other amenities

Sample businesses using retail space:

  • store (toy, jewelry, clothing)
  • wine tasting rooms (it is a huge option in my area)
  • hair and nail salons
  • coffee shops
  • book stores
  • dentists, lawyers, accountants, etc.

Office space

This is the traditional option for businesses that provide professional services.  Office space is leased or rented building space, usually by square footage, that is open and ready for office furniture.  The same holds true with office space as retail space; consider parking, neighboring offices, traffic flow, is it easy for employees to access, are there parking fees for employees, is the building stairways and elevators secure, and consider the building neighborhood and amenities.  Sample costs to consider are fire inspections, insurance, alarm systems, furniture, signage, locksmith, fire protection, city inspection (in some areas), and in some cases parking fees.

Plum Pretty Sugar via Atlanta Home & Lifestyle

Plum Pretty Sugar – Office Space – via Atlanta Home & Lifestyle

Great option if:
  • Business requires a professional location
  • You work better in an office away from home and distraction
  • The business has many employees
  • A central location in a business area is optimal

Sample businesses choosing this option:

  • Physicians
  • Specialists
  • Insurance
  • Financial
  • Therapists, Psychiatrists
  • Lawyers
  • Accounting

It is helpful to take time and consider the proper and best location for a business.  It is not necessary to rush into a decision only to regret it later.  Consider the business type, target market (clients), what the business does, what message it conveys to the marketplace, and above all the budget.  A fantastic retail space may appear but if it is way over the budget it will surely become a burden rather than a blessing down the road.  Always anticipate additional, unforeseen costs when selecting a space — even a home office — and be prepared to manage those challenges as they arise.

Good luck on finding your perfect business space!

Cheers!

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life is complicated.

Beautiful!

Lisa Lillibridge

lillibridge barefoot on the pacific coast highway Lillibridge  dakota 1966 octopi roadtrip

Life is complicated. Sometimes it would be nice to be so singularly focused in one direction that everything else just fades in the background like these images.

“…there should be long obedience in the same direction…”

Nietzsche said, “The essential thing ‘in heaven and earth’ is . . . that there should be long obedience in the same direction; there thereby results, and has always resulted in the long run, something which has made life worth living.”

I don’t know if modern life allows absolute singular focus. However, since we are able to make choices—we can choose to spend our time in a more singular direction and get rid of distractions that are taking us further from and NOT closer to our goals. I am going to try to spend the next few months eliminating some distractions and see what comes into better focus.

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Naming Your Business

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Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.   Jack Welch quotes 

Naming your business is a critical part to the development process. A name can say everything. It can be personal, professional, or funny; whatever message you want your business to project.

Selecting a good business name is extremely important. The name, once chosen and branded, is very difficult to change later. It can be done but requires significant effort and money.

A business name sends a message to the consumer what the business does, its philosophy, its purpose, and much more. It is how you want the community to view your business.

Let’s have some fun! Here are ten business names. Try to identify what each company does. I’ll give you the answers at the end of the post.

game

Some of the company names are very recognizable while others are not. The point is, the business name is important but it doesn’t have to SAY exactly what the company does. You want your name to mean something while memorable and easy to brand and market. It should give a feeling or vibe about your company.

For instance, one of the above business names does not sound like a cosmetic company. I thought it was a music group. However, the name is incredible! It is hip, different, and represents the company. It also speaks to the company’s target audience. I can see young, fashion-forward, edgy consumers being drawn to the name and product.

Sometimes, however, you want the name to reference the product or service. Such as Burger Hop, Vintage Rose Suppliers, Jan’s Pet Service, or Pet Paw Grooming (I made all of these up).  All of these are great if it fits your business and says what you want it to say.

Steps to developing a great company name:

1. Write. Write down every idea that comes to mind. Don’t try to be clever or silly. Just write down all your ideas.
2. Share. Share your ideas with other people to get their feedback.
3. Research. Search the internet. Make sure your name isn’t already out there. You don’t want a copyright or trademark problem in the future.
4. Sleep on it. Don’t make a rush decision. Give it some thought.
5. Philosophy. What is your company about? Make or do? What is your philosophy? Are you a mom and pop, parent and sons/daughters, creative company, professional services?
6. Beware. Stay away from anything offensive. Nothing will drive potential clients way more than an offensive name. It may seem funny in the beginning but a poor business decision in the end.

