By:  James Pruitt, Senior Staff Writer

Types of Incorporation

Small businesses may incorporate as corporations or LLCs as well as partnerships. The first two formats shield owners personally from various liabilities. Hence, in case of debts or lawsuits, the owner’s personal assets remain behind the “corporate veil,” generally not reachable by creditors.

Limited liability companies (LLCs) offer the tax advantages and flexibility available to partnerships. Corporations differ from LLCs in the issuance of stock. Also, corporations issue by-laws that govern their management and govern the interactions of shareholders, directors, and officers.

Relationships with their home state govern corporations. Contract (and agency) law governs partnerships. Choosing between these methods of small business formation is the first step in availing yourself of the benefits of formal recognition.

Reasons to Incorporate

Benefits of small business incorporation include (1) name protection; (2) tax flexibility; (3) perpetual existence; (4) personal asset protection; (5) deductible expenses; (6) nationwide availability; (7) and not least importantly, additional credibility.

First, as for name protection, incorporation provides exclusive access to your business name. Second, tax flexibility grants the legal advantages of the most fitting taxation scheme. Third, the small business will exist perpetually and assume an identity independent from the owners. Fourth, the assets of the business will belong to the business itself rather than the owners. Fifth, incorporation allows a process for deducting business expenses before allocating income to the owners of the business. Sixth, the business will go on the records nationwide in all jurisdictions under the relevant name. Seventh, the plain fact of credibility offers opportunities for expansion.

Where to Incorporate

Incorporated businesses must file annual reports in any state where they register or do business.

Owners usually incorporate in their home state. While large corporations sometimes avail themselves of outside states (most commonly Delaware), for a small business, incorporating locally saves time and effort.

Taxation

Different corporate tax entities can include C corporations and S corporations, in addition to LLCs and partnerships. ”C corporations” file the IRS form 1120. “S corporations” qualify for “pass through” taxation, which taxes the owners themselves for the profits of the corporation without involving corporate income tax. In other words, “S corporations” escape the double tax liability typical of “C corporations.”  “S corporations” cannot have more than 100 shareholders. An accountant or lawyer can advise the best options.

LLCs, or limited liability companies, are also subject to the same type of “pass-through” taxation. The distinction between the three types of tax entities lies in the nature of the ownership of the company, with “C corporations” generally issuing shares to large numbers of owners.

How to Incorporate

Next, choose a business structure. Options include C-class corporations, S-class corporations, or LLCs. The best option really depends on the size and ownership of the organization. Smaller organizations with limited ownership may better fit with an S-type or LLC structure. Partnerships depend on contract law, hence agreements between business owners rather than with the state.

Articles of Incorporation

C or S type corporations should have Articles of Incorporation, filed with the local Department of State. These articles determine the scope of the company and the structure of the ownership. Such a company could have a Board of Directors. Such corporations may issue public or private stock to foster growth.

Small business owners who choose the C or S corporation route should not confuse articles of incorporation with bylaws, which are rules governing the day-to-day running of the company. Both articles of incorporation and bylaws are generally filed with the relevant office of the Secretary of State.

Should a small business owner choose to incorporate as a partnership, they need not file documents with the state. An LLC, on the other hand, should file “articles of organization.”

After Incorporation

Employers generally apply separately for an employer identification number, for employee entitlements such as unemployment. Next, one should obtain any necessary business licenses and permits. Finally, after the actual incorporation, the owners of a new business should draft bylaws and operating agreements to govern the day-to-day functioning and scope of business operations,

Incorporation v. Partnership

Legally, state governments control the status of corporations. Contract law between business owners governs partnerships. A limited liability corporation (LLC) may opt to file the paperwork for treatment as a separate entity from the owners. Hence, the owners may protect their assets in debt collection. In conclusion, the best choice between a C or S corporation, partnership, or LLC depends on a variety of factors, including the number of owners, their status, the relationships of each owner, and plans for the future and scope of the company.

VAMBOA, the Veterans and Military Business Owners Association is pleased to announce that James Pruitt will be contributing articles to our blog as a Senior Staff Writer.  James Pruitt is an independent copywriter and editor specializing in legal and health-related issues. He received his master’s from the University of Chicago and his bachelor’s from UC Berkeley. He currently resides in Thousand Oaks, where he pursues his passions in gardening, cooking, and spoiling his mixed Maine Coon cat, Russell.

By Debbie Gregory.

Outsourcing Customer Service – Part 3 of Series

Some small businesses decide to outsource their customer service to another company that provides customer service agents. This is move that requires careful consideration for a small business.  Management needs to determine if they want to outsource   of hiring more employees to focus on customer service.

