|
NEW! 2004 Entrepreneurs Master Planner |
|
 |
|
 |
$39.95 |
 |
|
| Just Out! Personal Branding & You CD with downloadable work sheets. | |
| Mind Masters 2nd Quarter Planning March 30th, 2004 | |
| Visit the Small Business Store | |
 |
|
 |
 |
|
Personal Branding & You!: How to Master the Art of Personal Branding For Explosive Business Success On April 7, 2004 you will learn how to: 1. Attract New Clients 2. Build Personality into You Business 3. Pre-Sell Before They Walk in the Door 4. Overcome Sales Resistance 5. Package Yourself and Your Expertise 6. Turn Your Marketing Tools into Cash Space is Limited! Please Register in Advance with this online fax form. |
|
| Call 619-497-0430 Fax 619-497-0353 or Mail to 3604 Fourth Ave #5 San Diego, CA 92103 CLICK the form |
 |
|
|
 |
|
| Take time to look at your liabilities and talk to your accountant about sole proprietorship vs. incorporating. Let us know Click Here >> if this is a seed worth nurturing. |
|
By Barbara Eldridge
One of the questions I often get from my members is, "when is the right time to incorporate"? The answer is often the question of liability that one needs to take into consideration before deciding which entity best suits ones business needs. Do you have employees that put you at risk driving your business vehicle or dealing with customers? Each business entity has its advantages and drawbacks, benefits and tax consequences.
Picture a situation where an employee is driving with you in your vehicle and you are in an accident. The accident is not your fault but your employee gets injured. You are now in a position where the employee's lawyer decides they need to sue you too. What kind of protection do you have?
Most small businesses are started as sole proprietorships to allow an individual the independence, flexibility and minimum government red tape giving him/her absolute control. Taxes are filed on a regular 1040 form with a schedule C attached. Employee benefit premiums are deductible. However, Linda Harris of Harris Insurance and Financial Services says that the disadvantages of the sole proprietor are so profound that I will quote her explanation.
"The sole proprietorship is limited by the personal financial resources of the owner and the ability to obtain credit and borrow money. The sole proprietorship is also limited in terms of business talent and ability and the success of the business generally is tied to the ingenuity, initiative, resourcefulness and managerial abilities of the sole owner. "
Without proper planning the employee in the above scenario could wind up owning the assets of the business and other personal assets as well. Creditors may attach personal resources (home, bank accounts, retirement accounts, etc) in the event of a business failure. Also what happens to a sole proprietorship upon the death of the owner? In general, state laws provide that all of a sole proprietor's business activities cease at the owner's death.
Without getting over my head in legalities, let's look at the General Corporation advantages that could offset the sole proprietorship disadvantages. There is limited liability as all responsibility for debt and liability fall on the corporation. That means creditors cannot attach personal assets of the share holders. Financing is generally more easily secured, as corporations have a more stable appearance, whether or not it is true. Unless there is a restriction on the transfer of stock, shareholder's interests are freely transferable. As a separate legal entity, a corporation enjoys perpetual existence.
Often small business owners fail to value their sole proprietorships and do not adequately plan for its security or continuance. It is important to review all of the benefits and drawbacks of incorporating with your attorney, CPA and financial planner so you understand the financial impact on the business and your family.
Linda Harris has spent 25 years in the insurance and financial industry working with small business owners, finding them the solutions they need for succession planning and fringe benefits for the business. She can be reached at 858-695-1162 for any questions.
Contact Barbara Eldridge >> Click Here <<
Special Legal Notice
We send free small business newsletters to our web site and Mind Masters members. Topics include sales, marketing, business development, operations and internet promotions.
Legal notice: We do not sell or provide your information to vendors. Customer information is for internal use only.
All Rights Reserved