Join SBA and Microsoft in Portland, Oregon for a Tweetup
Microsoft and the U.S. Small Business Administration are teaming up to host a Tweetup for Portland area small business owners and entrepreneurs to learn about business resources in the community. The event is open to mom-and-pops, tech startups, and everything in between - just bring your tweeting (or other social media) skills.
In addition to meeting other entrepreneurs in the community, participants will have a chance to hear from SBA’s Sean Greene, Associate Administrator for Innovation & Investment, and Microsoft’s Mark Drapeau, Director of Innovative Engagement (Public Sector).
The event is free to the public, but space is limited and registration is required. To register, please visit http://pdxbiz.eventbrite.com.
If you cannot attend in person, you can catch all of the action online with the event hashtag #PDXbiz.
SBA & Microsoft Tweetup
Tuesday, November 13, 2012
Migration Brewing Co.
2828 Northeast Glisan St
Portland, OR 97232
What’s a Tweetup?
A Tweetup is an event where people who tweet come together to meet in person, allowing them to share more than just 140 characters at a time. The event is open to the general public, including non-tweeters interested in learning more about business resources and making connections with other entrepreneurs in their area.
About the Speakers
Sean Greene, who heads up SBA’s startup division in Washington, DC, will provide remarks as well as Dr. Mark Drapeau, the Director of Innovative Engagement at Microsoft. The Tweetup will provide entrepreneurs insights and updates into the $2.5 billion in annual federal funding for small business research, innovation, and technology transfer.
Cosponsorship Authorization # 13-2110-06. SBA’s participation in this cosponsored activity is not an endorsement of the views, opinions, products or services of any cosponsor or other person or entity. All SBA programs and services are extended to the public on a nondiscriminatory basis. Reasonable arrangements for persons with disabilities will be made if requested in advance. Contact: Natale Goriel (503) 326-5207 or Natale.Goriel@sba.gov.
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On Measuring Social Media ROI For Real Business
Warning: this post is all about the questions. It doesn’t include the answers. Asking the right questions is a good first step to getting the answers.
Theoretically we should be able to measure the ROI (return on investment) of anything we do in our business. We talk about ROI, and return, and payback when we look at an ad campaign, direct mail, product development, purchasing some big-ticket item. We make assumptions about ROI all the time. But it’s not always easy, and our assumptions are not always correct.
What about social media ROI? I’ve been searching the web. Some smart people are working in this area, of course. But it’s a hard nut to crack. Everybody seems to like the idea, but is there a formula to apply? I’m not sure.
I think of social media as 1.) amplified word of mouth; 2.) earning a voice instead of buying a voice (a reference to the fact that with social media you can engage large numbers of people based on the value of your content, rather than on how much you paid for the advertising); and 3.) a new addition to business marketing that should follow basic fundamentals.
Wikipedia defines ROI as:
(gain from investment - cost of investment) / cost of investment
We talk about ROI in percentages. For example, if we bought the share of stock for $10 and sold it for $20, then ROI is (20-10)/10 = 100%. Or if we spent $25,000 on a direct mail campaign that generated $35,000 in sales, the return is (35,000-25,000)/25,000 = 40%.
Technically, ROI calculations ignore time. Doubling our money in a day is 100% ROI, but so is doubling it over 10 years, also 100% ROI. But the return on the 10-year doubling is only about 7% per year. So that’s why the more technical measurements, like net present value and internal rate of return, take the amount of time into account. In this post, however, I’m talking just about ROI, not those more sophisticated analyses.
Problem 1: Measuring the gain
What’s the measurable business impact of social media? In dollars? Ultimately it’s obviously an increase in sales or a decrease in costs. But how do you measure an increase in sales if social media generates new customers walking through a physical door? How do you measure a decrease in costs if you can’t track which parts of the costs were cut by using social media? Maybe the advertising you didn’t do?
Take the example of the taco truck using Twitter to broadcast locations hour by hour: Obviously this increases sales, but can you pin that down to specific numbers?
There are some business types that lend themselves to measurement: Web traffic leading to web visits and conversions, for example.
