Home: Message List - Start online biz with sole proprietorship or corp

Re: Start online biz with sole proprietorship or corp

LUCKIEST — Sat, 21 Jun 2008 09:05:24 GMT

Start online biz

Suggestions

Plan Ahead.
People often ask why bother with a business plan? Look at thelottery as an example. You may get lucky and get
the winning ticket,but the odds are against you when you rely on random chance. Minimize the risk of going into business andmaximize your potential for success. Take the time to write a plan of how you get from point A to
point B. A plan gives you a clear futurefocus and increases your chances of success.

The first rule of a start-up is put some of your own money in the business. As the owner you must be willing to capitalize the business.The second rule is put as little of your own money as possible in the business. Prepare your plan and look for funding for your business from multiple sources, which can include a business loan or business line of credit.

Don't go it alone. Plan ahead now to build your team. Your team may include a CPA and an attorney that you work with as needed. Add a mentor from your industry and get a SCORE mentor to help you plan for success.No one has all the answers. You get more ideas and information by building a success, support team that can help you plan ahead.

Set up Systems.
The most basic system every business should have is a good financial system. Ask yourself how am I going to generate enough income tosupport myself and my family. Begin here. Put together a personal budget, so you know what it costs you to live. Now, you can move on to the business budget and sales planning, so you can see how many sales you need to break even and make a profit. The start-up expense plan,
operating budget and your accounting software are vital to your success.

Seek out Sales.
The daunting question is how do you go about seeking out your first sale. Recognize that since you don't have a big ad budget to be seen by everyone, you need to target a niche and get connected in your market
community, be it local, regional or national. You need other people selling for you-not employees-goodwill referrals. Get out and talk toas many people as you can. Join organizations that would have clients
for your product or service. Become a visible part of your market, and then ask for the sale.You begin the sales process with people that you know. Yes, it's okay to start with friends and family as your first
customers, and then broaden from there.

Aim for Growth.
The basic tenant of creating a company is that you own the company. You are not just creating a job for yourself. It's less risk and less investment to get a job. Building a business is creating a company that is more than the job itself. Think about the future. How large do youwant the company to be in terms of sales, net profit and employees?
Your answer to each of these questions will influence how you grow. There are varying costs and profits associated with growth. It's important to make a choice early about how you want to growyour company.

Leverage Opportunities.
Good luck. Good fortune. Good timing. All play a part in business. As a business owner, be very clear about your core focus for the businessand how it serves clients. Your core business is what pays the bills.
Then, as an entrepreneur you are about opportunity. When you see a potential opportunity or stroke of luck measure it against your corebusiness focus. Good fortune is great, when it matches your vision for
the business. Always consider if a good opportunity is the right fit for your business. If something looks great, but it's not in sync with your long-term plan and budget, think carefully before committing your
company's resources.

Hope this helps, LUCKIEST

Re: Start online biz with sole proprietorship or corp

NorthStar — Sat, 21 Jun 2008 05:51:12 GMT

It doesn't matter what the business makes, it matters what assets you have. Thats what any lawyer will look at. If you own a corporation that has no asset base and you run it right, no lawyer will spend the time to sue you as the company is worth almost nothing. On the other hand if you are a SP and you have a house, nice car maybe some investments, they can go after that and even garnis your wages for years into the future. The choice is yours. Start out as a SP and then when you are ready transfer into a Corp.....

As for franchize tax..... Everyone of our businesses is incorporated in Nevada. As we only do web sales, thats all we need. No Florida franchise tax to worry about. Again, do what you want.

And I sent the affiliate link so you could read about business setup and they have small business ideas on marketing and whatever. The more info you have the better it is.

It's always good to get advice from a lawyer and CPA, but you don't need a lawyer to form the Corp. You can do that by yourself and save a bundle. If cash is what you want to save, why would you pay a lawyer to form a company and pay up to two thousand dollars for the same thing you can do for a 25% of the cost?

You asked for advice, you got a bunch of it here. You do what you want with it.

Re: Start online biz with sole proprietorship or corp

Lighthouse24 — Sat, 21 Jun 2008 01:16:17 GMT

I believe the State of Florida treats an LLC exactly like a corporation, regardless of how the company elects to be treated for federal tax purposes -- and since FL doesn't have a personal income tax, it seems like a one-person business would be just as well or better off as an S Corp (if the choice was either that or an LLC). Perhaps I'm missing something, though.

Re: Start online biz with sole proprietorship or corp

jmba1943 — Sat, 21 Jun 2008 00:42:02 GMT

For a one man no employee operation the best form is an LLC.
The LLC. enables you to take the benefits of a full corporation,
you can take all the expense write offs, without the corporate tax,
Your maximum tax bracket will be the personal tax max.

