Are you Business Savy?

Are you Business Savy? (Full Version)

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SteelofUtah -> Are you Business Savy? (5/28/2009 3:53:20 PM)
I am getting ready to start my own business, it will be a small business and it will be one that connects me with MANY larger businesses supplying them with work force needs, it will also put me in contact with many people in need of skills that are not currently taught in ANY curriculum. I need a little advice in deciding between an LLC or an S-Corp. My Partner has the idea that we both form LLC’s and then combine them to create an S-Corp and I wonder if in the beginning that isn’t swallowing the elephant whole. Projections show at some point it would be a good idea to keep both of us as individuals separated from the business on a legal end however I wonder if the expense is worth the Initial need. Also I am not very experienced when it comes to the Starting of a Business I know that I have discernable skills that give what I am planning on doing a very lucrative potential, however I know most small businesses fail in the first five years due to that inexperience. Any Advice on how to go about setting up a Business from scratch and getting the ball rolling would be very helpful. Off to the Library to check out LLC’s and S-Corps for Dummies, and other Helpful Literature. Steel

Aileen1968 -> RE: Are you Business Savy? (5/28/2009 3:56:29 PM)
I just formed a LLC and am flying by the seat of my pants. No help. Sorry. Good luck.

MsFlutter -> RE: Are you Business Savy? (5/28/2009 4:03:58 PM)
One of my business law professors is a big fan of LLCs - says it means 'lots of lots of choices'. I suspect the difference will be in the tax treatment. Two S corps forming a holding company sounds interesting - I'd be reading up on how/if such a structure increases the corporate veil and how/if it would reverberate back thru said structure come tax time.

Aileen1968 -> RE: Are you Business Savy? (5/28/2009 4:07:14 PM)
Your best bet is to hook into a really good accountant who is knowledgeable in all of the pros and cons of the different options and go from there.

purepleasure -> RE: Are you Business Savy? (5/28/2009 4:16:04 PM)
personally, i'd go with the LLC, only because you KNOW your work ethics and abilities. how well do you know your business parter's? When push comes to shove, will they come to the office in a pinch, or will they leave you completely responsible for the business operations, while collecting a draw on your hard work?

NorthernGent -> RE: Are you Business Savy? (5/28/2009 4:27:49 PM)
quote: ORIGINAL: SteelofUtah Also I am not very experienced when it comes to the Starting of a Business I know that I have discernable skills that give what I am planning on doing a very lucrative potential, however I know most small businesses fail in the first five years due to that inexperience. What's that old motto - Fail to Prepare; Prepare to Fail. You must plan - stratregy resources product markets e.g. are you going to put all of your eggs in one product/market basket and consequently increase your risk etc. The question's too big picture to give a meaningful answer - specific concerns may prove more useful.

DemonKia -> RE: Are you Business Savy? (5/28/2009 4:58:36 PM)
The Small Business Administration office in our area offers a lot of support & services to help entrepreneurs & established business persons do their thing. The first thing they'd tell you, & that I'll tell you, is to write up a 'business plan' . .. . . Essentially it's your business, in a binder. Everything about the business -- what you're doing & how. Constructing it is a process of thinking thru as many aspects of your business as possible. Figuring out what corporate structure to use fits into that overall scheme. (& there's tons of resources online & off to help figure out what writing a business plan entails, generally & for your specific kinda business . . . . .) Also, I learned a great deal about non-profit corporate structures from some workshops led by a corporate-law lawyer . . . . . . . . So my instinct is to say to find a lawyer who specializes in these issues to consult about the differences, if you need to seek out expert advice . . . . . .

DarkSteven -> RE: Are you Business Savy? (5/28/2009 5:31:08 PM)
Both LLCs and S Corps have the attraction that they provide a legal shield. If you have an errand boy working for you that has an accident and hurts someone, your company's assets are toast but your personal ones are safe. Thus, the decision of LLC vs S Corp is a legal one, not an accounting one. Having two LLCs for a single business makes no sense and may cause issues. If a lawyer or accountant checking over your business sees something unusual (either an audit or else in court), they will drill down for a better look. You do NOT want that. In addition to the resources that Kia mentioned, there is a group called SCORE that consists of retired execs that volunteer to help fledgling businesses like yours. St George has lots of retirees and should have an active SCORE chapter. If you're running a manufacturing operation, an old rule of thumb was to take the cost of production and multiply it by four to get the final selling price, to cover marketing, overhead, profit margin, etc.