Some businesses build measurement into the social media content, by using promotion codes or specific ties to Facebook likes or ads.
Problem 2: Measuring the costs
The social media platforms are mostly free. Facebook, Twitter, LinkedIn (depending on options), Google+, and Pinterest. But the time you spend isn’t free.
As a general rule of thumb, an employee costs a company per hour but 1/1000 of the annual gross salary. That’s because the overhead costs double the annual cost, roughly; and then you divide by 12 months, 52 weeks, and 40 hours per week. Overhead costs include payroll taxes, work space, computers, electric power, bandwidth, etc. So the $50,000-per-year employee costs the company roughly $50 per hour.
So, if nothing else, the cost of social media is the cost of the time invested.
- We can’t measure everything that’s valuable in business.
- We can’t rule out social media because it’s hard to measure
- But we can, if we focus on getting the right information, and using realistic estimates, get a very useful estimate of social media business ROI.
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6 Steps to Assess Your Small Business’ Readiness to Export
Making the decision to export, however, is significant. Is your product marketable overseas? Can your business tolerate the benefits versus the trade-offs of exporting?
To help you assess your exporting readiness, take a look at SBA’s Export Business Planner. This invaluable, hands-on exporting guide provides a roadmap for creating an export business plan, discovering foreign markets, developing a marketing plan, exploring financing, costing your product and more.
Here’s what the Export Business Planner has to say about assessing your business’ readiness to export – backed by a series of useful worksheets to help you work through this important exercise.
1. Determine the Benefits and Trade-Offs of International Market Expansion
Start by brainstorming a list of benefits and trade-offs for expanding your market internationally. For instance, one benefit might be a reduced dependence on domestic markets. Trade-offs? You may need additional financing, or be willing to use short-term profits to ensure long-term goals, or hire additional staff.
Your list of benefits and trade-offs should be based on your current assumptions about 1) your company, 2) your company’s products and 3) market knowledge.
2. Perform a Business/Company Analysis
Next, you’ll need to perform an in-depth analysis of your existing business to determine the feasibility of growth. This entails evaluating your company and its attributes. Check out page 32 of the planner for a worksheet that can help you with this exercise.
3. Conduct an Industry Analysis
Once you have examined the status of your own company, the next area for consideration is your overall industry. How is it currently involved in the global marketplace? This review will help you to capture key aspects of your industry that will affect your exporting decisions. Again, check out the worksheet for this exercise on page 34 of the planner.
4. Identify Products With Export Potential
Part of the overall analysis of your current business involves identifying products that may have export potential. These have sold successfully domestically or maybe have had marginal success in the U.S. but potential for high demand overseas. Many small businesses make 100 percent of their sales in foreign markets.
Start by listing the strengths and weaknesses of products/services you believe might have export potential. Then, select the most exportable products/services to be offered and evaluate them. The worksheet on page 36 can really help you narrow down your product focus.
5. Marketability: Match Your Product/Service with a Global Trend or Need
Once you’ve identified products/services with export potential, the next step is to identify the most profitable foreign markets for those products. This means gathering foreign market research. Work through the worksheet that starts on page 39 to narrow your choices to the three most-penetrable markets. Ask yourself:
- Which countries are best-suited for your product?
- Which foreign markets will be easiest to penetrate?
- How does the quality of your product compare with competing in-market goods?
- Is your price competitive?
- Who could your major customers be?
To help you with this exercise and to continue to explore these top three markets in-depth, pages 25-27 of the planner provide links to essential resources that can help you determine your product’s marketability overseas. There is also information about regulatory and political considerations that can affect your exporting decisions.
6. Define Which Markets to Pursue
Once your research has revealed the largest, fastest-growing and simplest markets to penetrate for your product or service, the next step is to define which markets to pursue. Here are some tips to bear in mind (and refer to the worksheet on page 42 of the planner for guidance):
- It’s best to test one market and then move on to secondary markets as your expertise develops. SBA data shows that new-to-export businesses often tend to choose too many markets at first. For most small businesses, choosing one to three foreign markets initially is recommended.
- Focusing on regional, geographic clusters of countries is more cost effective than choosing markets scattered around the globe, especially when you undertake trips or marketing events.