PROS

• It can take work off your plate and allow you to focus on other areas where you have strengths.
• It can be cost effective for startups or very small businesses.
• There are services that offer more than you could afford to do and monitor effectively in house. They offer a fully integrated customer service center that includes phone, chat, email, and fax capability that also manages online inquiries and issues.

CONS

• Loss of control over the quality of service and how that service is provided.
• It is more challenging to properly monitor service issues and address and correct problems promptly.
• There is not any idea the manner in which reps are chosen or if they are happy. Happy employees generally offer better customer service.
• You do not have the option to remove employees who aren’t working out.
• If the company that you hire provides poor service, it can seriously harm your business and you will need to repair the damage.

If you decide to outsource your customer service, you have many options to do so. Take the time to find a good, reputable company preferably one that is geographically close to you.  Make sure that you review and have a good understanding of the way they work, the services they are providing, and the costs compared with other choices. Additionally, make sure that you test out the company before you sign any agreements so that have 100 percent confidence in placing your customers in their hands.  After you are fully on board with the company, make sure to regularly assess your metrics and customer satisfaction scores to help ensure you’re getting the results you desire.

By Debbie Gregory.

Veterans face unique challenges when they return home from active duty.  They are often way behind on the political and cultural events happening back home.  Additionally, many return from incredibly stressful and violent situations overseas which can cause debilitating injuries and emotional wounds that may not ever fully heal. They also need to find a job or start a business to support themselves and their families.

Tips For Servicemembers Starting a Business:

1.) Have Confidence in Yourself and Plan Ahead

As an entrepreneur, you need to have confidence in your own ability and skills. As a veteran, stepping into an entrepreneur role is simply an extension of everything you have learned from your time in the service. You have already learned when to pivot from one thing to the next, how to handle unknowns, how to deal with pressure, and sacrifice, how to focus and complete the mission and teamwork. Though in the business world there is generally a lot less on the line, you can still benefit from your experiences dealing with unpredictable unknowns. You simply need to use some creativity to transition your thinking from military to business.

2.) Embrace and Use Your Military Training

For many the transition to civilian life after the military can be rather unsettling and unnerving. Embrace your military past.  You have been instilled with phenomenal skills of adaptation, the ability to thrive under pressure, and how to use that pressure to perform better and use it as a strength. Those exact skills are a big reason why many veterans become such good entrepreneurs. You have had much worse tossed at you in the military than you will face in the business world.  Remind yourself of that and that you were able to persevere.

3.) Understand Your Strengths and Weaknesses

Take stock of your strengths and weaknesses. Following your passion is a nice thought but often does not translate into a lucrative business. Find out exactly what you are good at and where you excel and then identify something in the market that can be improved on or a new product that would benefit your market.

4.) Work with Other Companies That Share Your Vision

Success is easier when you work with others who share your vision. Once you have your own mission statement finished laying out your personal and business goals, core values, and passions, take the time to visit other entrepreneurial companies that fit your vision and values and offer to work with them. The companies you visit do not need to do exactly what you to do or even be in the same market as your company; they just need to share your values. This type of collaboration helps both of your companies by leveraging the experiences and strengths that you both bring to the table.

5.) Understand and Plan for the Costs Associated with Starting a Business

One of the most important things to think about when starting a new business is how much it will cost to get the business up and running. Write out your plan and your expected expenses and then multiply your expected startup costs by two or three (depending on the type of business you are starting). Good financial planning is key to long term business success. Give yourself the best possible start by saving or otherwise acquiring sufficient financial resources before you begin your new business.

Starting a new business is challenging for everyone and can be even more challenging for a veteran. However, with good planning, confidence, collaboration, and support you will succeed.

By Debbie Gregory.

Branding your business is vital to your success. Branding offers consistency across   your promotional channels including social media, ads, newsletters, and more.  It    generates your unique identity and can increase your perceived professionalism.

What is Branding?

Branding is the entire visual representation of your small business. It includes:

• Your business name
• Your logo
• Your color scheme
• The fonts you use
• More….

Branding is much more than just a cool logo.   Branding encompasses how your business is perceived by your customers or potential customers, how you conduct your business, and what your business stands for. It is not too complicated to brand your business.

