By James Pruitt, Senior Staff Writer

The most common types of small business are sole proprietorships. As discussed in previous blog posts, many small business owners ferret out their economic niche from a specific hobby, interest, or expertise which they can best accommodate from the privacy of their own home.

Independent business owners should consider their relationship with the organization when deciding whether to incorporate. Legally, a sole proprietor often can’t separate from their business. The obligations between the person and organization stay one and the same. 

As for the positives, some business owners benefit from the ability to take their organization in unique directions based on their own judgment. Often, the owner can’t effectively delegate their vision to a newcomer. Small businesses often start with specialized concepts. Sometimes, the only necessary staff within the company maybe you, the one business owner.

Various negatives may also rear their heads. For example, some may perceive the company as less established as, for example, an LLC (limited liability company) or a company that has undergone formal incorporation. 

Business partners may view the company with greater suspicion. Remember, legal liabilities for a sole business owner and the organization itself are one and the same. The possibility of a “fly-by-night” operation may loom larger in the eyes of potential contractors.

Given the integration of a sole proprietorship with the business owner, the proprietor bears all the burden when problems arise. Furthermore, these organizations often hold less organizational backing, so funding and investment revenue present greater challenges. Finally, an ultimate sale of the business may bring further logistical issues. Outsiders may show little interest in a company tailored to the ambitions of one individual.

Positives are manifold for the right business owner. Sole proprietors may control their own schedules. Also, the simplicity of a sole proprietorship can make the process of tax preparation more agreeable. Businesses’ expenses are deductible, and the process is done much easier in general. Furthermore, sole proprietorships are much less expensive and easier to start up without the process of establishing an LLC or incorporating.  

Incorporation separates much of the owner’s legal responsibility from that of the business. The incorporation process also may loosen the grip of the owner on the business itself. After all, the process of registering a business implies the presence of other stakeholders. When others share an indispensable role in the organization, the process becomes worthwhile. 

In the end, the business structure must fulfill the needs of the owner. Sole proprietorships suit certain owners’ needs more than others. Some business ideas are unique enough that the owner should exercise the types of control that sole proprietors offer. Also, sometimes the founder simply doesn’t need a large, complex organization. 

Hence, when starting a new business, always consider the benefits of non-incorporation, as well as different types of incorporation. Many new owners may in fact benefit from incorporation as an LLC or, more formally, as an S or C corporation. However, other proprietors can satisfy their obligations independently. Assuming other stakeholders don’t complicate operations or legal matters, the simplicity of sole proprietorship should remain a viable option.

VAMBOA, the Veterans and Military Business Owners Association hope that this article has not only been valuable but provided some unique perspective.  We work hard to bring you important, positive, helpful, and timely information and are the “go-to” online venue for Veteran and Military Business Owners.  VAMBOA is a non-profit trade association.   We do not charge members any dues or fees and members can also use our seal on their collateral and website.   If you are not yet a member, you can register here:  https://vamboa.org/member-registration/

We also invite you to check us out on social media too.

Facebook:  https://www.facebook.com/vamboa

Twitter:  https://twitter.com/VAMBOA

Do not forget that VAMBOA members receive significant discounts on technology needs.   Check them out here: https://vamboa.org/dell-technologies/ 

By James Pruitt, Senior Staff Writer

New business owners sometimes invest their life’s work into business ideas. The possibility of a failed business can be devastating and a hard pill to swallow. The emotional and economic commitment might lead to unhealthy management tactics in the early stages.

The practicalities of meeting the bottom line should govern early management decisions. These practicalities often require interpersonal skills. In other words, the entrepreneur should work with subordinates rather than overpowering them. “Helicopter management” may be off the table as the team develops processes to best exploit human resources within the company itself.

Respect and trust should govern the onboarding process. Management should stay mindful that, when they finally must navigate the hiring process, they are bargaining for talent. Talent merits the respect and should be treated well.

Of course. business owners need to monitor employees. At the same time, never forget the importance of healthy boundaries. Lines must be drawn between the autonomy of employees and the visions of their employers. These lines ensure the proper balance between the employees’ dignity and the employer’s bottom line. This balance could bring about the harmony that leads to the fulfillment of a company’s potential.