What’s next? Once you’ve determined your export readiness and investigated foreign market options, refer to the SBA’s Export Planning Guide for more tips and worksheets to help you plan, finance and execute your small business exporting strategy.
- SBA Guide to Small Business Exporting and Importing
- Selling Global? – 8 Reasons Why Your Small Business Should Get to Know Export.gov
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New SBA.gov Guide Makes It Easier To Understand Laws and Regulations That Apply To Your Small Business
It doesn’t matter whether you’re a freelancer, an online business or operate a growing bricks and mortar company with multiple employees. In all cases, two things are certain: 1) You must pay business taxes (of course), and 2) you need to know a little bit about business law.
The problem is there are so many laws and regulations that impact small businesses, from ensuring the emails you send to your customers fall within marketing and advertising laws to trademarking your name to making sure you comply with labor laws.
So how do you find out which laws affect you and what you need to do to comply? Strapped for time and looking for quick answers, many of us simply turn to Google. But how do you know the information you are getting is up-to-date, accurate and specific to your situation?
These are all issues for small business owners and the U.S. Small Business Administration has made it a priority to help small business owners get through them. Besides offering a range of tools to help small business owners navigate business laws (such as this online tool that lets you find which licenses and permits your business needs), the SBA has recently re-launched many of its small business guides to provide quick access to essential information.
New Business Law and Regulations Guides from SBA
One area that has undergone a re-boot is the Business Law and Regulations section of the website.
The guide is particularly useful because it pulls together information from a variety of different government websites such as the Department of Labor, Federal Trade Commission, Environmental Protection Agency, Securities and Exchange Commission and others that may apply specifically to small businesses.
This saves you a lot of legwork and ensures the information is accurate and reliable!
Browse the new guides by topics such as employment and labor law (includes useful links to help you determine which labor laws apply to your business), workplace safety and health law, intellectual property law (covers everything you need to know about how to protect your business with trademarks, copyright and patents), environmental law, finance law (something to note if you engage in competitive bidding practices).
Hiring foreign workers and determining their eligibility to work gets a step-by-step overview of what you need to do to ensure you comply with the law. If you gather and retain customer and employee data, take a look at the consumer privacy law guide.
Manufacturers and marketers should take a look at the advertising and marketing law guide, which explains product labeling requirements and offers information for marketers on laws that impact email marketing, such as the CAN SPAM Act, and telemarketing laws such as the Do-Not-Call Registry.
Other Useful Resources
Give these guides a bookmark, and if you have more questions about business laws and regulations, you can post them on the SBA.gov Community Discussion Boards or drop into your local Small Business Development Center or other small business counseling resource. Don’t forget to add the Business Law Advisor blog to your RSS feeds too.
- 10 Ways your Small Business May be Breaking Employment Laws
- Do your Email Marketing Activities Comply with the Law
- Starting a Freelance Business – How to Take Care of Legal, Tax and Contractual Paperwork
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Superstorm Sandy Update: SBA Coordinating with Our Federal Partners
Many communities are still feeling the effects of Superstorm Sandy, including power outages and flooding. The importance of listening to instructions and safety information from your local officials and FEMA cannot be understated.
Federal response teams are already providing assistance to affected communities. SBA is closely coordinating with our federal partners to share information in the immediate aftermath of the storm.
- For the latest on the Federal government’s response to Sandy, you can read FEMA’s blog or follow updates on Twitter.
- If you need emergency shelter, you can download the Red Cross Hurricane app, visit the Red Cross web site, or check your local media outlets. You should also register on the Red Cross Safe and Well website, a secure and easy-to-use online tool that helps families connect during emergencies. Finally, you can download the FEMA smartphone app or text SHELTER and your Zip Code to 43362 (4FEMA). Standard rates apply
- If you’re not in an affected area, please consider donating blood, because numerous blood drives have been canceled as a result of the storm. To schedule a blood donation or for more information about giving blood or platelets, visit redcrossblood.org or call 1-800-RED CROSS (1-800-733-2767).
