If you’re thinking about starting your own small business, it is essential that you understand the dedication and planning that is involved. Although the idea of becoming your own boss is liberating, you must keep in mind that there are things that should be in place from day one. It makes no difference if your business is online or off-line, here are few things you should consider before taking the plunge.

1. Business Plan – A business plan will map out the steps you need to take and will give you direction. Understand that if you plan to seek funding for your new business, a well thought out business plan is a must have. If you think you’ll have difficulty with this step, seek the assistance of a professional, and dont’ forget to choose the right business entity.

2. Capital – Starting a low cost business is only possible through online affiliate marketing. However, if your business is a typical brick in mortar establishment, be certain that you have enough funding, whether through savings, loans, or investors. In the most cases, it takes some time for a business to begin to show a profit, so take the necessary steps to have enough funds for any extended period.

3. Credit Line – In a perfect world, the unexpected wouldn’t happen. Even if you feel you have plenty of funds to get started and to help sustain your business, have a credit line in place. If the unexpected should occur, you will always have a safety net. If you plan to seek or obtain loans in the future, maintain a good credit record and score.

4. Location – Even if your presence is online, make sure you have a physical address that is associated with your business. Especially important, for licensing purposes.

5. Licensing – Obtain all the necessary licenses and permits, before going public with your business. Skipping this step can subject your to fines and penalties if you are caught.

6. Insurance – Insurance will vary, depending on the type of business you are running. You may require a variety of insurance services, but most important, insurance will provide your business with some protection in cases of loss, damage, or lawsuit. If you plan to employ others, consider a health insurance plan for yourself and your employees.

7. Accounting System – To ensure your bills are paid on time and kept current, a detailed accounting system is essential. This will help you keep track of your income and expenses on file, especially true for tax purposes.

Conclusion

Don’t let the long list discourage you from being an entrepreneur. As long as you have a detail business plan in place, and follow it to the letter, it will map out what you need to do. Starting a small business may seem like rocket science, only if you don’t have access to the right information. As mentioned before, if you’re having difficulty establishing your business plan, consult a qualified professional for assistance. Alternatively, if you are do-it-yourself-er, or are short on funds, you can pick up a book at Amazon or your local book store.

If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

Running a business, whether online or offline, requires adequate planning and research. If you’ve already established a business plan, make sure you add “what business entity to pick?” to your checklist. Every business entity has its own unique characteristics as they relate to ownership rules, personal liability, tax treatment and documents needed for formation. Incorporating will not only provide you with a better level of protection not available as a sole proprietor, but it will also give you some tax benefits as well.

Definition of a Corporation

A simple definition of a corporation is “a separate legal entity, independent from the business owner(s)”. Since a corporation is an entity on its own, it can open a bank account, operate as a business, and own property all under its own name. As a corporation, the business establishes a separate legal standing from its business owners. This separate entity protects the owners from personal liability, in the event of a lawsuit. This level of protection is often referred to as the “corporate veil”.

A corporation is managed by a board of directors, which makes major business decision and has the responsibility of making sure things run smoothly with the business. Appointed by the board of directors are the officers, which are responsible for the daily operations of the business. A president, chief financial officer, and a secretary all fall under the umbrella definition of “officers”. It is possible, for a one person within a corporation to hold all three titles.

Why Incorporate?

Long before corporations where formed, an investor risked losing everything if the business went belly-up. Consequently, if the business lost money, the business partners would find themselves in a bind, and would need to make up the difference in order to pay off their creditors. As corporations became the norm, finding investors was less risky, as they would be shielded from this type of liability.

Types of Corporations

There are two types of corporations; a C-Corporation and an S-Corporation.

C-Corporation Characteristics:

• No limit on stock class
• Unlimited number of shareholders
• C-Corporation has double taxation
• Corporate tax and shareholders tax on distributed dividends
• Generally no personal liability on shareholders

S-Corporation Characteristics:

• Up to 100 shareholders
• Only one class of stock allowed
• Option for pass through entity tax
• Generally no personal liability on shareholder
• Option to be taxed as a partnership or sole proprietor

Conclusion

There’s are a lot more involved when it comes to incorporating your business that’s beyond the scope of this post. The whole purpose was to give you a quick overview and brief understanding of what a corporation is. However, if you’re considering incorporating, download this free report, Choice of Entity Secrets Revealed to find out if incorporating is right for you.

Recommended Resources

LegalZoom.com
NVINC.com

If your like most small business owners today, you’re probably doing business as sole proprietorship. This is a common theme among the majority of aspiring business owner. If you’re like most, you probably felt your business wasn’t sophisticated or large enough to incorporate, and probably wanted to keep it simple by electing a sole proprietorship.

Although the chances of getting sued are highly unlikely, there is a high price to pay IF you were to be sued as a sole proprietor. You see, being a sole proprietors adds serious risk to you and your family, because you personally bare the responsibility of any lawsuit. Its like having a big red target on you and your business.

If by chance you are sued by a disgruntled employee or customer, you personally have unlimited liability, and could actually lose all your personal assets. The good news is, you can protect yourself by choosing the right business entity.

Most common business entities:

• LLC

• LLP

• S-Corporation

• C-Corporation

By incorporating your business, you create a separate identity apart from yourself, thus establishing the “corporate veil.” There are a number of things to consider before incorporating. For instance, which corporate identity is right for you and your business? Where to incorporate - Nevada or Delaware?

Here are three corporate websites that can help you with the transition:

• LegalZoom.com

• Corporate.com

• NVINC.com

My personal preference is Nevada Corporate Planners, due to their extensive library of information found on their website, as well a 50-page report, not offered by the other websites. This report is also jammed packed with information, which will give you a good indication of what you need to know. You can download it here:

Conclusion

For most affiliate marketers and home based business owners on the net today, the chances of getting sued may seem pretty slim. Nevertheless, one is still throwing the dice to the wind, and it’s important that you know the risks involved by not incorporating. That extra level protection could make a world of difference to you and your families financial stability.