The limited liability partnership (also known as an LLP) is a business formation formed with one or more general partners AND one or more limited partners.  This formation is most appropriate for businesses seeking large capital contributions.  The general partners manage the day-to-day operations of the partnership; the limited partners contribute capital, have limited liability for the obligations, but have no right to manage the day-to-day operations.  However, if they do manage, they’ll lose their right to limited liability. 
 
Some advantages and disadvantages of forming a limited liability partnership include:
 
Advantages

• Liability of limited partners is limited to capital contributions
• Have the ability to attract large amounts of capital
• Losses from the business are deducted from individual federal income tax returns without limits
• Can be created by default, however, a partnership agreement is necessary
• Can continue after the death or withdrawal of a limited partner
• General partner can also be a limited partner at the same time

 
Disadvantages

• General partners have unlimited liability
• General partners are liable for criminal acts of other partners if they know about them or are a part of them
• Estate of any limited partner is liable for all liabilities of the limited partner
• Dissolved upon the death or withdrawal of a general partner unless there is an agreement that states otherwise

Excerpted from, "The Start of Something BIG: Your Ultimate Guide to Writing a Dynamic Business Plan."

This is a business formation in which two or more competent persons combine their skills, property, other assets or labor to conduct business.  While general partnerships aren’t considered legal entities, the Uniform Partnership Act provides for some degree of legal uniformity.  Some advantages and disadvantages of forming a general partnership include:
 
Advantages

• Business can be conducted by agreement or by default
• Management decisions are shared equally
• Partners can agree to add a purchaser of interest as a partner
• All profits are divided among the partners
• Income is reported on individual federal income tax returns

 
Disadvantages

• Not a legal entity
• All partners are personally liable for all obligations of the business
• Any partner can be held liable for more than their share
• Unless otherwise stated in an agreement, the business ceases to exist upon death or termination of any partner
• Business ceases to exist upon bankruptcy of any partner regardless of the agreement

 
To form a partnership of any kind, it is imperative that and attorney is consulted to assist in drawing up all the agreements to protect the interest of all partners.  Second, there must be a fictitious business name statement in the county clerk or county recorder’s office of the primary place of business.


Excerpted from, "The Start of Something BIG: Your Ultimate Guide to Writing a Dynamic Business Plan."

Also known as an “S” Corporation, the Subchapter S Corporation is treated like a partnership for federal purposes.  This legal form of business can only have up to 100 shareholders and must have a board of directors.  Income in the S corp can pass directly to shareholders without double taxation and with the benefits that come with being a corporation, however, with only one class of stock, asset class (as defined by Wikipedia).

Some advantages and disadvantages of forming a Subchapter S Corporation include:
 
      Advantages

• A legal entity, therefore, shareholders’ liability is limited to their contributions

• Has the ability to raise large sums of capital
• Shareholders report income on their individual income tax returns
• Remains unaffected upon death or termination of any shareholder

 
      Disadvantages

• Expensive to form
• Ownership difficult to transfer because of restrictions on who and how many shareholders there may be

 

Excerpted from, "The Start of Something BIG: Your Ultimate Guide to Writing a Dynamic Business Plan."

Close and closely-held corporations have few shareholders whose shares aren’t available to the general public.  This type of corporation is generally a smaller type of corporation.  While they’re subject to the same rules under state corporate law, they’re given a greater degree of latitude.  Some advantages and disadvantages of forming a close or closely-held corporation include:
 
Advantages

• Precise form and content of the articles of incorporation are open ended, therefore, there are no set guidelines as to how the business is managed or financed
• Controlling shareholders are the only managers of the business
• Not necessary to elect a board of directors
• Can operate as though it were a partnership

 
Disadvantages

• Number of shareholders cannot exceed 35
• Cannot operate without the cooperation of all shareholders

 


Excerpted from, "The Start of Something BIG: Your Ultimate Guide to Writing a Dynamic Business Plan."

A corporation is the second most common form of business.  It is formed as either a for-profit or a not-for-profit entity.  Owners (referred to as shareholders in a for-profit entity) elect a board of directors who are responsible for the management of the business.  The board of directors appoints officers to manage the day-to-day operations.
 
