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ABCs of Small Business Incorporation

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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.

 

Increasing Your Business

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By Debbie Gregory.

LinkedIN Debbie Gregory VAMBOA VAMBOA Facebook VAMBOA Twitter

 

 

To grow your Small Veteran Owned Business, you must get out the word and grow your business to new potential customers.   This means you need to focus on marketing and more marketing.   This article will help you evaluate ways to attract new customers to your business and retain and engage your current customers.   There are a multitude of marketing channels available today and one or all of them might be a good fit for your business.

Email Marketing:

Email marketing is both effective and an inexpensive way to reach new and existing clients.   It requires a solid list of contacts and engaging content.   The content can tell your story and include special discounts, coupons, tips, and important information that concerns your market.

Work on building a list of contacts by capturing the email addresses of your clients, referrals, and business colleagues.   You can build this list from asking customers to fill out or register on your website or blog, live and industry event and subscriptions.   It makes sense to offer those that register value too.  Keep those on your list engaged by sending them emails regularly with a concise and strong subject line or call to action that tells those receiving your email your message.   Always include something of value in your message such as valuable information or discounts.

There are excellent email services available that are fairly cost effective to assist you.   These services will help you design, compose with content, and deploy your emails.  Additionally, they will help you manage your contact lists and view the results of your emails to learn what works best. Some of most popular services include iContact, Constant Contact, MailChimp, AWeber and GetResponse to name a few.

Direct Mail:

Direct Mail should be included on the list although it can be much more costly than email marketing.  Direct mail includes catalogs, postcards, flyers and can help build the identity of your brand and business.  Printed materials are something more tangible and will get attention since as they are mailed.  You will need the snail mail addresses of your customers and potential customers.  You can use your own list and/or supplement it by renting a list from a direct mail vendor.

Social Media:

Social media is an excellent way to truly engage your customers and potential customers as well as learn their preferences. There are five major social media platform and they include:

  • Facebook that has over one billion users and allows you to post, invite and use targeted ads. Many feel that Facebook can provide the biggest bang or return on investment.
  • Twitter is a huge platform that allows you to share ideas, information, and insights concisely with a limit of 140 characters.
  • LinkedIn is a professional networking site that enables you to connect with other businesspeople and post insights and join like-minded professional online groups that will increase the reach of your business.
  • Instagram is visual and you can share images, photos, and videos to showcase your product line and/or service.
  • Blogging is an effective way to tell the story of your business and share your products and expertise.

It does not matter if you use one or all of them.  It is important to post regularly, respond to comments, complaints, and inquiries and really listen to what prospects are telling you online.

Advertising:

This is one of the most effective methods to let potential customers know about your business.   It can be expensive, so it is imperative to plan carefully and identify your target market to time and place ads in the best venues for your needs.  Place ads where your customers go for information on the products and services that you offer.  Print ads are very expensive, and you may wish to consider digital ads that are much less costly and reach a larger audience.  Some options for digital advertising include Facebook, Twitter, LinkedIn and pay-per-click ads.

Some free advertising to consider and claim are online directories including Yelp and Google Plus. These reach a huge audience and the best part is they are free so be sure to complete your business profile and ask satisfied clients to post positive reviews.

COVID-19 Impact & USERRA

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SHARING FROM THE U.S. Department of Labor / Published April 21, 2020

During these challenging times, our nation’s Guardsmen and Reservists are answering the call to duty to protect the health and well-being of all Americans. We owe a duty to them to ensure full compliance with the employment and reemployment rights of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA)

The Veteran’s Employment and Training Service (VETS) interprets and provides guidance on USERRA and investigates complaints filed under this law. VETS offers the following frequently asked questions and answers:

Does this fact sheet create new USERRA rights and obligations in light of COVID-19?

No. The statute and regulations still govern USERRA rights and obligations. This factsheet addresses some scenarios that might arise from the application of USERRA in the context of this pandemic.

