The Small Business Mid-Year Tax Planning Checklist

by NellieAkalp

1 March 12th, 2012

Now that we’re approaching the the mid-way point of 2012, it’s the perfect time to review the financial and tax picture of your business. Too often small business owners wait until it’s time to file their returns to start thinking about taxes. Have you ever met with a CPA or tax preparer and been told you could have lowered your tax payments if only you had acted earlier?

Tax planning is an ongoing process and taking actions now can help lower your 2011 taxes, and for years to come. Here is a small business mid-year tax planning checklist for you to consider:

1. Meet with your CPA

Why wait until the busy tax season to meet with your CPA or tax advisor? Make a mid-year appointment when you’ll both have more time to discuss your financials. Most importantly, you’ll still have plenty of time to act on his or her suggestions within 2011.

2. Review your estimated tax payments for 2011

Now that we’ve hit the midway point, review what your business has made year to date and your forecast for the rest of the year. Then assess your estimated tax payments to avoid underpayment penalties or overpayments (you could be doing more with that money). Adjust your final two estimated tax payments for 2011 as needed. Read More→

Categories business checklist, Choosing A Business Structure, Legal Tips, Running A Small Business, Small Business Tax Issues, Starting a Business, Women In Business
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Now that I’ve Incorporated…What’s Next?

by NellieAkalp

1 March 9th, 2012

The most frequently asked questions AFTER incorporation

Over the course of my career, I’ve helped over hundreds of thousands of small business owners incorporate a business or form and LLC. And certainly there are many questions leading up to the process, such as…what type of business should I form? What’s the difference between a C Corporation and an S Corporation? But I’ve also found there can be just as many questions after incorporating a business or forming an LLC.

I’ve put together some of the more commonly asked questions to help you navigate life after the incorporation or LLC formation process:

I used to be a sole proprietor and I had a Federal Tax ID number. Do I need to get a new Federal Tax ID number now that I’ve incorporated/formed an LLC?

The answer here is yes. An LLC or corporation is its own separate entity (remember an LLC or Corp can sue, be sued, get a loan…) and as such, it needs its own federal tax ID number, also known as an Employer Identification Number (EIN). Think of business formation like the birth of child. Once a child is born, it needs its own social security number. The same holds true for your business.

As a sole proprietor, you’re able to identify your business either with your social security number or an EIN. However, if you’re operating your business as an S Corporation, LLC, C Corporation or other legal entity, you must obtain an EIN for that entity. Otherwise, you will not be able to open up a business bank account or file your business tax returns properly. Read More→

Categories business checklist, Business Tools, Legal Tips, Marketing Your Business, Running A Small Business, Small Business Tax Issues, Starting a Business, Women In Business
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HOW TO: Legally Structure your Startup

by NellieAkalp

1 March 7th, 2012

Whether you’re the next big thing in social gaming or organic knitwear, each startup eventually faces the same gnawing questions: How should I legally structure my business? Should I form an LLC or an S Corp? What about an S Corp vs. a C Corp?

These questions are only natural. After all, the legal and financial ramifications are significant. And your passion might be designing iPhone apps or analyzing Twitter data, but I’m pretty confident it’s not tax law.

While circumstances vary among individuals and individual businesses, here are some general guidelines to help you jump-start your decision on business structures. There are other possible business types, but I’ll focus on three: the LLC, the S Corporation, and the C Corporation. Read More→

Categories business checklist, Choosing A Business Structure, Legal Tips, Running A Small Business, Small Business Tax Issues, Starting a Business, Startup, startups, Women In Business
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Incorporating a Business 101

by NellieAkalp

1 March 2nd, 2012

Yes, I know. The majority (if not all) of you did not start a business because you love tax law and legal fine print. And in the flurry of supporting your current customers, working on adding to your client base, taking care of your home and family, and finding some down time for yourself (remember down time?), it’s all too easy to put off the question of incorporating your business.

But as a business owner, the day will come when you inevitably will have to address the legal aspects of your business – and the sooner the better. And, fortunately, the process can be relatively painless and hassle-free.