My business names have spanned the spectrum of hit and miss. One company in particular, was named to be funny with a catch tag line. It was an epic failure because the name did not reflect the business, product, or philosophy.  It did not evoke confidence in the consumer and was off-putting.  Going in a decidedly different direction a tech company was named after a family member, internet company named for the area it is located, and a retail jewelry business named after favorite things.

Naming your business should not be a chore or a cerrebural work out. Given some good thought and understanding your goals and image will help you find the perfect name for your business.

Here are the answers.  How did you do?

1. Violent Lips — cosmetic company specializing in temporary lip tattoos. http://www.violentlips.com
2. The Company Store — bedding and linen company. http://www.thecompanystore.com
3. Pairpoint Glass — Glassware manufacturer. Founded in 1837! http://www.pairpointglass.com
4. Auntie Anne’s — Pretzel products. http://www.auntieannes.com
5. The Honest Company — eco-friendly baby products. http://www.honest.com
6. Bohemian Bicycles — bike manufacturer. http://www.bohemianbicycles.com
7. Little Tikes — toy manufacturer. http://www.littletikes.com
8. Pet Mountain — pet supply retailer. http://www.petmountain.com
9. Keurig — coffee, k-cups, single-serve coffee manufacturer. http://www.keurig.com
10. Aldo – Shoes. http://www.aldo.com

Have a wonderful weekend.  Cheers!

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Tips to Form Your Company

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If opportunity doesn’t knock, build a door.  Milton Berle

red door

In the past two posts I’ve shared must-dos, tips, and descriptions to starting your own company.

Once you have discussed the different business structures with your CPA, lawyer, and made the right choice for you, it is time to start the paperwork.

A CPA and lawyer can take care of the paperwork and legal filings or you can do it yourself.  It really depends on your funding options, time, and your comfort-level with the formation process.  If after researching local, county, and state requirements you are not feeling confident (and funding is available), hire a CPA and lawyer to help.

how to start

The requirements, steps, and filing process is different for most of the structures.  I found the Nolo books extremely helpful as a do-it-yourself resource during the formation and early management of each company.  The books and resources are available for each state to make the process a bit easier and answer your questions.

1st – Name the Business.  Consider the type of business, target audience, and message the business conveys.  For instance, a law firm called “Lawyers for Dummies” may not attract the right audience.  I’ll post more about naming a business in the coming days.

2nd – Select a Business Structure. Based on the type of business, advice from a CPA and/or lawyer, and your management commitment select an appropriate structure.

3rd – Start the Paperwork Process — Remember, all cities, counties, and states have different requirements.  Some are more onerous than others.  You will visit:

City website where the business is located

County Clerk website for the county the business is located

Secretary of State where business is located

IRS website for federal tax filing requirements

Sole Proprietorship – As described in an earlier post this is the easiest business structure to form and maintain.  If you are operating business from your home check with your homeowners association (if applicable) and file necessary paperwork.  Most cities require a business license so you will file for this as well.  Check with your county clerk for business requirements.  Most will require a Fictitious Business Statement filed every 2-3 years.  Finally, file with your state and IRS as an employer if the business with have employees (you are not considered an employee).

General Partnership — The same process as a sole proprietorship, however, hiring a lawyer to develop a Partnership Agreement before beginning business is a wise step.  As with a sole proprietorship, partners are not employees.

**Start creating a Partnership Agreement.  It lays the groundwork for how the partnership functions.

LLC  The LLC process is a little different.  File Articles of Organization (a very short document) with the state in which the business is located.  A Registered Agent must be named as the person within the state to receive any legal notifications.  Filing in a state other than the one you live?  No worries, you can pay an agency within your filing state to act as the Registered Agent.  Pay fees associated with filing in the state and securing a Registered Agent (if necessary).

**Start creating or complete an Operating Agreement (great SBA.gov information).  This important document is the foundation to the LLC.

Don’t forget the federal government.  File for an Employer Identification Number — here is the IRS link.  This number is different from a social security number and necessary for all tax filings.  Proceed with all permits and licenses within the state, county, and city.