Key Areas for Successful Branding:

• Your Key Business Goals: Make sure that your business goals are clearly defined so that you start your branding from a solid foundation. Any ideas that do not fit your goals should be discarded.
• Define Your Brand: The more time you dedicate to developing your look and feel, the better you will be received in the market. You need to select your website’s domain name, your email addresses, your logo, your color scheme, the tone you will use when writing any communications, typography, etc. Additionally, make sure that your business name is consistent across all of the platforms you use; you do not want to make it difficult or confusing for a potential customer to find you.
• Who Is Your Target Audience? Though it would be nice if you could target everyone with your product and service, you are more likely to gain business if you have a clear idea of who your target customers are or will be. Make sure that the products or services you offer match the needs of your target clients. Find what makes your business stand out from your competition and highlight it.  How will you fulfill the promises you make to your customers? How will you make them connect personally with your business? When you can help people relate personally to your business, they are more likely to gravitate toward your products and services.
• Consistent Marketing: With clear goals in hand, a defined brand, and a solid picture of your target audience you can more effectively market your business. Make sure your marketing efforts are consistent with your business goals and establish your brand in the market. Most people today rely upon social media for recommendations and to connect with brands that they identify. Your website alone is not enough in today’s market. Make sure you are where your customers are and make sure it is all consistent! Your website, social media channels, ads (both online and offline), brochures, flyers, posters, business cards, and the like all need to have the same look and feel so that at a quick glance your customers know they are in the right place.

Branding your business will have a direct impact on your success.

Take the time to clearly define who you want to be in the market and make sure you stick to it.

By Debbie Gregory.

VAMBOA hopes you enjoyed Part 1 of Small Business Ideas for Veterans.  Please find below Part 2 of this 3 part series with more small business ideas for entrepreneurs.

Heating, Ventilation and Air Conditioning Business (HVAC)

There is a great demand for HVAC experts and requires special training and licensing.  You can count on being extremely busy when temperatures are very high or low.   You might want to focus on maintenance and annual service calls as well as new installs.  You may also want to work exclusively in residential or commercial.   As a service-disabled veteran business owner, you have extra points when you bid on some contracts.

Home Inspection Services

The home inspection service business requires you to have knowledge of the construction and real estate. Plan on climbing up on roofs, attics and into crawl spaces. Having ASHI or NAHI certification may be required.  There is a huge market because almost every home sale requires a home inspection.

Identity Theft Protection Agency

If you are well versed in cyber security, this is a good business for you to get into as ID theft is a constant threat that costs consumers and businesses billions of dollars.

Junk/Trash Removal Business

You make money when people are moving, renovating or cleaning out their homes or businesses. You can also expand into document shredding.

Landscaping Business

If you have a green thumb, gardening tools and equipment, and are physically fit, this could be a great business for you. You can also provide artificial turf installation as this is a popular trend.  You may wish to focus on residential or on commercial.  Again, if you are a service-disabled veteran, companies seeking a diverse supplier network want to do business with you.

Locksmith Business

Locksmiths can be heroes to anyone who has ever found themselves on the wrong side of a locked door.  Additionally, tenants move, employees leave and there is a demand to change locks and update to locks and security that is better and offers more technology.

Off Road Tours Business

The ability to drive in rugged terrain and a love of the outdoors can lead you to start an off-road tour business.

Painter

Some jobs are best left to the experts, especially when they involve ladders, scaffolding and expertise.   You may want to focus on residential or commercial.

Personal Security/Bodyguards Business

More and more, people who are targets for kidnappers due to their wealth or fame are utilizing personal protection services. Prior security experience is highly recommended.  It addition many corporations provide their top management bodyguards.

Pest Control Services

Insects and wild animals are often a nuisance for residential homes and businesses. Your business will identify and eradicate these pests.  You can obtain monthly contracts too.

Photography

A picture is worth a thousand words, so if you have the talent to take beautiful photographs or capture precious moments at special events, consider a photography business.

Private Investigation Firm

Move over Magnum PI.  This business is a good one for those who are inquisitive and like to investigate, who are resourceful and are detail oriented.   resourceful.

Remodeling Business

If you can use remodeling design software, have a flair for design and are up on the latest design trends, this could be a great creative outlet as well as a lucrative business.  Perhaps you might want to focus on one area such as additions, fireplaces, bathrooms, kitchens.

Residential Security Consultant

You will provide expert advice and tips on various security issues to homeowners.  More and more homeowners are securing their homes with technology that they can access with their smart phones. Security stores and companies might want to partner with you for a mutually beneficial relationship.

Restaurant Business

You need to have passion for cooking and love to try out new recipes as well as be service oriented and understand all the aspects of running a business that is usually open seven days a week.

Veteran and Military Business Owners Association, VAMBOA.