But let’s back up a bit. Why incorporate in the first place? I talk to countless small business owners and freelancers who consider themselves too small to worry about incorporation. After all, you don’t have mazes of cubicles…you may not even have any employees. However, incorporation can still be a smart idea even for the self-employed graphic designer or wedding planner. And here are the benefits of incorporating a business:

It protects your personal assets: Once your business is incorporated, it exists as a separate legal entity. This means that the corporation (and not you, the owner) is responsible for all of its debts and liabilities. Of course, most entrepreneurs don’t start their business expecting to anger clients or default on payments. And most likely, you won’t encounter such problems…however what if a copywriter unintentionally plagiarizes while working on a client’s website? What if your major client fails to pay, making it impossible for you to meet your own obligations? Without incorporation, you, as the owner, can be personally liable in these situations, and this puts your own personal savings, retirement, child’s college fund all at risk.
It can offer tax benefits: For some individuals and businesses, incorporating can help lower the tax burden. For example, through incorporation, a self-employed contractor could reduce her federal and/or state income taxes by avoiding self-employment taxes. And corporations may be entitled to additional deductions not available to individuals. Of course, specific circumstances vary, and you should consult with a CPA on your particular tax situation.
It can change your outlook: You’d be amazed at how much adding three little letters (Inc or LLC) after your company name can change the way you approach and perceive your business. And when you’re working from home, you need all the reminders you can get that you’re actually running a business. And, marketing studies have shown that adding Incorporated or LLC provides a sense of credibility and trust with current customers and potential customers.

After “Do I need to Incorporate?”, the next question I’m usually asked is “What business structure is right?” It’s a great question… one that I can’t necessarily answer here. But here’s a quick synopsis to get you on the right path:

Limited Liability Company (LLC): The LLC is very hot among small businesses right now, and for good reason. It’s a hybrid of a partnership and corporation. It offers liability protection, but with minimal corporate formalities (in a Corporation, you have to pass resolutions and file minutes whenever you want to make a change to the company…this isn’t the case for an LLC). If you’re the sole owner of your business, the LLC is a great way to protect yourself without adding a lot of corporate bureaucracy. An LLC is considered a pass-through entity when it comes to federal income tax. This means the business itself is not taxed; rather, any business income or loss is reported on your own individual tax return.
Corporation: The Corporation is the most common form of a for-profit corporate entity. There are actually two types: the S Corporation and C Corporation. Like the LLC, the S Corporation is also a pass-through entity for your income taxes. However, the C Corporation is not pass-through and for many small businesses, this can result in ‘double taxation’ where your Company is taxed, and then you’ll also be taxed on any profits/salary you draw from the business.

Unless your business is particularly complex, you should be able to incorporate your business or form an LLC online, without having to retain a business attorney. By working with a legal document filing service, you can represent yourself to create a legal business entity. And in the eyes of the law and IRS, your business structure will be just as valid than if a high-priced attorney sent in the documents for you.

Of course, when spare seconds seem in short supply, legal fine print and paperwork aren’t exactly high on your priority list. But getting your legal ducks in a row can give you peace of mind and help you avoid any legal pitfalls in years to come.

As always, CorpNet.com’s professional staff is here to assist you every step of the way… And once you know what you’re required to file, we can take care of the details for you! If you have specific legal questions or concerns, you should consult an attorney for sound advice. After all, your business is worth it.

Please feel free to reach out to me with any questions to nakalp@corpnet.com ; I get you because I’m just like you and have been through this myself!

Good luck!

*Original content written by Nellie Akalp for http://smartmompreneur.com/features/incorporating-your-business-101

Categories business checklist, Business Tools, Choosing A Business Structure, Legal Tips, Running A Small Business, Small Business Tax Issues, Starting a Business, Women In Business
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CorpNet Staff Spotlight: Katie Hendrix

by CorpNet

1 February 29th, 2012

Here at CorpNet, we pride ourselves on our fast, attentive customer service. If you use CorpNet to incorporate a business, form an LLC or manage your business filings, you’re getting the time and attention of a talented team of real people who get your projects done right – on time, every time.

One of our recent hires is Katie Hendrix, Client Relations specialist. Let’s learn more about Katie and see how she helps CorpNet customers each day:

Katie Hendrix graduated from Sonoma State University in 2006 with a Bachelor’s Degree in Communications. She worked as an advertising intern while in college, and her first job after college was as a kindergarten teacher in Los Angeles. “Working with children was extremely fulfilling and a lot of fun,” said Katie. “The experience taught me a lot of patience and attention to detail. If you can take charge of a room full of energetic, squirming kindergartners, you can handle any customer relations challenges that might come your way!”