Corporations:

S-Corporation The process for an S-Corporation is the same as a C-Corporation with an added step –  the IRS tax classification as an S-Corporation.  The IRS requires the corporation be formed first — then apply for S-Corp. status.

Now, you can file for S Corporation status.  This link is the PDF IRS form 2553 Election by a Small Business Corporation.  Once this is done you can continue with all applicable state, county, and city regulations and requirements.

C-CorporationYou may incorporate in any state but the location state may require registration too.  Check with individual states regarding C-Corporation requirements.  Some states tax corporations; others do not.  Other regulations and rules will help determine which state to file.  I have filed in California (the business location) and Wyoming.  California has more rules, paperwork, and tax requirements.  The Wyoming corporation is required to file as a Foreign Entity in California (our location) every year and pay a minimum corporation income tax.  While Wyoming does not tax corporations and has the least regulations and requirements, these requirements were not avoided in the business location state.  For Wyoming I use a reputable and experienced Registered Agent service – your lawyer may recommend a service.

Most states require Articles of Incorporation to form the corporation (SBA link).  As with the LLC a Registered Agent must be listed to receive all legal documents.

At the same time, file with the IRS for the Employer Identification Number.  Here is an SBA link for state tax filing requirements; such as employer’s etc.  Once registered, file for any licenses or permits within the county and city.

Finally, if you are selling taxable goods or services file for a Resale License with your state (Franchise Tax Board).  Your business may be required to collect local and state sales tax, depending upon the state your business is located or conducts business.

ideas

It is a lot of information but with some education and research anyone can file to legally form a company.  Seek help and advice from reliable sources when you are unsure of the next step.

Have faith in yourself and your ideas.  Your business is an expression of your passion so let if fly!

In the next post we’ll talk about naming your business.  That should be fun!

Cheers –

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5 Business Structures Explained

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If you don’t have time to do it right, when will you have time to do it over?    John Wooden

Deciding to start a new business is exciting.  Forging out on your own to sell a product you love, provide a service you are passionate about, becoming your own boss, is empowering.  To start off in the right direction and make sure your business has a sound foundation it is important to consider and select the best business structure for your business at the time.

Business structures determine legal and tax responsibilities.  Each structure has a pro and con; some are easier to implement and maintain; while others require more effort.  When selecting a structure consider the legal and tax consequences first then the ease of maintaining the structure.  If your initial structure doesn’t work well for your business it can be changed later.  For example a sole proprietorship can transition to a LLC or corporation.  However, a corporation cannot move down to a sole proprietorship — something to keep in mind.

Sole Proprietorship:  A sole proprietorship (great SBA article here) is the basic business structure.  Legally and tax wise there is no distinction between you and the business.  It is very easy to implement and maintain as the law views the business as you; no meetings, resolutions, votes, etc. are necessary.  The profits and loses of a sole proprietorship are passed onto the owner and taxed at the individual level rather than subject to corporate rates.  Another consideration is the liability issues.  As the law does not differentiate between you  and the business you are personally liable for the actions of the business.  A legal action can be taken against you personally and all of your personal assets.  I’ve had two sole proprietorships and they were very easy to operate.  Unfortunately, it was very difficult to raise funding — remember banks and lenders will review your personal finances because you and the business are ONE.  Liability insurance was also more expensive because the business structure offers no protection so the insurance must do more.

Pros of a Sole Proprietorship:         Cons of Sole Proprietorship:

* Easy to form                                   * Liability risks for the owner

* Owner has complete control          * Raising financing is difficult

* Little or no paperwork                  * Self-employment tax

* Easy tax filing

Partners through Thick and Thin  www.moneynewsnow.com

Partners through Thick and Thin
http://www.moneymatters.com

General Partnership:  Similar to the sole proprietorship, a general partnership is between two or more people.  The partners are legally responsible for all business liabilities and profits / losses are passed onto each partner as personal income.  In a partnership you must confer and make decisions with one or more individuals limiting your control of the business.  However, partners can pool assets to fund the business in ways a sole proprietor may not.  Tax filing is more complicated in that a CPA will prepare K1’s (profit and loss statements) for each partner.  A partnership agreement is highly recommended.  The agreement spells out partnership percentages, responsibilities, and processes for dissolving the partnership in the event it ends.  I can attest to the importance of a partnership agreement as my husband and I had to dissolve a partnership.  We had no agreement with our partner and it was an expensive and contentious legal battle.  Dissolving a partnership is akin to a divorce and just as a pre-nuptial agreement helps in the event of dissolution so does a partnership agreement.  Here is a very basic agreement by Entrepeneur.com.

