At one time, when a business owner had to decide what structure they wanted their company to be based on, usually only two options were available, partnership or corporation. Recently, another option was introduced that many have since taken advantage of and that is a LLC, or limited liability company. Some claim that this type of business takes the better of both the other two and combines them together for a unique business structure. On the one hand you have the benefit of being a corporation, which protects you from personal liability, yet you also have the benefit of a partnership, and are able to pass the profits and losses to the owners without having to tax the company itself.

LLCs are on the rise, as more and more company owners are discovering the savings, flexibility and liability protection it offers. With a smaller company it allows for the avoidance of personal liability, but at the same time, if the venture is not be ready to incorporate, then it is an ideal structure.

You may want to explore some of the advantages and disadvantages of forming a LLC. Most state regulations concerning the formation of this type of business do not reflect the more recent taxation changes and it can be quite a bit more expensive to form this type of company, versus a partnership or sole proprietorship. However, individuals have a limited amount of personal liability, the profits and losses have a different allocation and the IRS will now allow you to choose between being taxed as a corporation or as a partnership.

[Read more →]

The following article is from a series of business-related articles and tips on start-up grants …

Small business startup grants are an ideal way for a person with the dream of beginning your own business to achieve that dream. Although many people choose to fund their new business with bank loans or other types of loans, other entrepreneurs find borrowing money intimidating. Unlike loans, small business startup grants do not have to be paid back. Business owners can take advantage of small business startup grants and, even if their business fails, they have no legal obligation to the company or organization that provided them with the grant.

Small business startup grants have a variety of benefits to people who want to own their own business. The most attractive benefit of a small business startup grant is that it never needs to be repaid. Whether you receive your small business startup grant through the federal government or a private company, you can keep the money regardless of how successful your business becomes. With small business grants, you also do not need to undergo a credit check or provide collateral in order to receive the money for your business. In addition to all of this, small business startup grant money is also non-taxable.

Every year, the federal government provides citizens with over $150 billion dollars in small business startup grants. This includes a range of government organizations that make sure that ordinary people who want to start their own business can get a small business startup grant to encourage them. While the federal government alone offers almost 1,500 different programs to offer small business startup grants, state governments provide an additional 24,000 programs. In addition, local governments account for over 150,000 programs that offer a variety of small business startup grants to encourage people to start their own business.

[Read more →]

There is a lot of preliminary work to be done once you have decided to open your own business. A multitude of tasks clamor for your attention and it can be easy to find yourself spinning around in circles trying to keep every fire burning. Don’t make the mistake of dealing only with urgent things and failing to do some foundational work as well. Getting your business structure set up in a timely manner will serve you well when it comes to dealing with tax and legal matters. The sooner you get this somewhat tedious step out of the way, the better.

A sole proprietorship is the most basic organizational structure, and a particularly common one among start-up businesses to boot. In the sole proprietorship structure, the founder of the company takes in all the profits and has all the decision-making power. Needless to say, organizing such a company is also an easy task. Unfortunately, this is where the benefits end. Any profits you make are taxed as personal income, your company will pay higher taxes, and you take on all legal responsibilities for your businesses’ actions, meaning that personal assets are vulnerable to fines and taxes. Still, going it alone can be a good plan for some start-ups.

The partnership is more complex and consists of two or more people pooling skills and assets, sharing responsibilities in running the business. Each partner, however, takes on the same level of legal liability as a sole proprietorship. Furthermore, each partner your start-up brings into the fold will require a written and legal partnership agreement, complete with legal recourse for the partner to leave the business, assigning ownership of a company’s assets to that partner, and assigning individual responsibilities to that partner. These agreements should always be fleshed out beforehand, and control of the company should never be divided in a way that allows for important decisions to become ties when brought before the partners in charge.

[Read more →]