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FREE BUSINESS PLAN HELP

This page is reserved for business owners in the earliest stages of a start up. We have compiled the most useful and FREE resources found on the internet to help you develop a working foundation of required business knowledge. Where available, this information is taken directly from authoritative organizations (SBA, IRS, Sectretary of States, Department of Commerce and SEC as well as private organizations offering useful free services.) The information is presented in the following categories:

  • Business Structuring - How should you operate your business (Sole, LLC vs Corporation)

  • Business Functions - Free help by function (Accounting, Marketing, Finance, etc...)

  • States - Helpful business links specific to all 50 states. (COMING SOON)

  • Industry - Guides and publications for all major industries.

BUSINESS STRUCTURE

One of the earliest decisions you will have to make is how you will structure your business. Although you may be able to change this structure in the future, switching business forms may prove to be a hassle if not costly. Several business structures are availabe for business owners:

  • Sole Proprietor

  • Limited Liability Company

  • Cooperative

  • Corporation

  • Partnership

  • S Corporation

Sole Proprietorship

A sole proprietorship is the simplest and most common structure chosen to start a business. It is an unincorporated business owned and run by one individual with no distinction between the business and you, the owner. You are entitled to all profits and are responsible for all your business’s debts, losses and liabilities. Consequently, the sole proprietorship is limited in the duration of its existence ending when the sole owner is unwilling (or unable) to continue operating the business.

 

You do not have to take any formal action to form a sole proprietorship. As long as you are the only owner, this status automatically comes from your business activities. In fact, you may already own one without knowing it. If you are a freelance writer, for example, you are a sole proprietor.

Limited Liability Company

A limited liability company is a hybrid type of legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership.

 

The "owners" of an LLC are referred to as "members." Depending on the state, the members can consist of a single individual (one owner), two or more individuals, corporations or other LLCs.

 

Unlike shareholders in a corporation, LLCs are not taxed as a separate business entity. Instead, all profits and losses are "passed through" the business to each member of the LLC. LLC members report profits and losses on their personal federal tax returns, just like the owners of a partnership would.

Cooperative

A cooperative is a business or organization owned by and operated for the benefit of those using its services. Profits and earnings generated by the cooperative are distributed among the members, also known as user-owners.

 

Typically, an elected board of directors and officers run the cooperative while regular members have voting power to control the direction of the cooperative. Members can become part of the cooperative by purchasing shares, though the amount of shares they hold does not affect the weight of their vote.

 

Cooperatives are common in the healthcare, retail, agriculture, art and restaurant industries. Forming a cooperative is different from forming any other business entity. To start up, a group of potential members must agree on a common need and a strategy on how to meet that need. An organizing committee then conducts exploratory meetings, surveys, and cost and feasibility analyses before every member agrees with the business plan. Not all cooperatives are incorporated, though many choose to do so.

Corporation

A corporation (sometimes referred to as a C corporation) is an independent legal entity owned by shareholders. This means that the corporation itself, not the shareholders that own it, is held legally liable for the actions and debts the business incurs.

Corporations are more complex than other business structures because they tend to have costly administrative fees and complex tax and legal requirements. Because of these issues, corporations are generally suggested for established, larger companies with multiple employees.

 

For businesses in that position, corporations offer the ability to sell ownership shares in the business through stock offerings. “Going public” through an initial public offering (IPO) is a major selling point in attracting investment capital and high quality employees.

Forming a Corporation

 

A corporation is formed under the laws of the state in which it is registered. To form a corporation you’ll need to establish your business name and register your legal name with your state government. If you choose to operate under a name different than the officially registered name, you’ll most likely have to file a fictitious name (also known as an assumed name, trade name, or DBA name, short for "doing business as"). State laws vary, but generally corporations must include a corporate designation (Corporation, Incorporated, Limited) at the end of the business name.

 

To register your business as a corporation, you need to file certain documents, typically articles of incorporation, with your state’s Secretary of State office. Some states require corporations to establish directors and issue stock certificates to initial shareholders in the registration process. Contact your state business entity registration office to find out about specific filing requirements in the state where you form your business.

Partnership

A partnership is a single business where two or more people share ownership.

 

Each partner contributes to all aspects of the business, including money, property, labor or skill. In return, each partner shares in the profits and losses of the business.

 

Because partnerships entail more than one person in the decision-making process, it’s important to discuss a wide variety of issues up front and develop a legal partnership agreement. This agreement should document how future business decisions will be made, including how the partners will divide profits, resolve disputes, change ownership (bring in new partners or buy out current partners) and how to dissolve the partnership. Although partnership agreements are not legally required, they are strongly recommended and it is considered extremely risky to operate without one.

 

Types of Partnerships        

 

There are three general types of partnership arrangements:

  • General Partnerships assume that profits, liability and management duties are divided equally among partners. If you opt for an unequal distribution, the percentages assigned to each partner must be documented in the partnership agreement.

  • Limited Partnerships (also known as a partnership with limited liability) are more complex than general partnerships. Limited partnerships allow partners to have limited liability as well as limited input with management decisions. These limits depend on the extent of each partner’s investment percentage. Limited partnerships are attractive to investors of short-term projects.

