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How to determine Partner Percentages

How to determine Partner Percentages

Here’s a useful/ more down to earth approach…

1. Tally all the money commitments to the business – since money is lord for most new businesses, you might need to give it a multiplier at your tact.

2. What is the present market estimation of your work and how long would you say you will add to the organization without pay?

3. Different assets, such plant and gear, and so on – what’s the estimation of that?

4. The intangibles may be harder to gauge, for example, organize, particular skill, IP, and so on.

You can make this a quiet vote. Everybody records what they believe it’s worth and afterward take the normal. Include that all up and compute the rate – this should give you a decent reference point to begin. …what’s more, bear in mind to incorporate a “save” possession for financial specialists or potentially future donors. While I would not make this the last and restricting method for deciding the proprietorship shares, this is a decent exercise to experience. It will give your gathering a more prominent “purchase in” accordingly amicability with regards to possession – contrasted with managing the proprietorship

.

Starting a Business Checklist

Starting a Business Checklist

For any new business owner, starting a business checklist should be a top priority.

Opportunities to launch a business, in many respects, have never been easier than today. Technology has advanced to a point where many necessary components can be addressed online, without the time-consuming and labor-intensive obligations of the past.

Nevertheless, if you want to launch a business, you may need to take certain key actions to tilt the odds of success in your favor. While great ideas for startups are unique to most individual entrepreneurs, a business checklist is often similar for everyone.

What are some must-have elements of any effective business strategy? Which processes should be initiated and completed? What other to-do action steps should be followed?

Here is a starter list of must-dos to include in your own business checklist:

Bring passion to your enterprise. A new business will probably consume most of your waking hours, so it’s important that you care deeply about your proposed product or service. This can get you through difficult times and keep you energized on a continual basis.

Do industry research. Before going further, it’s important to know that someone else hasn’t already preempted your great new idea. Fundamental market research may quickly indicate whether there’s a void in the marketplace that your new product or service idea can fill.

Address essential elements in your startup tool kit. Deborah Sweeney, CEO of MyCorporation, which provides leading online legal filing services for entrepreneurs and businesses, pinpoints crucial elements every would-be business owner should address:

Make sure your business is protected by forming a corporation or an LLC. A separate corporate entity helps to protect your personal assets from those of your business, partners, and investors. It also helps to maintain a separate corporate presence that protects you personally and limits your personal liability. This adds a level of credibility and professionalism. Finally, having a corporate structure lends itself to potential tax savings – especially with new business-friendly tax laws.
Ensure that you have bylaws or an operating agreement in place. Set forth the terms of your business, including money invested, owners, roles, and responsibilities. Having everything in writing from the outset is key. If all partners and investors know their roles and the revenue opportunities of profits and losses, it is much clearer when questions arise.
Protect your business’s intellectual property. Trademarks, copyrights, and patents can be a critical business asset. Make sure to protect your assets because they often involve a huge investment from the business owners, and therefore, should be adequately protected.
Business licenses may be a critical part of your business. Depending on the business type, different business licenses requirements may vary. Even if a business does not incorporate, most states and counties require a “DBA” or business license to designate the business is operating. It is important to be aware of these licenses and to make sure they are timely filed to avoid penalties.
“As the entrepreneur decides to move forward, it’s important to remember that a small business is a living and breathing entity,” Sweeney notes. “Things change. Businesses grow. You need to remain flexible as the business grows, but you don’t need to have all of the answers at the outset.”

How does a business plan fit in?
Your new venture requires a detailed plan that covers some of the above-mentioned components, but should also include your strategy to launch and maintain the new business. Other aspects of the plan may cover marketing and technology needs, a method for identifying your target audience, anticipated expenses, cash-flow scenarios, and hiring strategies.

Many plans include a financial forecast, where the business is likely to be within one year, three years, and five years. The Small Business Administration offers a free business plan tool, noting that a well-crafted plan “helps you to step back and think objectively about the key elements of your business venture and informs your decision-making on a regular basis.”

“The business plan is associated with how the business will be expected to run, but that will still be a moving, changing document,” Sweeney says. “A key component of a business plan is finance. Evaluate the key strategies for income and associated expenses. Make sure to continuously evaluate return on investment (ROI) because this part of the plan will change as you recognize that ROI is higher for some initiatives.”