From the perspective of an employee, controlling managers cause anxiety that may diminish work performance. However, the temptation to micromanage may overwhelm a new Veteran Business Owner. These new frontline workers, after all, may hold the business owner’s life aspirations in their hands. 

Business owners need good results to stay alive. Good business processes and operations are key to the bottom line. However, employees themselves bring their own skills into the business enterprise, which managers should exploit to everyone’s advantage. In some cases, perhaps establishing a 1099 relationship might allow greater synergy between the needs of the employee and employer. A 1099 relationship may increase the employee’s independence while allowing the employer more flexibility as well until the employment relationship solidifies into something more traditional.

The middle ground for an entrepreneur is to find the right “processes” for your business. “Processes” should lead the business on the most efficient path to its bottom line. However, “business processes” are not the same thing as “red-tape.” For-profit businesses have no business administering bureaucracies that interfere with worker productivity. One function of a new business is to find the right functions and operations to increase efficiency.

Businesses build relationships with their workers as each of them grows into their respective roles, and better understand their needs within each of their own niches of the economy. Good relationships with front-line workers always play crucial roles in a business’s capacity to function. 

Business owners should always stay mindful of the needs of their workers as well as their own needs. Often, new businesses adventure into diverse paths in their roads to viable moneymaking status. Likewise, these workers often bring in their own skills that may function in diverse ways to the benefit of the business. Rather than belittling their front-line workforce, business owners should integrate employees into their developing business processes in a manner that decreases costs while increasing the quality of the workday for everyone.

VAMBOA, the Veterans and Military Business Owners Association hope that this article has not only been valuable but provided some unique perspective.  We work hard to bring you important, positive, helpful, and timely information and are the “go-to” online venue for Veteran and Military Business Owners.  VAMBOA is a non-profit trade association.   We do not charge members any dues or fees and members can also use our seal on their collateral and website.   If you are not yet a member, you can register here:  

https://vamboa.org/member-registration/

We also invite you to check us out on social media too.

Facebook:  https://www.facebook.com/vamboa

Twitter:  https://twitter.com/VAMBOA

Do not forget that VAMBOA members receive significant discounts on technology needs.   Check them out here: https://vamboa.org/dell-technologies/

By James Pruitt, Senior Staff Writer

Often, business owners find themselves in the midst of a crazy business idea that promises to become their bread and butter. Has your dream come true? The last thing you need at this point is to throw practicality out the window. The first success may be only the start of a crazy growth spurt. Depending on the business itself and your own ambitions, the following considerations may grow your idea into a cash cow.

1) Know your Priorities. . . Budget, budget, budget!

Office supplies and equipment and maintenance can really dribble the resources of a Veteran Business Owner. Business owners should never be pennywise and pound foolish.  Profits don’t come from penny-pinching, 

You know your business better than anyone else. Over the long term, Veteran Business Owners should balance their plans with their resources.

For a successful business, the best profit margins should more than compensate for the overhead. Seek good deals. The tastiest ice cream should more than compensate for the glitter on the cone.

2)  Understand that Money should Make Money

Stagnant money does no one favors. Various resources can provide business owners with the seeds to grow their investments into a harvest that may yield fruit.

Occasionally, a bright idea may pop up in the news that sprouts and sheds its spores. Business owners should consider these situations case-by-case. However, in general, secure investments do the best service for Veteran Business Owners.

The best investment is yourself, and your knowledge and understanding of your own idea. Outside of their own considerations for their own business ideas, business owners need to maintain some sort of corporate veil between their own ambitions and those of their company.

Corporate bank accounts can yield dividends, but business owners should give thought to any opening capital until that money is ready to blossom into the Veteran Business Owner’s dream.

3) Diversify

When a business owner has capital, careful education should guide the management of that wealth. For example, many people confuse stocks and bonds. Bonds are essentially documents issued by corporations and governments that issue certificates that increase in value at a fixed rate. Stocks entail ownership of a share of the company. Bonds generally bank on the security of the issuing body, whether governmental or private. Stocks require care and confidence, and generally function best in a portfolio long-term, after careful contemplation. The health of the company matters. Also, consider the health and future of the industry.  

Also, consider your own resources. Do you own real property? Real estate can be rented, assets can be sold. As for yourself, as long as you have a place to live, consider all options. 