Pros of a General Partnership:            Cons of a General Partnership:

* Easy to form and maintain                   * Share decision-making

* Funds raised between partners            * Personal liability and legal risks

* Taxed on a personal income level         * Partner discord

LLC (limited liability corporation):  A LLC is a happy combination of a partnership and corporation.  It takes the tax benefits of the partnership structure (passing profits and losses onto the “members” as income) while providing the liability benefits of a corporation.  The owners are called members and have the ability to operate the business like a partnership.  An LLC doesn’t require as much documentation or records (such as board minutes, shareholder votes, etc.)  However, a LLC must be dissolved when a member leaves and members will pay self-employment taxes on profits.  An Operating Agreement (similar to a partnership agreement) is highly recommended upon forming a LLC.  It makes operating the company much easier.  I have formed one LLC and it was a fairly simple process.  I also developed the Operating Agreement and maintained all documentation.  The tricky part was extracting myself and my husband from the LLC when we decided to leave.  There were 2 other members so it did not dissolve but I had to research the correct, legal way to remove ourselves from the entity.

Pros of an LLC:                                         Cons of an LLC:

* Liability protections of a corporation        * Must dissolve if a member leaves

* Tax benefits of a partnership                  * Self-Employment taxes

* Shared responsibilities                           * Share profits and control

 

YOU are corporate America. www.llcwizard.com

YOU are corporate America http://www.llcwizard.com

S-Corporation:  Is a corporation called Subchapter S.  Meaning it is a corporation but small enough for the profits or losses to pass onto the shareholders like a partnership.  The corporation has the full benefits of a corporation i.e. liabilities but the is not taxed at corporation tax rates.  The business is its own entity; separate from the owners.  This separation makes securing funding less difficult as the corporation is judged and examined rather than the shareholders (depending upon the lender.  Some lenders like to examine officers for solvency).  Another difference is corporations are expected to pay officers a reasonable salary and the IRS strongly discourages excessive distributions.  In a partnership and sole proprietorship does not have these restrictions.  The corporation is initially formed as a C-Corporation with an application for Subchapter S classification.  The requirements are fairly simple: domestic corporation, fewer than 100 shareholders, only eligible shareholders, and one class of stock.  Subchapter S is an IRS classification rather than legal as the beneficial difference between an S-Corp and C-Corp are at the taxation level.  I have one S-Corp. now and I really like it.  I formed the C-Corp., applied for S-Corp. status, maintain records, and other administrative duties.  For my business it is a perfect solution to my liability and taxation issues.

Pros of an S-Corporation:                      Cons of an S-Corporation:

* Liability protections of a corporation       * Recordkeeping similar to a C-Corp.

* Taxed at partnership rates                    * Officer/Owners receive salary

* Easier to obtain funding                        * Distributions discouraged by IRS

C-Corporation:  aka The Big Daddy.  I’m being silly but a C-Corporation is the traditional, full corporation structure most companies use.  This structure is the most complicated and time-intensive.  The benefits to a C-Corp. are the legal protections.  A corporation is its own entity to the law and IRS.  It is operated by officers hired or chosen by a board of directors (for small companies they are typically the primary owners).  The board of directors are chosen by the shareholders (again, for a small company typically the primary shareholders).  C-Corporations follow the laws of the state in which they are formed and the states they operate.  For example, my former C-Corp was formed and located in California so those were the laws it was bound.  My new corporation is formed outside California but operates in California so it must follow the laws of the state it is filed and the state is operates.  Most larger companies opt for a C-Corp because it offers legal protections, sells stock to secure funding, and can secure outside financing much easier than other structures.  I have formed and operated a C-Corp and though it offered great protections it did require considerable maintenance.

