LLC or CORPORATION?

Many who are looking to start a new business want to know whether to form a Limited Liability Company (LLC) or a Corporation (s Corp or C Corp). They want to know which one is best, which one will save them money, which one will give them the best tax breaks, which one will give them the best assest protection and which one will make them money.

The answer depends on what kind of business it is and how the business owner would like to arrange his/her tax liabilities and the other realities that come with business ownership and operation.We can start our discussion by looking at a partnership. This is a common form of business arrangement because it doesn’t take a whole lot of paperwork to arrange, and is often formed inadvertently due to lack of proper filing or even ignorance. A partnership is nothing more than a voluntary association between two or more people who agree to collectively own and operate a business. Each partner is proportionally responsible for all of the profits, losses, liabilities, and other happenings of the business. It is simple to arrange, but offers little in the way of protection from personal liability for the individual partners.This is why corporations and LLCs are beneficial: they offer differing levels of protection against personal liability.

Corporations

Corporations are an excellent way to protect owners against personal liability for losses and taxes, because they function as separate legal entities. More than just a legal entity, corporations are recognized as legal persons that can own property, file taxes, sue, be sued, sign contracts, and exist apart from its owners. This is beneficial for the owners of a corporation because all liabilities are applied to the corporation itself and are not passed on to the individual owners.The owners of a corporation are those who own shares of the corporation. Since a corporation pays taxes on its profits as though it were a person and is individually liable for losses, the shareholders are protected against these things. However, when the profits are passed on to the shareholders in the form of dividends, the individual stockholders are responsible to pay taxes on these. This is both a benefit because the corporation is responsible for its own profits and losses, and a detriment because taxes are paid twice (once by the corporation for profits and once by the shareholder for dividends).Corporations offer huge benefits because of liability protection, but this comes at a certain price. The price is the observance of corporate formalities. These formalities include holding annual meetings, keeping minutes of meetings, submitting annual reports, appointing directors and officers, and issuing stock. These formalities must be observed regardless of the number of shareholders. If not, then the “corporate veil” could be pierced and the shareholders could be found personally liable for the corporation’s debts.

Limited Liability Company

An LLC fits somewhere between a partnership and a corporation. It offers liability protection similar to a corporation, but has operational and tax advantages similar to a partnership. Generally, the owners of an LLC, which are referred to as members, are not liable for the debts or obligations of the company. This offers a level of liability protection similar to a corporation. However, the members are responsible for the profits and losses of the LLC since they pass straight through to them in a similar manner to partnerships. Another benefit to LLCs, beyond the liability protection, is the ease of maintenance. There are fewer paperwork filing and record keeping requirements. For example, LLCs do not need to keep minutes of meetings or file annual reports. There is also the ability for LLC owners to decide how they wish to allocate their profits and losses unlike the allocation of dividends based on share ownership for corporations.The way an LLC is taxed can get tricky depending on the state where it is formed since some states recognize LLCs as sole-proprietorships or partnerships. Still other states allow an LLC to choose how it is taxed which offers some flexibility. The flexibility and state specific rules for taxation can be both a benefit and a detriment to choosing this business form.

Conclusion

Both corporations and LLCs offer liability protection and ways of arranging profits and losses that can be more beneficial than plain partnerships. In making the decision as to which would best suit a business’s needs, some factors need to be weighed such as whether stock will be issued publicly, how tax liability will be dealt with, and how much organizational maintenance is manageable.Each state has its own laws governing these business formations and there can be subtleties in how they are formed and how they function. It is recommended to seek the advice of an attorney or accountant for specific questions about a business formation and how it could affect a new business owner.

Successful Mindset = Successful Business

Setting Goals Is Where True Success Begins; Achieving Those Goals Is Where Success Happens! Setting Goals without Achieving Those Goals Equal’s Failure.

There are key factors to effective goal setting which will give you the mindset needed to be successful.

Vision:

I am sure you have heard the word vision time and time again; but without knowing the importance of having a compelling vision; what a vision actually is and how it should be used you will be stuck in the beginning stages without moving forward towards success.
If you do not know where you want to be… How will you ever get there???

Vision incorporates the aspirations of what outcomes are hoped for. An entrepreneur’s definition of success can go well beyond profit maximization to include a whole range of other factors, including employment in the community, ability to create balance with family responsibilities, bringing a needed service or product to the market, or creating a certain work environment for employees that is not available in other businesses.

Initially a clear and compelling vision is critical to keep you focused. We often get tempted to pursue more opportunities than we can effectively handle. It is also an essential part of attracting employees, investors, suppliers and customers.

As your business grows, your vision becomes a compass to guide decision making both from a strategic and from an ethical perspective. It helps create order and meaning out of the chaos that so often part of a growing venture.

Personal Passion:

Think about what really gets you fired up, what drives your dreams. Your passions need to be able to get behind your list of goals and fuel the fire that makes you ACT.

Passion is a powerful emotion, such as love, joy, hatred, or anger.When it comes to your life’s work what do you want to pursue? What do you want to do? In order to succeed in small business, and in all areas of your life, you need to follow your bliss, love what you do and live your Passion. The basic premise is fairly simple. Think of the whole thing as cyclical: if you love what you do, then it’s not really “work” and your productivity, job and personal satisfaction will go hand in hand. You will look forward to your day instead of the typical dread of the daily grind. If you are brave and take a risk, and accept your challenges ahead with passion and enthusiasm, then you are able to create new ideas and imaginative solutions for your problems.

Part of living your passion and having “boundless enthusiasm” is being the best person you can be. Striving each day to learn something new, even if it means learning from past mistakes, is something you can do every day. Perhaps one of the best ways to live your passion is to start today and develop an insatiable appetite for learning. Become a lifelong student. Stop by your favorite local bookstore or library and familiarize yourself with the business section.

Start small and browse through the vast array of business publications, magazines and newspapers. The best part is you don’t even have to buy anything (at first). The only limits are your own imagination. Simply put, “knowledge is power.” The more you know, the more you are able to apply that knowledge to your business.Think of all the innovative thinkers, did they stop learning? Your own personal journey is just beginning.

Ego:

Check Your Ego at the Door!You do not need arrogance, defensiveness, or a desperate need for approval in your quest for entrepreneurial success, as these behaviors can only shut down dialogue, opportunities and decisions.

You may be brilliant, but you need to realize that you do not know everything; in fact, no one does. Hence, you may need collaboration and inputs from other people, which you can only maximize if you set your ego aside.

Honesty:

Your vision, passion and gifts that exist within you will carry you toward your goals; as Shakespeare wrote “To thine own self be true.”Be Brutally Honest when setting your goals; know your strengths and weaknesses. Don’t pretend to have skills or talents that simply do not exist within you.

Achievable Goal Setting:

Set Goals that are YOURS to Achieve.Make sure the goals you set are literally “Your Goals.” It does not seem possible for you to be passionate about someone else’s goals. For you to achieve the goals you have set before you, you must believe deep within yourself that the goals you are working toward will take your life where you want to go. Don’t take on goals for yourself that were designed by someone else. Look at your life and your vision then set goals that you will walk through fire to achieve.

Action:

Live a Life of Action! Remember to spend less time on setting your goals and more time on Acting on them. If you have a tendency to get stuck in the “planning” stage of goal setting, then start with setting smaller achievable goals each day that you make a priority to reach before the end of each day. If your goal is to host three home parties a week then set a goal that is yours to achieve within each day.

Can you Make someone book a home party? Of course not, but YOU can take the action (make 10 calls a day, everyday), that means you are taking this goal seriously and investing yourself in the process of reaching that goal.