SBA plays an important role in disaster recovery efforts for businesses and homeowners. As disaster assessments and declarations are made, various SBA disaster recovery loan programs become available to eligible applicants. We will continue to highlight these programs as communities turn to longer-term recovery efforts.
For more information about SBA’s disaster assistance programs, visit www.sba.gov/disaster or call our disaster assistance center at 1-800-659-2955.
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How to Avoid Losing Money on Your Next Coupon Campaign
Think you can build your business with coupons? Think twice.
Coupons have their place for many businesses, but they also carry the irksome problem of attracting the wrong kind of buyer. We all know them – the over-eager coupon clipper who stalks only those businesses that offer a special deal. This customer is often a one-time buyer and not the kind of consumer who is going to help you build your business. Even worse, you may incur couponing losses.
So when is couponing right for your business? How can you protect yourself against extreme couponing? Here are a few simple guidelines that can help protect your business.
Are Coupons a Good Fit for Your Business?
in themselves coupons are not money-makers for your business. However, they can be useful to help you build awareness of your in new markets and to new customers. Build awareness and you can hope to up-sell and generate repeat customers. Here are some other considerations:
- Is your business a good fit? – Coupons work best for location-based, product-oriented businesses where local customers can realize quick and easy savings. Good matches are restaurants, hair salons, hotels, spas, pet grooming services, yoga studios and so on.
- Can you scale quickly? – Can your business scale up to meet the potential demand surge the coupons may trigger? Whether you operate online or street-side within four bricks and mortar walls, it’s important that your staff is trained and your operations can scale quickly and seamlessly to deal with a jump in new foot traffic.
- Can you afford the discount? – Make sure you can afford the discount for the duration of its validity. Weigh your long-term goals and how coupons can benefit them. Do you have enough profitable business coming from other product lines or time periods to overcome the costs of offering a discount or special offer? This is a top consideration, especially if you are exploring social or group-buying coupon sites that typically take 50 percent of the revenue you get from your advertised offer.
Develop a Firm Couponing Policy so You Don’t Incur Losses
Once you’ve weighed the pros and cons of couponing and determined that special offers have a place in your marketing strategy, be sure to develop and communicate a coupon policy. This will help keep you from being a slave to coupon clippers, losing money and undercutting your brand value.
Entrepreneur magazine offers these excellent tips from Bob Phibbs, author of The Retail Doctor’s Guide to Growing your Business, for doing just this:
Don’t Allow Combined Promotions – This is a biggie and one that many larger brands have clamped down on. The biggest to avoid is accepting buy-one-get-one-free promotions (also known as BOGO) combined with other coupons. Accepting multiple combined coupons simultaneously is a huge risk for small business owners who may find they are literally giving merchandise away.
Eliminate Identical Coupons – Suppose a customer walks into your restaurant with four $5 off coupons – how do you deal with this? Or perhaps that customer chooses to use the coupons over several visits? Either way, you’re going to lose money on that customer. There are a number of ways for dealing with this:
- Limit the number of identical coupons that a consumer can use per purchase.
- Limit the number of identical coupons per customer.
- Limit the number of identical coupons that a consumer can use over a certain time period (although this can be harder to track).
If you can, use your point-of-sale system to track coupon code usage, and don’t forget to advertise your policy and the expiration date on the coupon
Accept Your Competitor’s Coupons Cautiously – Many large stores such as Walmart, Home Depot, Petco and Staples gladly accept competitor’s coupons. If you accept other retailers’ coupons, make sure you develop a policy outlining limits for their use at your store. For example, are you going to match the coupon or tighten up the conditions? Always check expiration dates and other limitations that your competitors may have placed on the coupons to ensure you don’t get burned by out-of-date or invalid offers.
Post Your Policies and Educate Your Staff – Make sure you advertise your couponing policy on the coupons themselves and at the point of sale. This can help deter extreme couponing practices before they happen. Educate and train your staff on these policies and how they should deal with potentially over-zealous coupon clippers.
For more tips on using coupons in your small business and how to build a coupon-based campaign, check out my earlier blog on coupon practices as well as How to Build Exposure for Your Small Business with Social Coupons.