4) Stay in Control

Keep in mind your own “money story.” Business owners should know that they know their own story better than anyone else. Profit often matters more than cash flow. Assuming humble beginnings, strong incoming revenue indicates a healthy company. On the other hand, a large investment requires even greater incoming cash to make the company successful. 

Legally, remember that you are always the master of your own estate. No one can take that control away from you. Veterans should seek counsel in any situation that challenges their feelings about how to manage their money.

VAMBOA, the Veterans and Military Business Owners Association hope that this article has not only been valuable but provided some unique perspective.  We work hard to bring you important, positive, helpful, and timely information and are the “go-to” online venue for Veteran and Military Business Owners.  VAMBOA is a non-profit trade association.   We do not charge members any dues or fees and members can also use our seal on their collateral and website.   If you are not yet a member, you can register here:  

https://vamboa.org/member-registration/

We also invite you to check us out on social media too.

Facebook:  https://www.facebook.com/vamboa

Twitter:  https://twitter.com/VAMBOA

Do not forget that VAMBOA members receive significant discounts on technology needs.   Check them out here: https://vamboa.org/dell-technologies/ 

By James Pruitt, Senior Staff Writer

To stay effective, businesses need to investigate methods to streamline operations. Various techniques save time and energy when getting your company or organization above ground. These include organizational methods to streamline project management, information retrieval, employee communication, and decision-making processes.

1) Project Management:

Business cycles rarely flow with perfect routines and without bumps in the road. At times, seasonal cycles control the ebb and flow of resources of even the most stable businesses.  As a result, skillful project management must tackle the unpredictable trials that break the rhythms of even the most stable institutions.

In some cases, the same project rolls around each year. In these cases, project management systems can facilitate review and record-keeping. Applications like Asana can help create plans for these periodic bumps in the road, facilitating the delegation and simplification of tasks.

In other cases, a specific circumstance may arise, and a company has a new dragon to slay. In order to tackle such unforeseeable bumps in the road, organizations should retain the flexibility to mobilize. Cross-training can help employees take on diverse tasks within the company as needed. Also, keeping business operations flexible may allow wiggle-room for novel situations as they arise.

2) Good Information Management and Storage, aka a Good Filing System:

Even before the age of computers, any secretary could describe the benefits of a good filing system. Effective companies need to stay organized. Lost documents and jumbled service can destroy a company’s reputation. 

Applications like Airtable can help organize various documents and spreadsheets. Online applications can supplement well-thought-out systems within the office to ensure information is stored effectively and retrievably.

3) Employee Feedback and Communication:

The workers on the front lines are often the first to know when the first hits arise of a dire new issue. Worker feedback is essential. Proprietary software should include space for comments by operators, and management should take these comments seriously. Open-door policies should allow the rank-and-file to raise issues when appropriate. 

Companies should stay vertically integrated to ensure that the leadership and the rank-and-file stay on the same page. This way, problems are less likely to snowball before they reach the attention of management. Applications like Dropbox can ensure communication between various members of the team.

4) Decision Making: Streamlined Approval for New Initiatives:

How can we define “bureaucracy?” Sometimes, layers of middle management calcify into a concrete wall between innovation and leadership. Hence, skillful oversight protects businesses from careless decisions. Approval processes must be strict, quick, and effective.

A calcified bureaucracy in a large organization can stymie the best-laid plans. Careful scrutiny of processes ensures that only the best products and services go to market. Smaller organizations often struggle to maintain quality in the face of limited resources. Given restrictions in size and resources, the problem for Veteran Business Owners often is not bureaucracy, but lack of oversight.

Several workflow applications, such as Shift, can channel tasks to employees’ inboxes. Such applications can allow workers to arrive in the morning ready to tackle their workload independently.

Overall, productivity strategies should vary with the type of organization. However, the above four considerations can guide management across industries in both the for-profit and non-profit sectors. In other words, both newfangled technological approaches and old-fashion office management techniques can help prune time-wasting redundancies from a Veteran Business Owner’s workday.

