Month: December 2016

You probably know of several businesses whose formal names end with the acronym LLC. And you probably also know that LLC stands for limited liability company. Here are ten things you may not know.

1. An LLC generally protects its owners from personal liability for business obligations in much the same way a corporation does, but an LLC is not a corporate entity.*
2. Like a corporation, an LLC can do business in multiple states, although an LLC must be organized in a specific state.
3. The owners of an LLC are called “members.” There is no limit on the number of members an LLC can have, and members don’t necessarily have to be individuals. Members’ management roles are typically spelled out in an operating agreement.
4. Upon formation of an LLC, the members contribute cash, property, or services to the LLC in exchange for LLC shares or units.
5. An LLC may borrow money in its own name and is responsible for repayment of the debt.
6. An LLC is usually treated as a partnership for federal income-tax purposes. (The remaining four points assume partnership treatment.)
7. Like partners, LLC members are not considered employees of the company. However, an LLC can have non-member employees.
8. LLC members are taxed directly on company income. The LLC itself doesn’t pay federal income taxes.
9. If an LLC has a loss, its members generally can deduct their share of the loss on their own tax returns.
10. For tax purposes, an LLC’s income and losses are divided among its members according to the terms of their agreement. Tax allocations must correspond to economic allocations of profit and loss.

An LLC is but one structure you might consider using for a business venture. We can help you determine which type of arrangement will best meet your objectives.

Whether you need individual or business tax advice, give us a call. We’ve got the answers you’re looking for, so don’t wait. Call us today.

* Each state has its own laws governing LLCs. Consult with an attorney before establishing an LLC.

Is it time to put your expansion plan on the front burner? Have you outgrown your current location? Do you need to replace some equipment? There are many reasons small business owners might be in the market for a loan. If you’ll be shopping soon, here are some pointers.

Check Your Credit

When you apply for a loan, the lender will look at your personal and your business credit histories. Before you start the application process, check to make sure both are accurate and up to date. If there are errors, clear them up ahead of time.

Polish Your Plan

Prospective lenders will want to know as much as possible about your business. Prepare a comprehensive, up-to-date business plan that provides information about your company (a description and an executive summary) and yourself (educational background and relevant experience). Since your plan may be pivotal in convincing potential lenders to approve your loan, consider including an overview of your management team and key personnel along with some market analysis and a marketing plan.

You should also be prepared to provide financial statements and cash flow projections. Lenders may request personal financial statements for you and other owners as well.

Check Your Equity

Before you put in a loan application, make sure you have enough equity in the business. Although requirements can vary, lenders generally want a company’s total liabilities to be less than four times equity. A lender may require you to put some additional money into your business before approving you for a loan.

Identify Collateral

Lenders generally require collateral, an alternate repayment source that can be used in case your business isn’t generating enough cash to make payments on your loan. Either business or personal assets can be used. If you don’t have anything you can use as collateral, perhaps you can find someone who does who will cosign the loan.

Look for a Good Match

If you already have a good working relationship with a bank that lends to small businesses, it makes sense to start there. If you don’t, or if your bank isn’t a good match, do your homework. Look for lenders that do business with companies similar in size to your own. Finding a lender that’s familiar with your industry is an added bonus.

For more tips on how to keep business best practices front and center for your company, give us a call today. We can’t wait to hear from you.

Are you interested in starting a new business? Make sure you do plenty of research and have a firm business plan ready before you take the plunge.

Making the Transition

If you have signed a noncompete or confidentiality agreement with your current employer, review it carefully to make sure it won’t hamper your startup efforts. If your new venture is in the same industry, be careful not to burn any bridges when you leave your current job. Scout out your opportunities. Buying a franchise or an existing business is much different than building a new business from the ground up.

Growing Your Business

Where will your customers come from? You may have one or two great prospects, but that may not be enough. Can you count on referrals from current business associates? Take a good hard look at opportunities for expansion that exist.

Figure Out Financing

Even with great prospects, it may take some time until cash starts coming in on a regular basis. Do you have enough of a financial cushion to get you through? If your spouse has an outside job, your spouse’s earnings and benefits may help provide stability during the startup period. If you need funding, where will it come from? Have you considered looking for a partner or investor?

Getting the Word Out

How much marketing and advertising will be required? Put together a comprehensive plan along with cost estimates. And, unless you’re familiar with the less traditional marketing and communication opportunities that today’s new media offer, you may want to enlist the help of someone who is.

Make a Budget

List every expense you can think of: rent, payroll (if any), phone and Internet service, computer equipment, website design, insurance, transportation costs, self-employment tax, etc. Then draw up a budget. Once your venture is up and running, you can use the budget as a guide in managing your finances.

Call us today for more tips on how to ensure you’re following business best practices, and let us help you keep your company in the black.