“Things change. Businesses grow. You need to remain flexible as the business grows, but you don’t need to have all of the answers at the outset.”

Also, consider:

Marketing strategy: How do you anticipate going to market and growing your customer base?
Sales and promotions: Will your product or service be sold online, in stores, via referrals, or storefront?
Branding: Evaluate your brand name, logos, slogans, and the associated protection of the business from an intellectual property perspective.
Key employees and roles in the company: Define their roles and your expectations of these positions.
Key investors and advisors to your business: You may want to have someone to turn to for advice and guidance, perhaps in the form of an advisory board.
A market and competitive analysis: Look at who your target market is, what the competitors in the industry are doing, and how you differentiate.
“As a new business owner, you won’t have all of the answers,” Sweeney says, “but a strong start in these key areas will give you the base from which to grow and evolve.”

Anticipate the costs of your startup
Any startup launch checklist must include an advance plan for addressing the costs involved in getting that business off the ground (and maintaining it in the future).

“It’s very difficult to anticipate expenses with any business,” Sweeney says. “I believe the number one way to grow is to associate business costs with a particular return. When you evaluate where your expenses relate to that specific return, it can be very eye-opening for an entrepreneur.”

She offers this example:

If you invest in paid search, you may learn that your ROI is 1:1. For every dollar you spend on Google, you make $1. You may grow because you offer annuity (ongoing services), so you’re fine to be “revenue-neutral” on the initial customer acquisition.

On the other hand, you may learn that by hiring a sales person, you make 2:1 ROI. In this instance, having the salesperson leads to a higher ROI, so you may decide to double down and hire a second salesperson rather than invest more of your cash flow in online advertisements.

“Each of your costs likely has a return (or lack of return), so it’s not just important to know your costs, but also to know how your costs impact your return,” Sweeney says. “If your intent is to grow organically, spend carefully. Hire as you need based upon customer demand. Do not hire in anticipation of growth. Costs may also come in the form of unexpected expenses – consider your rent, insurance, employee expenses, benefits, marketing, advisors, etc.”

Here are some critical elements to factor into your planning:

Put together a realistic budget. It’s impossible to determine down to the last penny what your operating costs will be. But putting together an estimate helps you create a working budget and get a better grasp of where funds should be allocated and in what order. Nearly everything about a startup costs money. Your job is to establish a realistic budget that accounts for all these outgoing expenses. Typically, this involves planning your startup’s “burn rate” – the amount of money you’ll likely spend per month before making a profit becomes necessary. As a general rule of thumb, it’s a good idea to add 15-20 percent to your estimated burn rate in order to cover all the expenses you don’t foresee at this time. Additional potential expenses include renting retail space, interior or exterior renovations, funds to hire employees, and branding and marketing materials.
Start the search for funding. You’ll need financial resources to get your business off the ground. If you have funds in reserve, be sure to place them in an account that’s separate from your personal savings or checking account. Establishing a free business account at a bank or credit union generally requires no more than an initial deposit, filing paperwork, and proprietor licensing data.
It’s impossible to determine down to the last penny what your operating costs will be. But putting together an estimate helps you create a working budget and get a better grasp of where funds should be allocated and in what order.

Sweeney offers insights into other potential funding sources:

Family and friends: “Funds from these sources are often easiest to come by, but can lead to personal and family conflict if the parties don’t get out of it what they hope for. It’s important to have everything in writing and to make sure that all parties have a strong understanding of the investment and risk of return.”
Venture capitalists: “Venture capitalists may take an ownership interest in a successful, thriving startup (or one that presents unique revenue opportunities). Often, the money is significant, but there is also traditionally significant involvement of the investors. You may have to give up a big portion of your business to have VC funding.”
Bank or online business loan: “A bank or online business loan could be a great resource for funds, especially if you have strong credit. Your hope is to get a loan with low interest and strong terms of repayment. The better your credit, the stronger the loan potential is. You may also have to have a strong business plan to present to the bank so they can evaluate your potential for repayment.”
Organic funding: “Start selling your product or service with just you and one or two employees, and then grow the space, number of employees, and products as the revenue starts to flow in. Online funding sites like GoFundMe can be a great way to get initial capital. Some of the amount donated goes to the funding source (i.e., the site that is collecting the money), but the rest of the funds get your business going.”
Determine your startup’s legal status and tax structure
As noted above, you must be prepared to attend to all city, county, municipality, or state licensing requirements for your new business. Designating yourself as “sole proprietor” has both advantages and disadvantages, so consult a local attorney or tax professional for the best guidance on how to proceed.