VAMBOA, the Veterans and Military Business Owners Association hope that this article has not only been valuable but provided some unique perspective.  We work hard to bring you important, positive, helpful, and timely information and are the “go-to” online venue for Veteran and Military Business Owners.  VAMBOA is a non-profit trade association.   We do not charge members any dues or fees and members can also use our seal on their collateral and website.   If you are not yet a member, you can register here:  

https://vamboa.org/member-registration/

We also invite you to check us out on social media too.

Facebook:  https://www.facebook.com/vamboa

Twitter:  https://twitter.com/VAMBOA

Do not forget that VAMBOA members receive significant discounts on technology needs.   Check them out here: https://vamboa.org/dell-technologies/ 

By James Pruitt, Senior Staff Writer

What is Depreciation, and How Can I Benefit from it?

Any new item in a business’s repertoire likely depreciates over time. Owners may write off this decline in value during tax season. Also, services and other intangibles may qualify as tax deductions.

For example, vehicles, equipment, and buildings inevitably require maintenance, as well as accounting for any loss of value. These assets may endure wear and tear during the early stages of your business. Guess what? Both the maintenance costs and the loss of value may qualify business owners for a tax write-off.

Oil changes, paint jobs, and worn-out parts can reduce your tax liability. Similarly, loss in inherent value can relieve proprietors come tax season.

Methods for Calculating Depreciation

The straight-line method is the most common way to calculate depreciating resources. This method simply divides the initial cost of an asset by its years of useful life. This asset may be a vehicle, a piece of equipment, or a piece of real property.

Other methods of calculation may fit different circumstances. Variables such as “useful life” and “value” may not always calculate simply, based on the nature of the asset.

Many calculation methods other than straight-line depreciation can reduce a veteran entrepreneur’s tax burden.

• Sum-of-Year’s-Digits (SYD) Depreciation

The Sum-of-Year’s method accounts for the salvage value of an asset. This method is complex, and business owners should apply this method to their taxes only very cautiously.

• Units of Production Method

This method accounts for the wear-and-tear of a piece of equipment. Essentially, this accounting practice considers the productivity of a piece of equipment. The depreciation of the equipment depends on the quantity of resulting product.

• Declining Balance Depreciation

Consider the cliché that a car loses much of its value after leaving the dealer’s lot. This method allows users to subtract most of an asset’s value during the first few years of use. After this period, often the depreciation of an asset flattens. However, the largest tax breaks for depreciation may come early on.

• Double Declining Balance Depreciation

This method is a hybrid. Generally, this method combines straight-line depreciation with declining balance depreciation. Usually, business owners use this method for equipment with a short useful life.

• Straight-Line Depreciation

The straight-line method is by far the most common method for calculating depreciation. Most small business owners use this method. This method of depreciation even reduces to a simple formula: (asset cost – salvage value) / useful life in years = annual depreciation.

Which Method to Use?

The straight-line method provides the best calculation method for the majority of small businessowners. However, the relevant variables themselves may not always seem readily apparent. How do we calculate, for example, “asset cost,” “salvage value,” or “useful life in years?”

Consider a small business that manufactures t-shirts. Imagine an embroidering machine. Perhaps the “units of production method” may provide a more useful method come tax season to gain that useful write-off. Lacking sophisticated expertise in gauging the declining value of this piece of equipment, a small business owner could legitimately resort to calculating the deterioration of the machine by the number of t-shirts produced.

Bottom Line

The straight-line method provides by far the most common method of calculating depreciation. However, straight-line depreciation is not always practical.  Variables such as “asset cost,” “salvage value,” and useful life in years” may themselves present difficulties. These values may depend on the type of equipment and the nature of the business. The owner’s discretion inevitably provides the best fit for the optimal tax and accounting methods.

VAMBOA, the Veterans and Military Business Owners Association hopes that this article on Depreciation has been valuable.   We work hard to bring you important, positive, helpful, and timely information and are the “go to” online venue for Veteran and Military Business Owners.  VAMBOA is a non-profit trade association.   We do not charge members any dues or fees and members can also use our seal on their collateral and website.   If you are not yet a member, you can register here:

https://vamboa.org/member-registration/

We also invite you to check us out on social media too.

Facebook:  https://www.facebook.com/vamboa

Twitter:  https://twitter.com/VAMBOA

Don’t forget that VAMBOA members receive significant discounts on technology needs.   Check them out here:

https://vamboa.org/dell-technologies/