Starting a business is tough. There are lots of things to think about—the industry landscape, your market, finding the startup cash you need—and which type of business is best for you is no less important a decision.

Let’s take an overview look at four of the most popular types of business—sole proprietorship, general partnership, llc, and corporation—so that you can get yourself off to the right start and select the best type of business for you!

Sole Proprietorship

A sole proprietorship is the simplest type of business you can form. Just as it sounds, it’s a business made up of just one person.

There are two main types of sole proprietorships that you’ll need to be aware of if you’re going this route. The first is ultra-simple: it’s just one person operating under his or her legal name. (You’ll need to use your social security number to report your earnings to the IRS, of course.) The other type of sole proprietorship is a DBA (“doing business as”—see?), in which you can use a name that isn’t your own legal name. For example, I could register a business called Sarah’s Writing and Editing Services, but since that isn’t my real name (my parents were not, in fact, Mr. and Mrs. Writing and Editing Services), I would need to formally register a DBA with my local authorities.

Why? There are many reasons, including public disclosure and regulatory issues, but one of the more practical reasons is that in order to cash a check with your bank, it has to have your name on it. If it doesn’t, you’ll need a bank account under the business name—and in order to do that, you’ll need to register your business!

The thing to remember with a sole proprietorship is that the business and the owner are one and the same; there is no legal separation protecting the owner from debts or obligations of the sole proprietorship.

[For information on other types of DBAs and the different terminology used around the country, take a look at the information on Trade Names by ClickAndInc.com.]

General Partnership

A general partnership (not to be confused with a limited partnership, which is a story for another time) is essentially a sole proprietorship, but with two (or more) proprietors rather than one.

Other than the difference in number of owners, much holds true for both: it is a very simple kind of business, one that is not legally separate from the owners, and formal registration is required in order to open a bank account.

Something to keep in mind with the general partnership is that each partner has equal control over the business—and both are equally liable for it. If one partner makes a decision that bankrupts the business, both partners are equally responsible for any debts or obligations.

[If a general partnership does not meet the owners' needs, you might look into a limited partnership, which has different "tiers" of partners; for more information, check out the great information on limited partnerships by NOLO.]

LLC (Limited Liability Company)

An LLC, which stands for Limited Liability Company, is a type of business that (as its name suggests) does provide limited liability protection to the owner or owners; if the LLC defaults on a loan, for instance, the owners’ personal assets are not seized to pay for them, provided they have acted within the scope of the law.

A limited liability company will be managed by members or managers—an important distinction. These managing members or managers are analogous to corporate officers, and they will make the decisions that dictate the day-to-day operations of the LLC.

[For more information on preventing the courts from seizing owners' personal assets to pay for debts and obligations of the business, check out our 8/24/11 post on Piercing the Corporate Veil.]

Corporation

A corporation, like a limited liability company, protects the owners against debts and obligations of the business. It also allows shares of stock to be sold to raise capital.

As mentioned above, a corporation is managed by its corporate officers, as well as a board of directors. It can choose between two different types: S Corporation or C Corporation.

[For more information on corporations and the different organizational structures, please visit our article on S Corporation vs. C Corporation.]

 

What about you? What type of business did you choose for your business structure—and why? Tell us about it in the comments!

TAGS: C-Corporation, corporation, general partnership, Limited Liability Company, LLC, S-Corporation, sole proprietor, Sole Proprietorship, type of business, which type of business is best

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No matter how many things you’re doing right, there are a few things that you could potentially be doing wrong—and that could be causing you to lose your creativity, your sense of honor, or even your reputation.

Take a few words of advice from these fine sources to fine-tune your day-to-day business dealings and keep yourself on the straight and narrow. Ditch the bad business habits today and help grow your business the right way!

• How to Make Amends for Bad Behavior by Penelope Trunk

Regardless of what you’ve done—or failed to do—the old cliche is true: actions do speak louder than words. In business and in life, Penelope Trunk shares her experiences with making amends and moving forward. (Spoiler alert: beating yourself up over past transgressions is not on the list.)

• Link With Love by Ameena Falchetto

There’s a lot of pressure on small business owners to be original, create unique content, and be “new” and “fresh.” Of course, you do not live in a microcosm. Ideas flow, influence other ideas, and are built off of other ideas. This is fine—even expected. What’s not fine is leaning heavily on one person’s idea without giving credit where credit is due—or, even worse, shamelessly stealing it and calling it your own. Ameena Falchetto tells us how this once happened to her, what you can do about it if it happens to you, and how to avoid doing it to someone else.

