Deborah Sweeney | She Owns It

What Entrepreneurs Need to Know Before Selling a Business by @DeborahSweeney

September 15, 2020 by Deborah Sweeney Leave a Comment

by Deborah Sweeney | Featured Contributor

Thinking about selling your small business? Now may be the right time to contemplate selling — or at least considering an exit strategy.

Amid COVID-19, studies have shown that the majority of advisors see today’s market as a seller’s market for businesses valued between $2 to $5 million. Small businesses in essential industries, such as delivery and eCommerce, are also considered to be in high demand and may be ripe for a sale to interested buyers.

No matter how confident you are that it’s time to sell, the process of selling a business can still be very overwhelming. Here are some key considerations to keep in mind that can help make the process less stressful and rewarding.

Do you know how much your business is worth?

You may think you know the worth of your business, but rather than guesstimate it’s important that you first conduct a business evaluation. Get a realistic idea of what the company is worth from an objective and outside source.

A professional evaluation gives you the basis for gauging offers and determining which ones are viable and what you can expect from the sale. You may get an evaluation of your business from a number of sources including accountants, busines brokers, and investment banking firms.

Consider how prepared you are to sell your business.

Many entrepreneurs will sell their businesses for a variety of reasons. Some entrepreneurs may feel as though they were able to lead their business to great success and are ready to go out on top. Others may be anticipating serial entrepreneurship and plan to start another business after they sell this one.

Aside from mentally preparing to move on, it’s critical to prepare your financial paperwork. Your business should be in good shape to attract buyers with solid balance sheets and an understanding that the company may be run without you present.

Recognize that it takes time to sell a business.

Selling a company, regardless of how profitable it may be, does not happen overnight.

Typically, it takes about six to nine months to sell a business. For the purposes of planning, it’s best to think at least a year out. You’ll need to use this time to think strategically about all aspects of the business from whether or not the company is in good standing with the state to its intellectual property to communicating with your team as well as the buyer to make sure everything is in order.

Will you sell the business completely or keep a portion of the percentage?

When selling a business, entrepreneurs may choose to sell their entire company and liquidate 100% of their equity.

However, not all entrepreneurs choose this option. There is also the option of recapitalization, which changes a company’s capital structure. In this situation, the owner likely retains a minority share in the business’ interest — usually around 10 to 40%. This gives the existing owner of the business an incentive. They can sell a portion of the business and earn a bit of money. They receive the added investment, and a bit of freedom to enjoy more flexibility.

So, should you sell the entire company or keep that portion of the percentage? Ultimately, the answer has a lot to do with the ongoing viability of the business and how invested you, the entrepreneur, is in the growth of the business. Much of the decision will tie in with your plans for an exit strategy. In the event that you plan to completely move on, you may decide to fully sell the company. There may also be a scenario in which you sell a portion of the business and have interested investors or buyers with management expertise. These may be possible competencies that your business does not yet have that will allow it to grow in the long run. Many entrepreneurs may see that as a fantastic reason to stay partially invested in the ownership of the business. They are able to maintain some ownership interest and remain involved in the business for the opportunity to see the business grow and thrive.

Are you incorporated as an LLC or corporation?

What does a business formation have to do with selling a business? Quite a bit more than you may realize! As mentioned earlier, it will be critical for buyers to examine if your business is in good standing with its state of incorporation. You’ll need to make sure your corporate documents are in order well before discussing whether you’ll sell the business.

A few due diligence essentials to take care of include the following:

Have you incorporated as a corporation or formed a limited liability company (LLC)? Incorporating a business essentially allows the business to become separate from its owner. Buyers will be more hesitant to buy a business for sale that is incorporated as a sole proprietorship. This entity does not provide limited liability protection and may be more of a risk than that of an incorporated business. They are seeking out entrepreneurs that have incorporated businesses that are all set up with a structure in place.
Does the business have its proper state IDs and business licenses? Depending on the type of business you run, it is critical that you have the proper licenses to run the company as directed by your city, state, and industry laws. Buyers will want to know what kinds of licenses you have in place so they make sure that these business licenses are all set up. If you need to provide additional information, like certificates or doing business as names (DBAs), you may need to show these as well. Create a folder to store all of these documents both physically and in a cloud storage system.
Did you file for any trademarks and/or copyrights? If you have filed for federal registration of these marks with the Secretary of State, make sure you have documentation regarding this intellectual property available for review. In the event that you needed to register a patent, this information should be organized and available to show potential buyers as well.