Katie started out as a temporary employee to help us with our busiest time of year in December – many customers hire CorpNet to help with year-end business filings, to close a business or incorporate a business with advance registration for the new year. We loved Katie’s work ethic and personality so much that we offered her a full-time job (on her birthday, no less) and she is now an official CorpNet.com team member! Read More→

Categories business filing service, Business Tools, Choosing A Business Structure, How To Form an LLC, How To Incorporate a Business, legal filing service, Running A Small Business, small business collaboration, Small Business Employees, Starting a Business, Startup, Uncategorized, Women In Business
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The S Corporation vs the LLC

by NellieAkalp

1 February 28th, 2012

The S Corporation and the Limited Liability Compnay (LLC) share several key similarities. Perhaps most importantly, both will protect your personal assets from any potential liabilities of the company (whether from an unhappy customer, unpaid supplier, or anyone else who might pursue legal action). With both the S Corporation and the LLC, your personal finances, home vehicles, and other assets are all safe. In addition, both structures allow a business to borrow money and sell equity in order to raise capital. Both stay in existence until they are dissolved, without need for periodic renewal. And both offer pass-through tax treatment when it comes to federal income tax.

Given these similarities, how do you decide which is the better choice for your particular business? While circumstances vary among individuals and individual businesses, here are some general guidelines to help you understand the differences and their impact.

1. Business formality: The LLC is ideal for companies that don’t want or need much formality, but still want legal protection. In a corporation (S Corp or C Corp), Articles of Incorporation must be filed; bylaws have to be written; officers have to be named; a board of directors elected; and minutes must be filed and resolutions passed whenever you want to make changes to the company. In the LLC, this isn’t the case. LLCs just use an informal ‘operating agreement’. Depending on your particular type of business and individuals involved, this could either be a great time and money saver, or the gateway to potential conflict down the road.

2. The S Corporation restricts who can be a shareholder

An S Corp cannot have more than 100 shareholders (of course, this limitation is probably not of much consequence to many small businesses). All individual shareholders must be either U.S. Citizens or permanent residents. By contrast, the LLC does not have such restrictions on owners.

3. The S Corporation has strict income allocation

In an LLC, income and loss can be allocated disproportionately among the owners; in the S Corp, income and loss are assigned to each shareholder strictly based on their pro-rata share of ownership.

So what does this mean? If I own 80% of an LLC, my share of the tax burden doesn’t necessarily have to be 80% of the taxable income. But if I own 80% of an S-Corp and that company makes $100,000 in taxable income, I will be taxed on $80,000 of income.

4. The S Corporation cannot increase pass-through losses: In certain circumstances, the IRS allows the loss in an S Corp or LLC to pass through to the individual shareholders. However, the LLC allows you to pass through more loss than in the S Corp, most notably when it comes to real estate. In an LLC used for real estate investments, however, the members are allowed to add the amount of the mortgage to their basis for the purpose of computing a loss. Clearly, that can add up to a significant difference in your tax statement.

5. Venture funds typically do not want to invest in LLCs. If your company is considering raising venture capital down the road, be advised that the C Corporation is a venture capital firm’s clear choice for the type of legal entity for their investment. Converting an LLC into a C Corp entails a complete merger and can be a rather complicated process involving accountants and possibly lawyers. By contrast, converting an S-Corp to a C Corp can be done in a day with a single tax form (you’re basically unchecking the box for S Corp tax election).

Choosing the right business structure for your business is a weighty issue and will ultimately depend on all the unique aspects of your particular business needs, vision, and circumstances. But no matter what entity you choose, taking a serious look at your legal structure is important and will help you scale far more smoothly (and avoid any legal/liability pitfalls) in years to come.

Please feel free to reach out to me with any questions to nakalp@corpnet.com ; I get you because I’m just like you and have been through this myself!

Good luck!

*Original content written by Nellie Akalp for http://smallbiztrends.com/2011/03/s-corp-versus-llc.html

Categories business checklist, Business Tools, Choosing A Business Structure, Legal Tips, Running A Small Business, Small Business Tax Issues, Starting a Business, Women In Business
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Raise Your Glass to Raising Your Prices

by Philip Akalp

1 February 23rd, 2012

Wayyyyyy back when the Internet was “new” and you could still register a one-word domain name, my wife/business partner and I were leading pioneers in our industry: Business Filings / Incorporation Services.”. The Internet was BRAND NEW! Our industry was BRAND NEW!