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Meet Patti Guttmann, Economic Development Specialist and HUBZone Liaison in St. Louis, MO District Office
When a friend or family member asks what you do to help small businesses, what do you say? I say I work for the Small Business Administration and we are the best resource for someone starting or growing a business. Our SBA office partners with the SCORE Association and we have a counselor in our office every day between the hours of 9 and 3 who will sit down and listen to your idea and thoughts. I can mail you a free startup kit that contains valuable information for starting or developing a business. Here is my card, call me!
What’s your favorite thing about what the SBA does for small businesses? There are so many things, but first and foremost, is that we are THERE for the small business person. Whether it is a question about loan, lender or certification, we are there to help. I am proud that with seven people in our medium office that we answer the phone every day with a live person. If we cannot answer the question, we make sure we put them in touch with the proper resource, i.e. SCORE, SB&TDC, Veterans Business Resource Center or the Grace Hill Women’s Business Center.
Is there a particular small business “success story” that comes to mind when you think about how the SBA helps people? We recently held a National Encore Entrepreneur Event and it was very well attended. I had calls after that event with people upset they could not attend for one reason or another. I counseled with them, offered to send them our startup kit and put them in touch with a SCORE counselor. They have been most appreciative and had we not done the National Encore Entrepreneur Day, they might not have found us at SBA.
Do you have any advice for entrepreneurs and small business owners out there? Yes, stay away from the “free grants” and “pay for certifications and contracts”. SBA is a truly free resource. We succeed when our business owners succeed and we want businesses to know that SBA is the best resource for them.
Anything else to add? In my 36 years at SBA I have worked with as many as 50 in our office and yet today we are doing more with seven great coworkers so I like to think of us as the little office that could. I am proud to work at SBA and I am passionate about helping and seeing small businesses succeed.
Quick story, five years ago when my daughter got married, I told her we were only buying from a small business. We went to a bridal fair, and I drove her crazy because I asked every vendor if they were a small business or large and walked away from the large. Well, she got married and I was so proud that everyone we hired or bought from represented a small business and not a chain. I have six kids and six kids who prefer small business!!! I love it!!!
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7 Holiday Marketing Tips on a Limited Budget
When we think of holiday marketing – which can be critical to your business success – we often think only of promotions and discounts. But you don’t have to cut your margins or break the bank to stand out from the crowd any more. Here are seven budget-friendly steps you should consider to promote your small business while meeting the needs of your customers this holiday season.
Host an “Open House”
If you operate a retail business, restaurant or any gift-oriented business, why not plan an open house event in mid-November? Use it to showcase holiday season gifts, menus and merchandise. Offer up a glass of warm cider or mulled wine, and really get people into the spirit of the holidays. This will give customers an opportunity to check out your merchandise or holiday menus in advance. You could throw in a special offer or coupon that customers can redeem anytime up until December 24.
Work the Holiday Magic for Your Faithful Customers
Think of ways to generate repeat holiday business from your existing customers. Special offers, sneak previews, free shipping, or secret sales are all great ways to make your faithful customers feel special without breaking the bank.
Feature Product/Services of the Day or Week
I love this low cost marketing idea from Ivana Taylor at SmallBizTrends: why not create 12 days of “your product” or a product or service of the month? Feature and market a product or service every day or every week during the holidays. Think about focusing on high margin products or items your customers don’t know about. “Companies in the food business use this strategy a lot,” explains Ivana. “Think beer of the month, cheesecake of the month, or coffee of the month… Maid service companies could feature an extra cleaning detail each month, trainers or consultants can offer featured webinars, reports or newsletters.”
And don’t forget to communicate this themed promotion on your website, social media, email, posters, and flyers.
Offer Gift Certificates
Whatever your business, selling gift certificates, gift cards and e-certificates is a great way to give your customers a convenient gift option. They also help you generate sales well into the New Year, with recipients often spending more than the value of the certificate.
Partner With Other Businesses
It’s likely that many of the businesses in your community also rely heavily on the holidays for a good chunk of their income. Is there a way you can partner with complementary stores or restaurants to cross-promote each other’s businesses? For example, a cosmetic store and a hair salon might develop a promotion that offers a time-limited discount off each other’s respective goods and services, if the customer frequents both. SBA guest blogger Rieva Lesonsky offers more tips in her blog: Forget Competition It’s Time for Co-Opetition.