Are you ready to draft a letter of intent?

A letter of intent is often abbreviated as LOI. It is a document that outlines between the buyer and seller the key terms and conditions of the sale in a legal agreement.

Once the business is in good standing, you feel confident it is successful and ready to sell, and you have agreed on general purchase prices, you will then put these items into your letter of intent. Additionally, your letter of intent must be able to include information about assets sold to the buyer as well as assets the seller will keep and terms of the seller’s noncompete agreements.

A well-drafted LOI will help buyers get the sales documents right on the first draft to prevent from being subject to further negotiations. Without the LOI, you may end up negotiating the business deal and legal language at the same time. This requires multiple drafts, more time and money spent on legal fees, and may frustrate all legal owners involved in the process. By getting the agreements settled early on, you’ll be ready to be off and rolling with an assigned LOI that allows the business to be officially in a motive sale.

Deborah Sweeney

Deborah Sweeney is the CEO of MyCorporation.com which provides online legal filing services for entrepreneurs and businesses, startup bundles that include corporation and LLC formation, registered agent services, DBAs, and trademark and copyright filing services. You can find MyCorporation on Twitter at @MyCorporation.

www.mycorporation.com

3 Ways Small Businesses Can Provide Comfort to Customers During COVID-19 by @DeborahSweeney

May 13, 2020 by Deborah Sweeney Leave a Comment

Photo by Gustavo Fring from Pexels

by Deborah Sweeney | Featured Contributor

In April, I was able to catch a Salesforce webinar on stories of resilience that was co-hosted by Mark Cuban. During the webinar, a listener wrote in to ask his advice for marketing and messaging during this time. His response was simple and transparent: at this specific moment, small businesses need to connect more than sell.

Behind every sale a small business makes is a customer. Right now, that customer is scared or at least a bit worried about something during COVID-19. Small businesses can provide comfort to their customers that go beyond making a purchase from their storefront. Here are a few ways you can get begin spreading kindness as quickly as today.

Add a handwritten note to orders.

Small business owners are currently working from home and have adjusted their daily routines accordingly to safety/shelter in place structure. As we take the time to make healthy lunches and add meditation to our schedules, how about setting aside 20 minutes to hand write thank you notes?

Put aside 20 minutes daily (if not more) to write physical thank you notes to customers. Not sure what to write? Keep it simple. Write a few sentences thanking them for shopping with you. Talk about how much you love to use the product they purchased or where the inspiration to create it came from. If you’re artistic, add an illustration to the note.

Encourage shoppers to stay connected by including your contact information, including social media handles, website link, and where they may sign up to receive a company newsletter, at the bottom of the card. Customers will be surprised and delighted to see a thoughtful thank you note included with their order.

Engage on social media.

Most individuals spend roughly 90 minutes on social media apps. Our amount of screen time has likely increased significantly during COVID-19. As customers and potential customers scroll through their Instagram and Twitter dashboards, your business has plenty of opportunities at hand for how it may engage and connect on social.

Repost content. Share the love by spreading it on your social accounts. Fill Instagram Stories with image reposts from customers excited to receive their new products. Retweet tweets from customers about positive interactions with your business.
Respond to comments. Whether these comments are made as a private message or publicly to your social media page, write back in a timely manner to thank customers for their kind words or address any potential issues or concerns.
Follow customers. Depending on the platform, follow your loyal customers back. They’ll be thrilled to see their favorite small business follows them!

Take a phone call together.

