I created my vision board, identified my mission and goals, and was ready to marry my dreams of entrepreneurship! I had a brilliant idea that would generate more profits and purpose for others. What else did I need? Love and passion is all you need, right? I was head over heels in love and wanted to accelerate the marriage process so that I could live happily ever after with the business of my dreams. But marriage requires more than love. It requires a strategic business plan that begins with the most important decision you will ever make: your legal structure!
There are four basic forms of for-profit businesses in the United States. You can choose a sole proprietorship, partnership, corporation, or limited liability company. I briefly explored the pros and cons of each legal structure and quickly concluded that a sole proprietorship was best for me. Why? I couldn’t wait any longer. I wanted to get married to my dreams NOW and a sole proprietorship would be the most cost effective and convenient business to start immediately. There are no rigorous paperwork requirements, thus, helping you to expedite your business execution date. I didn’t mind being personally liable for all financial obligations of the business at this time. Since there are no specific business taxes paid by the company, the owner pays taxes on income from the business as part of his or her personal income tax payments. (Does it sound like I’m speaking a foreign language yet? Don’t worry! I will discuss more about this in future posts or blogs. You can always hire me to break down the basics over the phone or at your group event). A sole proprietorship also offers complete managerial control to the owner. I would be able to sale or transfer the business anytime I wanted. Well all of these factors probably explain why a sole proprietorship is the most common form of business organization. We want to marry our dreams and we want to do it NOW.
So in order to expedite the marriage process even more, I hired a wedding planner/business consultant. I needed a partner in crime to help me manage the tasks that need to be completed before the business launch date. The more we worked, the more questions she asked. Where do you see your business in 5 years? How much revenue are you expecting to generate this year? What are your premier products and services? Have you identified all of the start – up costs? To what extent do you need to be insulated from legal liability? You need to consider whether your business lends itself to potential liability and if you can personally afford the risk of liability. Have you thought about your opportunities to minimize taxation? There are many more tax options available to corporations than to proprietorships. What are the unique needs of the business and the personal needs of you as the owner? What will happen to the business after you die? What do I want to happen to the business when I’m no longer around to run it? When you die, the business dies too! A sole proprietorship or partnership may dissolve upon the death of its owner or owners but a corporation can be readily distributed to family members. What if you decide to sell your part of a business partnership? Do you want to bring in stockholders as the companies grow? If so, you should consider a corporation. A corporation’s capital can be expanded at any time in a private offering by issuing and selling additional shares of stock. This is especially helpful when banks are being tight with money. Do you have the money needed to purchase your inventory now? Investors won’t usually invest in sole proprietorships. A sole proprietorship has to contribute whatever capital needed.
My head was spinning! I thought I had it all figured out. All I wanted to do was save the world with my brilliant ideas. But in order to make this marriage work, these are things I would have to consider. It was a simple idea when my primary goal was consulting services but my business consultant opened my eyes to other profitable product ideas that would complement the services that are offered. So I had million dollar ideas but did not have the funds needed to obtain the different types of inventory that I wanted. This means that I should consider changing my status to an LLC so that I could attract investors who are willing to support this dream of helping so many others. I’m glad that I discussed these questions with my business consultant. I highly recommend that you seek sound counsel from business experts before settling down.
Now I caution you to consider these questions before settling down but don’t allow these questions to STOP you from settling down. The world NEEDS what you have to offer. Marrying your dreams can change your life as well as the lives of those around you.
Keep Creating Endless Opportunities,
Ms. Corporate America 2015
*Certified Public Accountant
*Certified Fraud Examiner
*Project Management Professional
*Certified Zumba Instructor
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