Adhering to certain legalities (which can differ from state to state) is mandatory. Remember, everything in business from trademarks and intellectual property protection to contracts with vendors is legal in nature. This also includes obtaining the appropriate permits and licenses, as well as formally registering the name of your new business.

As for taxes, it’s important to interact with the Internal Revenue Service (IRS) in the proper manner. Here are some valuable tips:

Learn about tax responsibilities. As a new business owner, you have many tax responsibilities, including:

Filing your business’s annual income tax return;
Paying estimated taxes if you own a pass-through entity or for your C corporation;
Payroll tax responsibilities (figuring withholding, depositing payments, and filing employer tax returns); and
Submitting information returns. This may be necessary if you have independent contractors, maintain a qualified retirement plan, or have certain other benefit programs for your staff.
The IRS provides more information about filing and paying your business taxes.

Get a tax ID number. When you start a business, even if you have no employees, you usually need to obtain an employer identification number (EIN), which you can get online. You don’t need an accountant or attorney to do this. If you’re a sole proprietor or independent contractor, you can use your Social Security number and don’t need an EIN in most situations. However, it may be wise to obtain an EIN for identity theft protection purposes, and use it whenever your tax ID number is requested.

“If you are leveraging payroll to pay employees, it is critical to make sure you have your state ID accounts established,” Sweeney notes. “These may include state withholding IDs and state unemployment insurance IDs. Make sure you have established the appropriate accounts and ensured you are paying into the right holding accounts pursuant to your state laws.”

Depositing taxes. If you have a payroll or make estimated tax payments, you can do this electronically. There is no cost for using this service, and you can schedule your tax deposits in advance. Using EFTPS.gov doesn’t give the government access to your bank account; instead you authorize the bank to make withdrawals from your account to cover the tax deposits or payments you specify.

Transmitting W-2s to the Social Security Administration. You can submit copies of employees’ W-2s, along with an IRS transmittal form (Form W-3) to the Social Security Administration through its Business Services Online. You can even register by telephone to create a password.

Remitting information returns to the IRS. If you engage independent contractors, you may have to file annual information returns to inform the IRS about your payments to them. This can be done through the Filing Information Returns Electronically (FIRE) system.

Filing annual retirement plan returns. If you want or need to file electronically a form in the 5500 series (e.g., you maintain a 401(k) plan for you and your staff), it is done through the Department of Labor’s EFAST2. This is the portal to use even though you’re filing an IRS form.

Interacting with the IRS may seem intimidating to some new business owners, but as long as you’re in business, interaction is required. You can call upon valuable experts, as well as IRS guides, such as the Small Business Self-Employed Tax Center and an A-Z Index for Business.

Importance of business insurance
Some of the most common varieties of business insurance are commercial property, home-based business insurance, and general and/or product liability. Selecting the most appropriate insurance coverage depends on the type of product or service you intend to sell, as well as any planned need to bring on employees. You may also need to have workers’ compensation coverage.

“It’s important to consider insurance for your employees, for business interruption, and if you’re a professional, for your professional services,” Sweeney says. “Business insurance protects your personal assets and ensures that you’re protected in the event of business interruption, theft, or lawsuits. You may think you’re too small to get insurance, but often insurance is not as expensive when you are smaller. Insurance is often based on revenue and risk and the lower your revenue, often, the risk is less.”

Start Your Small Business: Everything You Need to Succeed as a Small Business Owner Right Now

Start Your Small Business: Everything You Need to Succeed as a Small Business Owner Right Now

 

Starting a small business is equal parts exciting and overwhelming, especially if this is your first venture. You may have a great idea that you want to bring to market or just an itch to create something of your own and you’re not sure what it is yet. This article can help you understand the necessities for getting your business up and running, as well as suggest some resources for more in-depth learning.