Quick! Before the Money Stops Flowing

With the growing number of people getting a PC or signing up for an internet connection growing each day, we experienced PHENOMONAL GROWTH! We were in the business of starting businesses… so I’d speak with new business owners each day. I remember one customer who summed up the sentiment when he said: “I can’t slow down! I’m afraid that one day I’ll wake up and all the money will stop floating around.”

From my perspective, that is exactly what has happened. Whether you want to call it a recession or a depression, or a Bear market, it’s hard to argue with the sentiment that the money machine of the late 90s and early 2000s has definitely stopped printing money. Read More→

Categories Business Tools, Choosing A Business Structure, How To Incorporate a Business, Marketing Your Business, Running A Small Business, Starting a Business, Startup, Uncategorized, Women In Business
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Top 5 Reasons for Incorporating Your Business

by NellieAkalp

1 February 21st, 2012

Many small businesses consider themselves ‘too small’ to worry about incorporation. However, whetherowever, you’re a self-employed social media consultant or a landscaper, incorporating or forming an LLC (Limited Liability Company) can be a smart idea. Here’s why:

1–Liability protection: First and foremost, the LLC and the Corporation (C Corporation or S Corporation) protect the owner’s personal assets from any liability of the company. That is, if your company happens to be sued, your personal assets (i.e. property, savings accounts) are shielded from any judgment. Of course, lawsuits are worst-case scenarios and there’s a slim chance you’ll ever run into legal problems. However, if you’re sued as a sole proprietor, you’ll be sued personally. And that means everything – from your children’s college fund to your retirement savings – is at risk. Also keep in mind that creditor judgments can last up to 22 years, so you need to worry not only about protecting the assets you have today, but the assets you’ll have tomorrow.

2–Taxes: Federal income tax rates can be lower for corporations than for individuals. And as a corporation, you may be entitled to additional deductions.

3–Credibility: Adding ‘LLC’ or ‘Inc.’ after your company name boosts your credibility in the eyes of some customers and partners.

4–Business credit/capital: As a corporation or LLC, it can be easier for you to access a line of business credit. And forming a C Corporation will be essential if you plan to seek Venture Capital funding.

5–Added layer of privacy: With an LLC or a corporation, the company’s ‘registered agent’ goes on public record, and not your home or business address (in most cases).

Fortunately, the incorporation process has been greatly simplified these days, so there’s simply no reason to delay incorporating your business or forming an LLC.

Question: So how do you even go about filing all the necessary paperwork and making sure that you’ve done it all correctly?

Answer: With a reputable business fromation filing service such as CorpNet.com .

Our professional staff has the knowledge and expertise to help you every step of the way. From choosing a business structure to reserving a name to filing with the Secretary of State, CorpNet.com can make the filing process quick and painless.

It is possible to handle all of your business filings yourself. It will require doing lots of research to be sure you’re filing the correct documents, completing all of the forms, paying individual fees, and quite possibly hiring an attorney to advise you. With CorpNet.com, you have a one-stop destination for all of your business filings. Everything can be handled at once, and all for an extremely reasonable fee. Check out our list of filing services to get an idea of how we can help you to get started.

CorpNet.com can help right from the beginning, with a Starting a Business Checklist that lists everything you need to know in order to get your company up and running. Our Free Corporate Name Search lets you be sure that the name you’ve chosen for your company is available, and we can help you to reserve the name for your own use. CorpNet.com’s Free Incorporation Guide or Free LLC Guide to get all the details about the distinctions between the two structures. You’ll learn that overall, an LLC is the less formal entity. Of course, details may vary based on your specific circumstances, so take some time to educate yourself on these two business structures.

Let CorpNet.com apply for your Employer Identification Number (also known as a Federal Tax ID Number), the first step in incorporating your business. If you aren’t sure whether you need a business license, CorpNet will advise you, and file the application for you.

Once your business is incorporated, CorpNet.com can continue to provide valuable services. If you make any changes to your corporate structure, our staff can file the appropriate Articles of Amendment. Take the worry out of filing your annual report with our service.

CorpNet.com can provide filing services in all 50 states. Our staff is professional, courteous and reliable, and all services are fully guaranteed.

Contact CorpNet.com today, and cross all of those business filings right off your list.

We look forward to incorporating your business for you and getting your business off the ground!

Good luck!

A portion of this original content by Nellie Akalp was written and published on BusinessWeek.