Pros of a C-Corporation:                Cons of a C-Corporation:

* Limited personal liability                 * Extensive recordkeeping

* Easier to obtain funding                 * Taxed at corporate rates

* Separate entity from the owner      * Expensive to form & operate

Do your research, educate yourself, and learn the differences between each structure.  The more you know the better your decision-making.  Once you’ve narrowed your options discuss your choices with your CPA and lawyer.  From here the direction is set for forming the company.

Next post I’ll discuss the different processes to actually form these structures.

Cheers –

c44bc-sig

 

5 Must Do Things Before Starting A Business

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There are no secrets to success. It is the result of preparation, hard work, and learning from failure. Colin Powell

Starting a small business is exciting; sharing your idea with the world, engaging new people, tapping into your creativity, and reaching for a dream.  This IS exciting!

To make sure your business is strong it is very important to start at the bottom, the foundation, the planning stage.  I know, it is not as exciting as creating a product or doing something you love; but it is a necessary part of the process to ensure your business survives for as long as you wish it to.

Many times businesses with great products or services collapse because the owner failed to plan properly. Planning doesn’t have to take months or weeks but it does take forethought and research.

Some background on myself, I have started and operated four businesses with my husband. I am on the verge of starting another. One of our businesses is closed and two are open, and one we transferred ownership to our partners.  These entities included sole proprietorships, general partnerships, LLC’s, C-Corps, and S-Corps.  I was responsible for forming each of the legal entities, maintaining records, accounting (including tax ID), trademarking, and with some dissolving them.  Yup, I’ve done pretty much all of it.

educate

1.  THINK! —

Grab your laptop, tablet, paper and pencil – whatever is handy – start documenting your thoughts. What is your business about? Is it a product, service? What kind? Who is your target market i.e. who do you think your customers will be? Are you a local, regional, national, global business? Will you work from home or need office or retail space? Will you work alone or have partner(s)? How will you fund your business? Will you need a start-up loan, access savings, etc.?

research

2.  Research —

Use the internet to check out potential competitors; what makes you different, what can you do to make yourself stand out? Go to the library and check out books on starting a new business.  The Nolo books were invaluable to me when starting each of my companies.  Research local, city, county, and state laws regarding starting a small business. Some homeowners associations will prohibit a home-based business. Some towns require you to notify neighbors if you establish a business in your home. Check into this before filing any forms. Will your company make money? Source manufacturers and suppliers; get pricing to determine costs.  Learn about different business structures (sole proprietorship, LLC, C-Corp.) and narrow down which ones you think will work for your business.

3. Organize —

What I mean here is write a business plan. It sounds daunting but a business plan is really writing down what your business will do, how it will make money, marketing, and structure. For instance, the business plan starts with Purpose. Purpose equals “What Will My Business Do”. Simple but very important to help you organize and gather your thoughts; to be very clear what you want your business to be or do.  While you’re doing this consider writing a marketing plan.  I love marketing plans because you can organize all of the ideas about social media, advertising, and promotions.

cpa

4.  Meet with your CPA —

Unless you are an accountant, banker, or have financial background you must meet with your CPA. Don’t have one? As your friends, mentors, or associates for recommendations. I cannot emphasize this enough. Meet with your CPA. This person will do your business taxes for you — they have a wealth of knowledge regarding tax laws and can help you decide which business structure is best for you. TurboTax is not going to cut it when you need to pay your business taxes. Period. Call your CPA.

 

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Johnson-Young Photography

 

 

5.  Consider a Business Structure —

After meeting with a CPA you probably have more think about. Consider the advice you are given and weigh it against what level of commitment do you want for your business structure. What I mean by that is, a C-Corp. requires more maintenance than a sole-proprietorship. But the C-Corp. offers benefits the sole-proprietorship does not. This is where you must educate yourself about the different structures available to you. Here is some light reading about business structures. I will go into more detail, including my experiences with each one, in the next post.

It may seem like a lot of work before getting down to doing what you really love, but trust me, the payoff is great if you form your business correctly in the beginning.  It can be very difficult to undo or redirect a business once it is well established.  Yes, I’ve had to do that too!

I’m looking forward to sharing the different business structures and my experiences in the next post.  Congratulations on starting your new business!

Cheers —

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