Find Your Right Small Business Idea

If you’re looking to start a business but don’t have a specific idea in mind, consider researching markets where small businesses are already faring well. It’s much easier for first-time business owners to start a business that fits into an existing market than it is to create a market for an existing business. So consider ideas that improve upon winning business models.

Business Idea Resources:

  • This article from Small Biz Ahead discusses the 10 best markets to start a business in right now.
  • While you’re at it, consider location and perhaps you’ll want to avoid one of these 10 terrible markets for businesses.
  • If you already have a business up and running, but are looking for ideas on how to improve it, check out this article on free insights for your business.
  • Learn how to test out business ideas in small doses before betting the farm with this episode of the Small Biz Ahead podcast.

Create Your Business Plan

First-time business owners often think of their business plan as a detailed roadmap that outlines every single step for their business’s success. In reality, a business plan should function as more like a compass. It provides direction and keeps you from veering too far off course. It’s a good idea to document your goals, strategies and resources, but an in-depth, detailed business plan may only necessary if you’re courting investors.

Business Plan Resources:

  • Get a comprehensive look at creating a business plan with this article from the Business Owner’s Playbook.
  • Learn what you need to do before you start writing your business plan.
  • Listen to Small Biz Ahead podcast hosts Gene Marks and Elizabeth Larkin discuss how much you need in a business plan.
  • Read about why your business plan is useless and how to make it better.
  • And here’s how to give your business plan a long shelf life.

Protect Your Small Business with the Right Insurance

The right business insurance will protect your venture from unforeseeable threats and help you maintain peace of mind without costing an arm and leg. The size and function of your business greatly determine the types of insurances you need. For example, a pizza shop most likely needs property insurance, workers compensation and commercial auto insurance. An e-commerce business may need data breach protection.

Resources for Protecting Your Business with the Right Insurance:

  • Get a simple overview of the most common business insurances that are available today with this article from the Business Owner’s Playbook.
  • Assess your current insurance coverage  to determine if your business is covered for the typical risks facing your industry.
  • No two businesses are alike; learn how to tailor insurance to your industry with this article from the Business Owner’s Playbook.

Manage Cash Flow and Fund Your Small Business

Eighty-two percent of businesses fail due to cash flow mismanagement. Whether you’re looking to get your business off the ground or keep operations running smoothly, you will need adequate funding and great cash flow management.

Cash Flow and Funding Resources:

  • Gene Marks and Elizabeth Larkin discuss options for raising capital in this episode of the SBA podcast.
  • Learn how to prepare your pitch for investors by listening to Shark Tank survivor Tim Barklage share his strategy on the SBA podcast.
  • Gain an in-depth knowledge of cash flow management with this comprehensive guide from the Business Owner’s Playbook.
  • Plug in your headphones and let Gene Marks and Elizabeth Larkin explain the difference between cash flow and profit in this episode of the Small Biz Ahead podcast.

Manage Your Accounting and Taxes

“The hardest thing in the world to understand is the income tax.” – Albert Einstein

Taxes are inevitable. In order to keep your business from running into any unfortunate surprises during tax season, or from suffering due to misplaced money, you need to manage your accounting and business taxes.

Accounting and Taxes Resources:

  • Get an overview of how and when you should manage your own finances, hire a bookkeeper or hire an accountant.
  • Learn some basics of business taxes with this comprehensive article from the Business Owner’s Playbook.

Pick Your Business Structure

“Every company has two organizational structures: The formal one is written on the charts; the other is the everyday relationship of the men and women in the organization.” – Harold S. Geneen

You’ll want to choose a business structure based on how your business will operate and what its needs will be. For example, if you plan to seek funding from investors, then you may want to consider forming a limited liability corporation (LLC). If your business is smaller and you have no employees, a sole proprietorship may be your best option.

Learn about different business structures and their pros and cons in this article from Business Owner’s Playbook.