  • Joint Ventures act as general partnership, but for only a limited period of time or for a single project. Partners in a joint venture can be recognized as an ongoing partnership if they continue the venture, but they must file as such.

S Corporation

An S corporation (sometimes referred to as an S Corp) is a special type of corporation created through an IRS tax election. An eligible domestic corporation can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S corporation.

 

An S corp is a corporation with the Subchapter S designation from the IRS. To be considered an S corp, you must first charter a business as a corporation in the state where it is headquartered. According to the IRS, S corporations are "considered by law to be a unique entity, separate and apart from those who own it." This limits the financial liability for which you (the owner, or "shareholder") are responsible. Nevertheless, liability protection is limited - S corps do not necessarily shield you from all litigation such as an employee’s tort actions as a result of a workplace incident.

 

What makes the S corp different from a traditional corporation (C corp) is that profits and losses can pass through to your personal tax return. Consequently, the business is not taxed itself. Only the shareholders are taxed. There is an important caveat, however: any shareholder who works for the company must pay him or herself "reasonable compensation." Basically, the shareholder must be paid fair market value, or the IRS might reclassify any additional corporate earnings as "wages."

BUSINESS FUNCTIONS

Operating a business requires a working knowledge in several crucial areas. At minimum, you need to have an understanding of the components and how they interrelate in the operation of your business: 

  • Planning

  • Management

  • Finance

  • Accounting

  • Marketing

  • Sales

Planning

Business Planning is the single most important function an entrepreneur engages in to impact the success of the business. Planning for a business is a process. It must consider all of the basic components of operating the proposed business such as product or service, intended customer, pricing, marketing strategy, sales strategy, personnel plan, financing strategy and profit plan. The planning phase should aslo identify and address certain regulatory, legal, compliance and other issues unique to that specific industry. A minimum, the planning process should project three years of sustained financial goals and a road map for achieving these goals:

  • Define your product or service

  • Define your customer (market analysis)

  • Analyze the industry

  • Analyze the competition

  • Develop your Marketing Strategy

  • Develop your Sales Strategy

  • Devise your Personnel Plan

  • Prepare your Financial Plan

Management

Busiess Management is the process of developing the strategies, plans, procedures and policies that guide a business on both a day-to-day and long-term basis. It involves coordinating human, financial and material resources to achieve organizational objectives.

Finance

Often the hardest part of starting a business is raising the money to get going. The entrepreneur might have a great idea and clear idea of how to turn it into a successful business. However, if sufficient finance can't be raised, it is unlikely that the business will get off the ground. Financing your business may be obtained from traditional sources or from more creative means:

Accounting

Business Accounting is the act of capturing, sorting, an presenting financial transactions for management analysis and business decision making. Unfortunately, 90% of small businesses utilize an accounting process or the sole purpose of preparing their taxes at the end of the year. It is no wonder that the majoriy of start ups fail in the first few years. A complete set of accounting Financial Statements at minimum must include:

  • Profit and Loss Statement

  • Cash Flow Statement

  • Balance Sheet

A foreward looking budget and variance report is extremely important in tracking your business and is highly recommended from the inception of your business. Running a business without it is like watching a basketball game without a scoreboard.

Marketing

The concept of Marketing can be somewhat nebulous for beginners and its definition varies even among experts. In simple terms Marketing is the process of taking your product or service to your customers. In more elaborate terms, Marketing encompasses the coordination of the four "Ps" as taught in every business college:

  1. Product - Identifying what products and services your company will offer and perhaps differentiating the product lines and their features.

  2. Price - How much will you charge for your products and services. Certainly a competitive analysis is crucial, but also an understanding of the supply and demand curve. Most new businesses price their products to maximize profits. However, most long-term successful businesses price their products to maximize volume of dollar sales. There is a big difference in the two.

  3. Placement - Where and how to best "place" your products for customer purchase. We're really talking about distribution strategy here. Some examples include door to door sales, inside telephone sales force, Walmart or grocery isles, ecommerce, Multi-Level Marketing (MLM), Business to Business sales (B2B), wholesale vs. retail, and so forth.

  4. Promotion - This is the component that most people think about when discussing marketing strategy. It involves available advertising avenues and marketing literature to showcase your products or services. Promotional means may includeTV ads, billboards, robocalls, attending conventions, website with SEO, social media, celebrity endorsements, and influencers.

Sales

So now that we have discussed most of the numerous and important functions of a small business, you should realize that no other function is as crucial to the ultimate success of your business as is SALES. If you ask 100 ailing or failed business owners what could have prevented their demise, 99 would answer HIGHER SALES. The one answering differently probably just didn't understand the question. Sales is the lifeline to your business and is the single most crucial line item on your financial statements.

Although they have some overlapping tendencies, sales strategy is different than marketing strategy. Whereas marketing is like tossing the biggest net into the ocean to capture as many fish as possible, selling is taking each fish, cleaning it up and frying it in the pan. Marketing announces your products and services to prospects, while sales converts those prospects into happy customers.

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