LaTigresse -> RE: Are you Business Savy? (5/28/2009 5:50:54 PM)
quote: ORIGINAL: Aileen1968 Your best bet is to hook into a really good accountant who is knowledgeable in all of the pros and cons of the different options and go from there. Agreed. You need a good accountant regardless. Screwing up business taxes, accounting, etc...can be a real motherfucker. A good small business accountant is worth their weight in gold. They can cover your ass, and save you money in ways you never imagined. I also suggest talking to an attorney that is familiar with small business law. We have both AND a consulting firm we can call. Early last year, the chief cheese thought he should relocate and build a new building. The consulting firm advised against it based upon our sales and other financial crap along with where they saw the economy going. At the time things seemed fine. If we hadn't listened to them, we might well be out of business right now.

subtlebutterfly -> RE: Are you Business Savy? (5/28/2009 6:06:57 PM)
I agree..talking to an accountant&lawyer is best. The founding of the corp. varies between the types...so do the taxes..n liability etc.. Here's a rough comparison though http://www.themoneyalert.com/Corp-Entity-Table.html

SteelofUtah -> RE: Are you Business Savy? (5/28/2009 7:13:41 PM)
quote: ORIGINAL: DarkSteven there is a group called SCORE that consists of retired execs that volunteer to help fledgling businesses like yours. St George has lots of retirees and should have an active SCORE chapter. YOU FANTASTICAL BEAUTIFUL HAIRY BEARDED BASTARD 2 weeks I search for the information that is located on the SCORE of Southern Utah (Yes it is located in St George) website and it is so simplified. I Could Kiss You. Seriously Thanks EVERYONE but SCORE was exactly what I have been looking for and what is better is that it is free. Please do not let this kill the thread I would seriously like information on how people see the difference between LLC's and S or C Corps. Steel

SteelofUtah -> RE: Are you Business Savy? (5/28/2009 7:17:15 PM)
You Too subtlebutterfly that link helped me to understand better the basics of what is involved in each decision. Steel

LookieNoNookie -> RE: Are you Business Savy? (5/28/2009 7:29:01 PM)
quote: ORIGINAL: SteelofUtah I am getting ready to start my own business, it will be a small business and it will be one that connects me with MANY larger businesses supplying them with work force needs, it will also put me in contact with many people in need of skills that are not currently taught in ANY curriculum. I need a little advice in deciding between an LLC or an S-Corp. My Partner has the idea that we both form LLC’s and then combine them to create an S-Corp and I wonder if in the beginning that isn’t swallowing the elephant whole. Projections show at some point it would be a good idea to keep both of us as individuals separated from the business on a legal end however I wonder if the expense is worth the Initial need. Also I am not very experienced when it comes to the Starting of a Business I know that I have discernable skills that give what I am planning on doing a very lucrative potential, however I know most small businesses fail in the first five years due to that inexperience. Any Advice on how to go about setting up a Business from scratch and getting the ball rolling would be very helpful. Off to the Library to check out LLC’s and S-Corps for Dummies, and other Helpful Literature. Steel Don't worry about shit like that....set up an S corp and get started. Here's what you need to worry about: It's going to take 3 times longer than you expect. It will cost 5 times more than you thought. The profits will be 20% of what you believe they'll be. (And they'll arrive 4 years later than you currently believe). Put that into your calculations...and you'll do fine.

intenze -> RE: Are you Business Savy? (5/28/2009 7:37:15 PM)
Everyone is right, I think Lookie is right about the S-corp. Do NOT forget to get a solid business plan, as Kia said. Run it by the SCORE folks. Be extremely conservative in your estimations and work through worst case scenarios. Make sure you have assets to live on while you are in start up, at least one year. Don't forget a very realistic marketing plan. Viral marketing is cute but don't hang your hat on it. It is too mecurial right now. Best of luck to you!