Set Up Your Office

There’s a lot to consider when choosing an office for your business. You want to weigh the pros and cons of working from home versus renting/leasing space. You also want to consider how much space you need and whether you can share that space with others outside of your company.

This article from the Business Owner’s Playbook offers a great overview of things a business owner should know when selecting an office location.

Start an E-Commerce Website

An e-commerce website can function as an additional source of revenue for a brick-and-mortar store or as a standalone, online business. With a little bit of know-how, you could have an e-commerce website up and running within 24 hours. Best of all, your doors are open to sales 24/7.

Here’s some information on how to start an e-commerce website.

Take Your Business Online

If you think your business can survive without a website and social media presence, you’re probably wrong. A survey conducted by Verisign found that 77 percent of consumers believe a website makes a business appear more credible and 93 percent of consumers use the internet to do research before making a purchase. Even if you don’t sell goods online, you still need a website. The same study found 91 percent of consumers use the internet to look for local goods and services.

Resources for Taking Your Business Online:

  • Gain a comprehensive understanding of things you need to build a website for your business.
  • Listen to hosts Gene Marks and Elizabeth Larkin share valuable insights on business websites and social media presence in this episode of the Small Biz Ahead podcast.
  • Get an introduction to social media marketing with this article from the Business Owner’s Playbook.
  • Learn how to handle social media complaints about your business in this episode of the Small Biz Ahead podcast.

Hire Employees, Vendors and Contractors

Knowing when to hire an additional employee and how to choose the best candidate requires a great amount of research, skill and experience. Even if your business is a sole proprietorship, you may need to hire vendors and contractors. Though it sounds simple enough to hire someone who’ll produce profitable work, know that it’s not always that easy.  And it can be costly if you end up hiring the wrong person for the wrong job.

Resources for Hiring Employees, Vendors and Contractors:

  • Learn everything from writing job ads to conducting interviews and making a job offer with this article on how to hire your first employee.
  • Gene Marks and Elizabeth Larkin share their expert opinions on letting employees work remotely in this episode of the Small Biz Ahead podcast.
  • Cut down on overhead costs by learning how to create a virtual workforce with this article from the Business Owner’s Playbook.
  • You may not need employees for your small business, but you will definitely need advisors. Get familiar with the five different advisors you’ll need for your small business.
  • Learn how to master the art of managing a contingent workforce (freelancers, contractors, consultants, etc.) to increase productivity and efficiency with this article from Small Biz Ahead.
  • Hiring vendors can be a great way to keep costs low. Learn the best ways to manage vendors with this article from the Business Owner’s Playbook.

There will never be an absolute, definitive prescription for starting or running any business. There’s a lot of trial and error (more error than you’d expect) involved. You don’t need to be a master of accounting to get your web development business up and running. Nor do you need to be a prolific web developer to ensure your coffee shop/used bookstore business is a success. But to be a successful business owner, you’ll want to have at least a general understanding of all of the topics covered here.

Special thanks to Mike Kelly and The Hartford for “Content share”

Californians can file trademark and service mark applications for registration online

Secretary of State Alex Padilla announced that for the first time, Californians can file trademark and service mark applications for registration online through bizfile California, the agency’s online business filing and search portal.

 

“By offering our trademark and service mark application process online we’re making it quicker, easier and more convenient to do business in California,” said Secretary of State Alex Padilla. “Previously, business owners could only submit their applications by mail or in-person. Now, they can submit trademark or service mark applications in minutes from the convenience of their laptop, tablet or smartphone.”

 

The new trademark and service mark platform was designed and implemented in an unprecedented seven week period in collaboration with the Secretary of State’s office, the California Department of Technology and the ThinkSmart LLC Platform.

 

The online trademark and service mark platform is part of Secretary Padilla’s Digital Business Initiative to modernize and digitize the agency’s divisions, including the Business Programs Division. In 2017, The Secretary’s Digital Business Initiative was recognized by the Governor’s office of Business and Economic Development (GO-Biz) as a champion for “Breaking Barriers to Doing Business in California.” The Digital Business Initiative includes an online LLC and Corporation Statement of Information filing tool, 11 million searchable business records through California Business Search, an updated search engine for the state’s successor-in-interest claims, and a Starting a New Business resource page.

 

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