• 12 Bad Habits That Could Kill Your Business by Business Tips

Full of tips for how to be a better businessperson—and a better person in general, for that matter—Victorio Abrugar lays out a set of bad habits you should knock off, immediately. Among them are lying (to your customer, to your vendors, or to your employees—it’s all a no-no), disrespecting (the same set of people), and being greedy, impatient, or unprepared. Great advice any Zen master would be proud of.

TAGS: bad habits, business habits, business lessons, link, Small Business

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Heads up, Nevada business owners! If you’re doing business in southern Nevada, there’s an event going on in Las Vegas next weekend that you won’t want to miss—new and existing business owners alike.

You already know that SCORE brings you valuable free resources, including free local mentoring (don’t you?). Now, SCORE has partnered with the Clark County Department of Business License to put on “Doing Business In Southern Nevada,” a conference of business professionals and experts, on May 11th, 2012.

Among the topics that will be covered by expert panelists in this free conference are:

• jurisdictional business license requirements
• micro-loan programs
• state and federal tax requirements
• venture capital and angel investors
• business incubation programs
• free local resources for business advice

If you’d like, you can download the full schedule as a PDF.

While the 2012 “Doing Business in Southern Nevada” conference is free, registration is required. The conference is broken into three panel sessions; you can attend anywhere from one to all three panel sessions.

Make sure to visit the official website for more information on the 2012 “Doing Business In Southern Nevada” conference held in Clark County, Nevada. Don’t miss this great day of free business tips and advice from the experts!

 

TAGS: business owners, clark county, conference, doing business, doing business in southern nevada, nevada, panel, SCORE

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Business loans are not given to people simply for their great ideas. If you’ve got a great business idea, congratulations! But this doesn’t make you unique, and it doesn’t make anyone want to give you money.

So what sets a real entrepreneur out from the crowd of idealistic dreamers in the eyes of a bank loan officer? The entrepreneur is serious about the business (and there is, yes, an actual business). The entrepreneur is willing to take on risk, get some “skin in the game,” and come up with a serious plan based on real research, not just hopes and dreams.

While bank loans are few and far between, they are out there. Here’s how to prove that your business is worth the bank’s investment.

1. Have a business plan.

Your business plan isn’t just for your banker, of course—it’s a key tool for planning your business and projecting gains and losses. It will prove to anyone reviewing your loan application that you’re more than just a great idea, that you’ve thought this through, and that you’ve done the research.

Tip: Business plans are, by definition, long. Give yourself a fighting chance by including a brief summary of the business plan to entice your potential loan officer to continue reading.

2. Show that you’ve got some buzz—or at least some solid potential.

Let me repeat myself: Bank loans are not given for great ideas alone. Can you show that you’ve taken that great idea to the next level?

It helps, in these planning stages, to personalize the banks a little—after all, every decision made by any institution really boils down to the people with the decision-making power in that institution. Ask yourself, If I were in their place, would I put my own money at risk to support someone else’s unproven idea based on their assurances alone?

The best loans aren’t used to start a business; they’re used to help out a business that already has some forward momentum. The more you can prove that you’ll be successful by already being successful, the more confidence you’ll inspire in your loan officers.

3. Show that you can survive without an income.

It’s a little like when the top car manufacturers were in trouble and they showed up in their private jets to ask for help—it reeeally doesn’t make a very good impression.

Any potential loaner is doing so because they believe the business can succeed, not to put a salary in your pocket. Obviously, you can’t be expected to live forever without an income—but showing that you had the foresight to take care of your personal details so as not to detract from helping your business get off the ground can only help the banks’ impression of you.

4. Share the risk.

This is a good time to put yourself firmly in your loan officer’s shoes. Imagine someone comes to you and asks you to invest in a new project. You notice that this person, however, isn’t putting up any of his/her own money—a huge red flag! Why aren’t they contributing to their own project? Do they lack the confidence in their ability to succeed? Would they just rather put the risk in someone else’s lap? What about this situation is supposed to inspire your confidence?

Nothing, of course. If you’re putting a modest amount of your own money toward your goals, your institution’s loan officer will get the sense that you believe in your business and that you’re serious about seeing it succeed—serious enough to put your money where your mouth is, so to speak.