With a corporation, the ownership and management are separate.  Shareholders don’t necessarily manage, and managers, directors or officers aren’t necessarily shareholders.  Some advantages and disadvantages of forming a corporation include:
 
Advantages

• Is a legal entity
• Shareholders have limited liability for the corporation’s debts
• Can survive after the death or withdrawal of its owners, partners or shareholders

 
Disadvantages

• More expensive to start than a general partnership or sole proprietorship
• Subject to both state and federal taxes

 
To form a corporation of any kind, an application must be filed and approved with the Secretary of State’s office in your state.  Prior to the filing, it would be wise to consult with an attorney to review the application, articles of incorporation and by-laws. 

Excerpted from, "The Start of Something BIG: Your Ultimate Guide to Writing a Dynamic Business Plan."

When determining the best legal structure for your business, taxes, liability, goals and objectives, contribution of owners, and management and control are major factors to be taken into consideration.

The most common forms of business are sole proprietorship, corporation, general partnership, franchise, joint venture and not-for-profit.  But regardless of which business formation you choose, there are advantages and disadvantages to them all. 

Beginning with the simplest form of business, sole proprietorship, below are advantages and disadvantages of this legal structure:

Advantages

• Easy and inexpensive to form
• Owner’s ability to make all management decisions
• Losses without limits can be deducted on individual federal income tax return
• Minimal government control

 
Disadvantages

• Not a legal entity
• Owner has unlimited financial liability
• Creditors can attach owner’s personal assets and those of the business
• Business ceases to exist upon the death or termination of the owner(s)

 
To form a sole proprietorship if the owner(s) name is not being used, a fictitious business statement must be filed in the county clerk or county recorder’s office.  Once contacted, further instructions will be given on the recordation of the business.


Excerpted from, "The Start of Something BIG: Your Ultimate Guide to Writing a Dynamic Business Plan."

It's seems that time moves so much faster than we anticipate it will. We start each year with plans for greater business success than the previous year.  And before we know it, the year is ending, and for the fortunate, most goals were reached and we feel successful.  But too often we miss the mark.  That doesn't mean we weren't successful.  It could mean that some things just didn't work out the way we planned. Or maybe we didn't have a plan at all.  We just went about the work every day without having a solid plan to follow for growth and prosperity. 

The good thing is that we can start anew in 2018.  We do this by looking back at 2017 and making an honest assessment of what happened.  We can start 2018 with a plan that can move us in the right direction instead of just having another year of flying by the seat of our pants. 

In preparation for success and prosperity in 2018, here are a few areas of our business we need to identify and re-evaluate to move forward:

1. Company structure, mission and vision
   
2. Setting overall company goals and objectives for the new year
   
3. Products and services offered
   
4. Manufacturing, production and delivery processes
   
5. Technology used and how it can be used to improve business processes
   
6. Marketing and sales objective and strategies
   
7. Leadership, management, compensation and benefits
   
8. Financial planning, budgets and projections
   
9. Long range planning
   
10. Succession for business continuation or transfer
    

You will need to carefully audit each area of your business and determine what and how changes need to be made, improved or no longer need to be a part of the company.  These steps can take time so it's important to begin thinking about it before the start of the new year.  In doing so, update your business plan to reflect each and every change.  But if you have never written a business plan, this is a good time to start.

Best wishes to you in 2018.

Excerpted from, "The Start of Something BIG: Your Ultimate Guide to Writing a Dynamic Business Plan."

Selecting the proper technology for your business takes serious planning. The latest and the greatest in solutions may sound nice, but isn’t always best and may not provide the tools necessary to operate efficiently.  Knowing how many computers you will need, the type of software, number of telephone lines, whether a combination fax/copier/printer will do versus standalone units and Internet speeds needed in your business is part of what technology planning encompasses. 
 
Technology is intended to organize, streamline and modernize business processes.  Employing the latest and the greatest technology in your business won’t guarantee that your business functions optimally.  In fact, the opposite can be true.  You can spend a lot of money and get all the bells and whistles you can afford, but if all the accoutrements don’t add value to your operation, don’t meet your technology needs, or are not utilized properly or at all, you have wasted time and money.
 
So, when making your technology buying and implementation decisions, you should take into account:

1.  the core functions of your business; 
   
2. the company’s goals over the long haul;
   
3. the technology needs of the company (requires a needs assessment);
   
4. technological expertise that already exists in the company;
   
5. technological expertise that will be needed;
   
6. how steep the learning curve will be for users;
   
7. technological architecture that will serve all units of the company;
   
8. how existing legacy systems will inter-operate with new technology;
   
9. how operational performance will be measured based on the use of technology; and
   
10. how technological performance will be measured.
    

Excerpted from, "The Start of Something BIG: Your Ultimate Guide to Writing a Dynamic Business Plan."