Does a member of the National Guard or Reserves who is called to active duty in response to the COVID-19 emergency have employment and reemployment protections under USERRA?
  • Yes, if called to duty under federal authority. National Guard or Reserve duty under federal authority (such as Title 10 or Title 32) is covered by USERRA.
    • National Guard duty under state authority, commonly referred to as State Active Duty, is not covered under USERRA. However, members of the National Guard serving on State Active Duty may have similar employment protections under state law and should contact the appropriate state office for assistance.
    • Note that the authority under which orders are issued can change, even in the course of a service member’s performance of service.
Can a service member be furloughed or laid off upon return from uniformed service?
  • Yes, if it is reasonably certain that he or she would have been furloughed or laid off had he or she not been absent for uniformed service.
May an employer delay a service member’s reemployment out of concern that the service member’s service in a COVID-19 affected area may have exposed him or her to COVID-19?
  • No. If the employee satisfies the prerequisites to reemployment, the employee should be promptly reemployed in the job position that he or she would have attained with reasonable certainty if not for the absence due to uniformed service.
    • Promptness generally depends on the length of time an individual was away, ranging from the next day after returning from duty, if the deployment was relatively short, to up to fourteen days in the case of a multi-year deployment.
    • When reemploying a service member who might have been exposed to COVID-19, an employer must make reasonable efforts in order to qualify the returning employee for his or her proper reemployment position. This can include temporarily providing paid leave, remote work, or another position during a period of quarantine for an exposed reemployed service member or COVID-19 infected reemployed service member, before reemploying the individual into his or her proper reemployment position.
Where to Obtain Additional Information:

Important USERRA-related resources and compliance assistance materials for employees and employers are available through the Veterans’ Employment and Training Service website at www.dol.gov/agencies/vets/programs/userra, which contains a USERRA elaws Advisor, FAQs, fact sheets, and links to the statute and implementing regulations. Our toll-free information and helpline, available 8:00 a.m. – 8:00 p.m. Eastern Time, is 1-866-4-USA-DOL (1-866-487-2365). The Department of Defense’s Employer Support of the Guard and Reserve also provides resources available at www.esgr.mil.

U.S. Department of Labor                             1-866-4-USA-DOL
200 Constitution Ave NW                              TTY: 1-877-TTY-5627
Washington, DC 20210

/Portals/13/USERRA-COVID-19-Impact.pdf

 

A Little About VAMBOA

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By Debbie Gregory.

LinkedIN Debbie Gregory VAMBOA VAMBOA Facebook VAMBOA Twitter

 

VAMBOA, the Veterans and Military Business Owners Association is your non-profit trade association.  There are other associations out there for Veterans and Service-Disabled Veteran Owned Businesses (SDVOB) that also address some of the needs of population.  We are a little different than other associations.

As the CEO of VAMBOA, I’d like to explain how we are different and some of what we offer so that Veteran and Military Business Owners may gain the most benefit from VAMBOA.

VAMBOA’s focus is to provide those we serve with as much valuable information and as many resources as possible.  We also want to make it easy for you to access it. We are highly cognizant of the fact that small business owners have limited time and must use it wisely.

It is not possible to attend all the conferences that will yield helpful and provide you valuable resources and also be away from your business.  Additionally, it can be very expensive and not only in the time away from your business, but the cost of travel, hotels, meals, conference fees.  More importantly, you can lose or compromise business by not being there to work with clients, prospects and your team.  Small business owners wear many hats and operating a successful business requires you to be engaged and there more often than not.

VAMBOA has evolved and in a few words has become the “Go To Place” for Veterans, Service Disabled and Military Business Owners to obtain resources and do so online.  We work hard to provide you significant value on a regular basis.

VAMBOA’s team performs extensive research in all areas of business that are important to you.  We write, edit, and post online on our blog a minimum of three important articles weekly to keep you informed without you having to leave your seat or your office.