Get Involved in Community and Charitable Events
Getting out there and supporting charities or sponsoring or getting involved in community events is a great way to generate awareness for your business during the holidays. Even if you don’t have the budget to donate large sums of money, think of other ways to get involved, such as offering volunteer services, equipment or even space.
Use Your Website and Social Media to Promote your Holiday Activities
Your online presence, email marketing, and social media networks are a great way to target and connect with local consumers through timely updates and compelling calls-to-action. Develop holiday themes for your email templates and update your website and Facebook profile picture with a festive look.
Then be sure to channel any offers or promotions through social media. You can even offer deals or events exclusively to your social media fans to help drive foot traffic and generate leads. And don’t forget to engage in two-way dialogues. Ask your fans about their holiday activities. For example, a restaurant might highlight a holiday dish of the day on Facebook and ask fans to chime in on their favorite dish or items they’d like to see on the menu.
What lost-cost holiday marketing tips and tricks have worked for your small business? Leave a comment below!
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New Partnership Puts The Women Owned Small Business Federal Contracting Program To Work
Earlier today, I joined hundreds of women-owned contracting firms at the Department of Defense Women-Owned Small Business Opportunity Forum in Alexandria, Virginia to announce a new partnership between the SBA and Women Impacting Public Policy, Inc. (WIPP). This partnership is designed to help highlight the benefits of the Women Owned Small Business (WOSB) Federal Contract program, educate women business owners on how to participate, and connect them to federal agency procurement officers in industries where women are historically underrepresented. This effort will enable more women-owned firms to take advantage of contracting opportunities so they can grow their businesses and continue to create jobs.
As one of the fastest growing sectors of the economy, women-owned businesses have and will continue to play a key role in reshaping the American economy. Ensuring these businesses have the tools and resources they need to be successful is a top priority for the SBA. And it starts with developing relationships that extend the agency’s reach to more entrepreneurs from more demographics and more areas across the nation. Today, there are over 11,000 women-owned vendors registered in the WOSB repository. And since 2010, $56 million in contracts have been awarded via set-asides through the WOSB Federal Contract Program. Our new partnership with WIPP will allow us to continue to build on this progress.
One of the best parts of my job is traveling the country and meeting with the small business owners on the frontlines of our economic recovery. I’ve met women entrepreneurs like Vicki Frankovich from Reno, Nevada. Since receiving her 8(a) certification, Vicki’s company, Building Solutions, has seen revenues grow from $3 million a year to $15 million in annual sales. Vicki credits her company’s growth and success to her 8(a) certification, which enabled her to build an infrastructure to take on larger, more complex projects. At the SBA, we know that federal contracting is one of the most effective tools to help women-owned companies, like Building Solutions, add to their bottom line and grow their businesses. It is a privilege to see firsthand the impact of WOSB and 8(a) Business Development programs on women and underserved small businesses.
This partnership with WIPP is just one piece of the SBA’s efforts to connect women small business owners to contracting programs in the Federal government’s supply chain. At the SBA, and across the Administration, we are committed to doing our part to build a strong, inclusive, resilient 21st century economy—one that creates good jobs and increases access and opportunity for more entrepreneurs to be successful.
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Former Deputy Administrator
Top 10 Questions About Small Business Incorporation Answered
Thinking of incorporating your business? Have questions about which business entity is right for you – limited liability company (LLC), S Corporation, partnership, or sole proprietor? Maybe you’re moving out of state and aren’t sure what happens to your business entity? For answers to these and other important facts about business incorporation, check out these 10 frequently asked questions:
What’s the best option for small business owners, an LLC or an S Corporation?
LLCs and S Corporations are two very popular forms of incorporation, and both offer liability protection and pass-through income tax treatment for business owners, since taxes are reported on your personal income tax return, not by the entity. Which is best for you? Among the issues to consider are the number of owners involved, what you can and cannot write-off for tax purposes, the amount of employment tax you may be required to pay, and individual state tax laws. To help you decide, read The Better Choice for Entity Selection: LLC or S Corporation?