LadyHibiscus -> RE: Are you Business Savy? (5/28/2009 7:45:49 PM)
LLC's are often just a moneymaker for lawyers. Check the rules of the state(s) that you will be doing business in. The whole idea of your personal assets being safe with an LLC are an utter crock when there are NO assets but your personal ones backing it all up. What protects you best is INSURANCE of the right kind, and solid contracts. The help of a contract attorney is worth the price. Based on experience, I would stay the hell away from a partnership. One partner has the right to act for ALL OTHER partners and the decisions are binding. Believe me, you do not know anyone that well. From a tax standpoint, a one-member LLC is just a Schedule C unless you file for an S or C. You CANNOT just decide you are an S ,you must file the election form with the IRS IN ADVANCE. They are sorta nice about it being a few months retroactive, but a year late is too much. CPA Hib

DemonKia -> RE: Are you Business Savy? (5/28/2009 8:41:09 PM)
Yay! Business geeks. I love business, & y'all are making me all kinds of happy reading thru this thread. In my area SCORE works with the Small Biz agency, that's who they hook the would-be biz aspirant up with . . .. Indeed it's SCORE volunteers staffing the local Small Biz office . .. .. All the experts you can use will be helpful. Keep in mind that it's relatively 'cheap' & easy to go talk to lawyers & accountants & et alia. I'm more than happy to offer up $50 to go talk to a lawyer (or whoever) for 15-20 minutes to evaluate whether they 'fit', what they have to say on the topic, that sorta thing. & that's after I research & find out who are likely to be useful to my needs; these are potentially long-term relationships, lol, so due diligence is called for . .. . . In general any corporation is a 'set of contracts' that establish the basic rules under which the business operates, the 'charter'. Much of that stuff will be boilerplate that is dependent upon the state of incorporation's rules governing this stuff. All that lawyer-ese gobbledy-gook is probably available online. Here in Cali all the laws are online thru a variety of sources . . . . lol . . . . . Tho' reading thru that stuff is truly painful, hehehe . . .. . But, in a pinch, you can review it yourself, for yourself.

DarkSteven -> RE: Are you Business Savy? (5/28/2009 8:41:26 PM)
I disagree about the S Corp being better than an LLC. IIRC a C Corp is for a big company like IBM. Way too complicated for you. I agree with Lady Hib about partnerships, but much more emphatically. They're awful.

samboct -> RE: Are you Business Savy? (5/28/2009 8:58:35 PM)
Steel As somebody who's been running a business as an LLC I can certainly concur with a bunch of the advice you've been given- The comments about partners are well founded. I got the same advice and it works fine these days. Both of you set up LLCs and you form a virtual partnership. These days, these types of partnerships are quite common and nobody blinks at them. It's harder to dissolve a business partnership than a marriage. In terms of the diff between an S-Corp and an LLC- I think the biggest difference is in the accounting from year to year. If you're going to carry inventory from one year to the next- I think an S-Corp works better. An LLC does OK if you basically aren't carrying any physical inventory, i.e. working as a consultant. If money is tight for a start- then you can get by without a lawyer or an accountant, just get ready to wear a lot of hats. Believe it or not, the IRS will cut you a certain amount of slack in your first few years of operation- probably because you're not making much money anyhow. Sam

ThatDamnedPanda -> RE: Are you Business Savy? (5/28/2009 9:06:27 PM)
Steel, you talk to Merc lately? I bet he'd be bursting with good advice. Might be a little out of pocket right now, but he'll have internet access on the cruise.

popeye1250 -> RE: Are you Business Savy? (5/28/2009 9:38:33 PM)
quote: ORIGINAL: Aileen1968 Your best bet is to hook into a really good accountant who is knowledgeable in all of the pros and cons of the different options and go from there. And a good lawyer who specialises in business preferably. You'll be using the lawyer and accountant on a regular basis during the course of business anyway so you might as well talk to some now and make your choices soon. I've been out of the business world for quite a few years now so I can just imagine the changes.

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