If you’ve followed the steps above, you’ll be miles above those starry-eyed “entrepreneurs” who turn out to be all talk and no substance. Best of luck!

Have you been successful in obtaining a business loan? How did you do it? Tell us your story in the comments section below!

TAGS: bank loan, bank loans, banks, business capital, business idea, business loan, business loans, business plan, entrepreneur, income, invest, loan officer, planning your business, risk

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Incorporating a business can be time-consuming, costly, a hassle to keep in compliance, risky—and it just might be the best small business decision you’ve ever made. Here are five clues that it might be time to take your business to the next level.

1. You’re taking out a huge loan.

While incorporating doesn’t give you free license to take out irresponsible loans with no intention of paying them back (the corporate veil doesn’t protect shady business dealings), it does allow you to breathe a little easier knowing that you’re not personally liable to repay the loan if things go awry.

Many businesses, especially those with little tied up in overhead costs, can comfortably remain unincorporated. But if you’re taking out a very large loan on behalf of your business, if you incorporate, the legal separation between owner and corporation may help set your mind at ease.

2. Your chances of being sued have increased.

For instance, you might be getting along just fine as a reseller of pet supplies, but if you’re considering bringing in a local vet a few times a week to offer walk-in checkups, consider whether you’re comfortable being personally liable for any lawsuits that may come out of the pet care you provide, or whether you’d prefer your business to assume this liability.

3. You want to do business statewide.

In many states, a Sole Proprietorship DBA or Assumed Name (an unincorporated business) is registered at the county level—or even at the city level—which means that registering a business only gives you the right to operate your business in that county or city.

But it’s not as simple as that: most, if not all, counties and cities require you to hold a physical location within their borders in order to register there. This means, to run a business statewide in some states, you’d need to open a storefront or have an office in every single county . . . or incorporate!

4. You want exclusive rights to your business name.

Rules on DBA/Assumed Name name availability from state to state vary wildly; while registering a sole proprietorship DBA in one state might provide exclusive rights to that name in that state, another state might allow an infinite number of DBAs to be registered in that state under the same name.

However, once you incorporate, all states grant you some level of exclusive business name protection. While the strictness of the naming rules does vary a bit from state to state, some states being more lenient than others on what is considered “confusingly similar” to another business on file, you can rest easy knowing that once you register Martha’s Baked Goods, Inc., you will be the only one!

5. You want your business to live on after you’re gone.

If you operate a sole proprietorship, the business is tied to you directly; if the owner of a sole proprietorship dies, the sole proprietorship dies with it.

A corporation, however, is its own entity. It exists outside of its owners, so it can exist for perpetuity, ownership can be transferred—and your corporate bylaws will lay out provisions for what’s going to happen to the corporation should the unthinkable happen or should any other issues arise.

 

What are you waiting for? ClickAndInc can help you incorporate your business today!

TAGS: assumed name, corporate bylaws, dba, Incorporate, Incorporate a Business, incorporate your business, incorporating a business, limited liability, ready to incorporate, Sole Proprietorship, unincorporated

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Employee or entrepreneur? With the unemployment rate what it is, many people are asking themselves what the best move is: work for an existing business as an employee, or go the entrepreneur route and start their own businesses.

While there’s no simple right answer to this, we’ve collected information and insights from around the blogosphere throughout the week to bring you the tools you need to make the right decision.

• How To Decide If A Job Or Entrepreneurship Is Right For You by Young Entrepreneur

This great post by Adam Toren looks at goals and personality traits to help you determine whether starting a business is the right decision for you, or if you might better excel at a traditional company job.

• Why Being a Successful Entrepreneur Takes Practice by Startup Professionals

Don’t make the mistake of thinking that starting a business is a fast-track to success. Think climbing the corporate ladder takes patience? Try starting a business from scratch. Just make sure to do it with reasonable expectations in mind.

•  When Will You Start Your Business? by Small Business Trends

This post contains a wealth of information from all over the internet on nearly every topic you can think of: sales, business ideas, tricks of the trade, and more. Make sure you’re considering all aspects of your business, and get your entrepreneurial journey off to a good start!

Happy journey!

TAGS: business ideas, employee, employee or entrepreneur, entrepreneur, start a business, starting a business, unemployment

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