Categories business checklist, Business Tools, Choosing A Business Structure, Legal Tips, Running A Small Business, Small Business Tax Issues, Starting a Business, Women In Business
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Introduction to the LLC: Is it right for your business?

by NellieAkalp

1 February 17th, 2012

In a previous post I wrote for WomensRadio, I discussed the potential risks involved with owning your own business ⎯ in short, every woman entrepreneur should be concerned about minimizing her personal liability. Even the self-employed writer or family-run landscaping business should think about protecting their personal assets from any liability of the company.

The LLC (Limited Liability Company) is a popular asset protection vehicle for small businesses. It essentially forms a wall that shields individual owners from personal liability.

So what is an LLC? It’s a hybrid of a partnership and corporation. It’s considered to be a “Separate Legal Entity.” In fact, a properly formed and maintained LLC will have both a state-certified filing date and an IRS-issued Tax ID Number (similar to an individual’s birth date and social security number).

An LLC’s main benefit is to limit the liability of the owners. For example, personal property is separated from company property, and can’t be wiped out because an unsatisfied client sues your company or your business runs into financial trouble because a key customer fails to pay.

The following example illustrates the LLC’s asset protection. Let’s say you have XYZ LLC that holds title to a vacation rental property. A guest falls from the balcony and the court awards a multi-million dollar judgment to the plaintiff. The defendant in this case is XYZ LLC, not you. And the judgment can be collected only from XYZ LLC’s assets, and not from your own personal assets. You may end up losing your investment in the property owned by XYZ LLC, but your other properties, your savings account, and any other investments are all safe.

An LLC does not file separate taxes (in the case of a single member LLC, the LLC taxes would be filed under the individual members’ tax returns; in the case of a multi-member LLC, the LLC would generally file a partnership tax return). All company profits flow through to the owners and are taxed at the personal income rate. Of course, please remember…it’s always wise to consult with a tax advisor on your own situation.

The LLC is ideal for companies that don’t want or need much formality, but still want legal protection. In a corporation (S-Corp or C-Corp), Articles of Incorporation must be filed; bylaws have to be written; officers have to be named; a board of directors elected; and minutes must be filed and resolutions passed whenever you want to make changes to the company. In the LLC, this isn’t the case. LLCs just use an informal ‘operating agreement’. Depending on your particular type of business, this could either be a great time and money saver, or the gateway to potential conflict down the road.

It’s a relatively easy task to form an LLC. You can either contact your attorney or use a legal document filing service to file the necessary forms with your state’s Secretary of State.

*This is original content by Nellie Akalp appearing in WomensRadio*

Categories business checklist, Business Tools, Legal Tips, Running A Small Business, Small Business Tax Issues, Starting a Business, Women In Business
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Is L-O-V-E a four-letter word in your business?

by NellieAkalp

1 February 15th, 2012

Does your company love its customers? Think about this honestly for a moment. Because the stark reality is that most businesses don’t love their current customers; they love acquiring new ones. If you’ve ever felt that your cell phone provider or other business is treating their brand new customers better than you, a loyal customer of 10 years, then you know what I mean.

In his report Competitive Strategy in the Age of the Customer, Josh Bernoff states:

“Lock-in mechanisms — mobile phone contracts, proprietary technology, and frequent-flier programs, for example — don’t create loyalty; they just create barriers to leaving… In the long run, you’ll always be able to use your iPhone on another network, migrate your Microsoft Word files to Google Docs, and plant your body on a comfortable plane from Virgin Atlantic that makes you forget your mileage balance. Customer-obsessed companies worry more about flexing to meet customer needs and less about ways to block them from fleeing.”

Yes, any business wants their customers to love them. Yes, any business wants their customers to stay and be loyal. However, you can’t focus on trying to get customers to love you; you can only love your customer and hope the feeling will become mutual. Read More→

Categories business checklist, Business Tools, Choosing A Business Structure, How To Incorporate a Business, Legal Tips, Marketing Your Business, Running A Small Business, Starting a Business, Startup, Uncategorized, Women In Business
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Archive for Women In Business – Page 2

The Small Business Mid-Year Tax Planning Checklist

Now that I’ve Incorporated…What’s Next?

HOW TO: Legally Structure your Startup

Incorporating a Business 101

CorpNet Staff Spotlight: Katie Hendrix

The S Corporation vs the LLC

Raise Your Glass to Raising Your Prices

Quick! Before the Money Stops Flowing

Top 5 Reasons for Incorporating Your Business

Introduction to the LLC: Is it right for your business?

Is L-O-V-E a four-letter word in your business?

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