I’m a freelancer. Do I need to incorporate?
Legally, the answer is no. In fact, over 70 percent of U.S. businesses are owned by sole proprietors and operate successfully without incorporating. However if you need liability protection to protect personal assets if a client sues you, potential tax savings (at a price), or a loan to grow your business in the future, then incorporation might benefit you. This blog also explains a little more about why you may wish to incorporate: Should You Incorporate your Freelance or Consulting Business?
Which state should I incorporate in?
Typically, if you only operate in one state, you should incorporate in that state. If you operate in multiple states, you should determine which state is the friendliest to corporations and incorporate in that state. Read more in How to Choose the Best Location for your Business. File your articles of incorporation in the state where you intend to incorporate – usually with the Secretary of State’s office and for a fee, depending on where you live. Check your state website for more information.
I’m forming an LLC. What documents do I need?
Each state has specific guidelines for forming an LLC, but they all adhere to the same general principles (explained on SBA.gov here). Whichever method you choose and no matter where your LLC is formed, you’ll need to complete two specific documents to legally form your LLC: your Articles of Organization and your Operating Agreement. Check this blog for a quick overview of what you need to know about these key documents.
How do I form a legal business partnership?
Partnerships are unincorporated businesses and you don’t have to file any paperwork to create one, although it is a good idea to put a formal partnership agreement into writing and run it past an attorney. You’ll also need to register it with the IRS and your state and county for tax purposes, and you’ll want to register your “Doing Business As” name. Many partnerships formalize their business entity as an LLC. An LLC protects the partners by reducing their liability for business debts while still allowing profits to pass through to them.
What kind of legal entity should a married couple in business operate as?
Married couples in business may form any kind of legal entity they choose and many opt for an LLC. However, for federal tax purposes, an unincorporated business jointly owned by a married couple is classified as a partnership. This classification stands on the assumption that each spouse has an equal say and share of business affairs. However, eligible couples can file as sole proprietors for federal tax purposes. Under this provision, each spouse must separately report a share of all business income, gains, losses, deductions, and credits. Both will receive credit for Social Security and Medicare.
To be considered a “qualified joint venture,” your business must meet the following three conditions:
- A husband and wife must be the only members of the joint venture and file a joint return
- Each spouse materially participates in the business
- Both spouses agree not to be treated as a partnership
I operate an LLC. What happens if I move to another state?
It’s always best to consult an attorney if you are moving your LLC to a new state because there are several options that require careful consideration, for both online and bricks and mortar businesses:
- Continue the LLC in your old state and register as a foreign (out of state) LLC in your new state. This will mean more paperwork (duplicate annual reports) and tax filing. Reporting for multi-member LLCs can get more complex.
- Liquidate the old LLC and form an LLC in your new state.
- Register a new LLC in the new state and have each member transfer membership interest (percent ownership) from the old LLC to the new LLC in the new state.
- Form a new LLC in your new state and merge the previous LLC into it. The IRS views this as a continuation of the old LLC and you can continue with your existing EIN. Assuming LLC members still have a 50 percent interest in the capital and profits of the new LLC, there are no tax consequences either.
How do I pay myself in an LLC structure?
It depends on the circumstances. It's always recommended that you consult a tax professional. If you are a single-member LLC, the practicalities of payment and taxation are relatively straightforward because the IRS requires that your earnings are reported on your own personal tax return. Open a separate business and personal checking account (merging them just exposes your personal assets to liability), and pay yourself by writing a check from your business account to your personal account. Remember that all your business expenses should be paid from your business checking account. If you are a multi-member LLC, your situation is likely unique to your business, so your best advice is to talk to an accountant.
What happens if I change the name of my business?
All business types, except sole proprietors, should first notify their Secretary of State to change names in their articles of incorporation. States have online forms for this and usually charge a small fee. You’ll find out whether your new name is already in use in your state by another corporation or partnership. You can do this via online state databases of registered business names and fictitious names.
Where can I get more information online about business incorporation?
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