In any operating format if you employ people you will be subject to employer witholding taxes, social security matching, workman's compensation, state employment taxes, adherence to work safety rules,etc... when it comes to employment taxes there is no protection from the state coming after you if you do not comply; even if you hire a CPA to handle the employment matter for you, as I did you are still liable for their errors and ommisions.

The best way to operate any company is to act as if you were personally liable for all actions,
in that way you wil reach the optimum cost and operational efficiencies, and truly benefit from the corporate advantages.

The solution is in attention to details, and the best way to do that is to ask for help from everyone you encounter.

Using this forum is a good start.

If you need more specific assistance contact me jmba@apsn1.net

Re: Start online biz with sole proprietorship or corp

zadpro — Sat, 21 Jun 2008 00:21:51 GMT

Northstar: Even though your concern about those sharks is correct, however I'm still not in that stage of making any money. I don't believe those sharks are going to waste their time to come after a tiny small business who is making nothing to minimal money. I would go with lighthouse24 recommendation and start with a Sole pro. If I get to the level to have couple thousands of income a month, then I can switch to a corp.

Thank you all for your recommendations.

Re: Start online biz with sole proprietorship or corp

Lighthouse24 — Sat, 21 Jun 2008 00:16:31 GMT

Doesn't Florida have an annual franchise tax (5.5 percent of the business' annual income) on corporations (a fee "for the privilege of doing business in Florida as a corporate entity")?

Can you fund the corporation at a level that allows it to instantly establish credit, or will your personal guarantee be required anyway to initially obtain business credit or assume company debt?

Will you be the only person making decisions about how your business handles its operation (i.e., if your company does something to harm somebody, won't it be obvious to a tort attorney that you made the call -- which means you'll be sued anyway, not just your company)? Respectfully, if you're anticipating that situation and want to set up "multiple levels of identities" to protect against it, it'll cost you more than $470.

If you have a reason to believe you really NEED a corporate structure fro the get-go, then I'd recommend making an appointment with attorney, rather than going through an affiliate program website -- yes it'll cost you more, but if you really have to have that level of protection, you'll be assured that you've got it.

Again, best wishes.

Re: Start online biz with sole proprietorship or corp

NorthStar — Fri, 20 Jun 2008 23:43:49 GMT

zadpro

Here is a link for you to check out. The site allows you to incorporate online. You can see the feature list, and they also have a lot of information about running a business.

http://www.incorporate.com/?affiliate=595
8

We form all of our companies by doing it with these guys. They are fast, friendly and make the process painless.

NorthStar

Re: Start online biz with sole proprietorship or corp

NorthStar — Fri, 20 Jun 2008 23:20:20 GMT

Lighthouse is correct that it takes a bit more time. But not that much. You must have an annual shareholders meeting and a directors meeting. This can all be done in 30 minutes if you are the sole guy running the show. As for the corporate veil, well in any business you should separate the money you use for business and the money you make and live on.

As for the C Corp.... It has a much longer history in Business Law. It is easy to work with in all states. If you are selling on the web, you want that protection. If you feel that setup costs of $470 dollars or so is too much then go for what you want. For us, I would never sell anything with the way US Lawyers are rabid to sue in this country. We actually have multiple levels of identities so that we are 100% protected in case one of those sharks comes a swim'in.......

Nothing can reach our personal assets or other companies. It is a shame, but in the Lawyer happy country we live in, if you have any type of wealth at all, you must protect it.

Re: Start online biz with sole proprietorship or corp

Lighthouse24 — Fri, 20 Jun 2008 23:03:24 GMT

Do I think it's worth the time and money to incorporate in your case at this early stage? No.

I'd go with a sole proprietorship because it's the cheapest and easiest way to get a part-time or home-based business up and running fast, and the simplest and least time consuming to manage -- plus you can always incorporate at a later date when there's a good reason to do so (no, it's not difficult).

I've posted this same advice several times when other people have asked the question -- and there are lots of valid reasons to disagree with me. I respect that. In my view, however, a lot of new business owners are persuaded to spend extra money setting up LLCs or corporations (and are often then surprised at having to spend additional time and money administering them), all because of one term: "limited liability." The thing is, most of them form a corporation, but they don't (or can't) initially fund the business operation and structure their personal assets in a way that preserves the so-called "corporate veil" -- so they actually don't have any more protection than a sole proprietor.

Again, just my opinion as a business owner -- not legal or professional advice.

Re: Start online biz with sole proprietorship or corp

zadpro — Fri, 20 Jun 2008 22:54:23 GMT

Thanks for your answer. But why C Corp? I know it has a double taxation comparing to S Corp!