VAMBOA has over 7,200 registered members and an extensive database of other Veteran, Service Disabled and Military Business Owners.  We are approaching a quarter of a million combined fans and followers on social media.  We regularly use various social medium platforms such as Facebook, Twitter and Linked In to put forth important information for you.

VAMBOA also connects our members with corporations that are seeking a diverse network of suppliers that includes Veterans, Service-Disabled Veterans and Military business owners.   We put forth their needs to our membership and contact individual members in the areas they seek for their Requests for Proposals (RFPs), Requests for Information (RFIs), to work with them and more.  We follow up and help you gain their business.

VAMBOA does not charge our members and all of services and connections are free of charge to you without dues or fees.  We also do not send you endless emails trying to sell you products or services.  VAMBOA relies solely on corporate sponsorship.   Corporations that sponsor us can easily connect to our huge audience.   They too don’t have to leave their offices and work to accomplish this goal nor do we go back to them over and over to sponsor various events.   We keep it simple and provide considerable value.

We place their corporate outreach to our members front and center in a variety of ways and repeat their message to engage and accomplish their goals.  We use the power of our huge database and the Internet including direct outreach, exposure on the VAMBOA website, emails, newsletters, social media posts and articles.  VAMBOA has impressive traffic with an outstanding US Alexa Traffic ranking of under 17,000 of all the billions of websites on the Internet (with Alexa the lower the number the better with Google being #1).

VAMBOA invites Veteran, Service-Disabled and Military Business Owners to join our association so your business can connect to companies that seek your skills and diversity.

You can register here: https://vamboa.org/member-registration/

VAMBOA also invites corporations that recognize the Veteran Business Owners are awesome and want to connect with them in an easy, efficient and cost-effective way to become sponsors.  Please send us an EMAIL!

SMART Goals for Your Business

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By Debbie Gregory.

LinkedIN Debbie Gregory VAMBOA VAMBOA Facebook VAMBOA Twitter

 

Starting and running a successful business takes a lot of personal fortitude and discipline. Whether you are a solo-entrepreneur or you have a large team at your back, your ultimate success will come down to whether or not you can set and achieve your goals.

 

A great way to put together and stay focused on achieving your goals is using the SMART goal setting technique. SMART is an acronym that stands for: Specific, Measurable, Achievable, Relevant, and Time-sensitive.

  • Specific – Exactly what you want to achieve.
  • Measurable – How you plan to measure your goal.
  • Achievable – Is your goal realistic?
  • Relevant – How does your goal relate to your business?
  • Time-sensitive – When do you want to achieve your goal?

 

With this information in-hand you have a very clear plan of action. However, there are still challenges that can arise and can lead to failure in reaching your goals and having a successful business. The main roadblocks to SMART business success include:

 

1.) You don’t commit.

You cannot sit around hoping that your dreams will fall into your lap. You MUST create a deliberate and concrete plan for your success and stick to it.

 

2.) You don’t factor in problems.

Regardless of how well you plan, problems will arise. Try to be flexible and factor in obstacles that may derail you for a bit. Your plan may even need to be revised from time to time due to unforeseen problems, as you move toward your goal.   The important thing is to be flexible and adjust to current circumstances.

 

3.) Your goals aren’t realistic.

You need to make sure that you have set reasonable, realistic, and manageable goals. You cannot change everything all at once. It is nice to dream big but try to tackle the dream one small piece at a time.

 

4.) You are afraid to fail.

Failure is an important tool to learn and failure provides you information on how to refine your strategy and move forward in obtaining your goals. Your missteps will provide you strength to overcome obstacles. Try to see failure as a stepping stone rather than an end.  It is said that failure provides you the proper perspective for success

 

5.) Your plan is vague.

Your plan must be as specific as possible. It helps you to focus on the individual parts and helps you identify the next steps you need to take.

 

Developing a SMART plan is an excellent way to help you foster discipline and focus on your goals with strategies and tactics to achieve them. Never allow yourself to become derailed by outrageous dreams, roadblocks, fear of failure, or fear of commitment.

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