Many entrepreneurs, including business consultants, PR executives, and real estate professionals, are accustomed to taking calls and meetings with clients. We may not be able to physically meet with customers during this time, but that doesn’t mean we are unable to connect over the phone. Pick up the phone and call clients with whom you have developed a rapport together.

What’s a good icebreaker to open with for this kind of call? Why not start by asking, “How are you doing?” It’s an ordinary question that has an extraordinary impact. Clients, established and brand new alike, are ready to talk. They want to highlight professional and personal aspects of life that are going well, ask for help where they need it, and update you with news on major changes or trends in and out of the industry.

Use this time to have a heartfelt, open conversation. This is one of the greatest opportunities you have to connect on a transparent level. Your kindness and understanding will pay back incredible dividends into the business. Make the time for a long, candid chat. It will pay off in the long term — and is absolutely worth it.

Deborah Sweeney

www.mycorporation.com

5 Women-Owned Small Businesses Pivoting to Provide COVID-19 Relief

April 14, 2020 by Deborah Sweeney Leave a Comment

by Deborah Sweeney | Featured Contributor

It’s difficult to know for certain when this — the COVID-19 pandemic — too shall pass. Many small business owners are pivoting their products and services during this unprecedented time. The decision to pivot is doing more than assisting those in need with necessary supplies and relief. It’s helping small businesses stay in operations. Pivots also allow owners to take a nimble approach and create even more valuable offerings for their company business models.

Feeling inspired to make a pivot, but not sure which direction to move towards or which would be best for your startup? Take a cue from the pivots that these female entrepreneurs are making with their small businesses.

Claire Coder | Aunt Flow

Pivot: Menstrual products to face masks.

Claire Coder is the founder of Aunt Flow, a startup that prides itself on the ability to ensure everyone has access to menstrual products. Aunt Flow sells dispensers and supplies to help stock organizations in the United States, including workplaces and university campuses, with menstruation products. However, the company faced a major hurdle when these organizations closed due to stay at home orders across the country.

In a time of crisis, Coder played to Aunt Flow’s strengths. Aunt Flow is a Class II medical device supplier and a Food and Drug Administration registered importer. The company was able to switch from making menstrual products to manufacturing three-layer disposable masks. The company manufactures pads in Shanghai, where they quickly made the pivot to mask production. Aunt Flow also partnered with manufacturing company Atrium Corp. for quality assurance purposes.

Currently, face masks are available to order on Aunt Flow’s website. They will begin shipping out from Ohio on April 20th.

Merrilee Kick | Buzzballz

Pivot: Alcoholic spirits to hand sanitizer.

When the World Health Organization (WHO) and the Centers for Disease Control (CDC) came out with hand sanitizer formulation and waived the necessity to have a permit in order to manufacture it, Merrilee Kick seized the moment to pivot her business.

Kick is the president of Texas-based alcoholic beverage company Buzzballz. Her company had the necessary raw materials needed to make hand sanitizer and was vertically integrated with the proper equipment. Kick was able to quickly find 100% glycerin to add to the alcohol mix. This allowed her to make the company’s first 100-gallon batch of hand sanitizer.

Since creating that first batch, Kick has been able to donate to three local hospitals in critical need. Hand sanitizer batches have also been sent to pathology labs, firefighters and police officers, supermarkets, the Army and the Air Force, and airlines including Spirit and American Airlines. Buzzballz, and its happily employed team, continue to make and provide COVID-19 first responders with necessary hand sanitizer.

Chavonne Hodges | GrillzandGranola

Pivot: In-person fitness classes to Workout From Home programs.

Many small business owners with brick and mortar storefront locations have had to get creative to make a successful pivot for their business. GrillzandGranola launched in June 2016. Chavonne Hodges, who started going to the gym to feel better as she went through a divorce, noticed a lack of diversity in her gym. She became a certified group fitness instructor, created TrapAerobics, and founded the company.

Due to COVID-19, GrillzandGranola has had to cancel its in-person classes and events. Online classes, however, have not been cancelled. GrillzandGranola now offers a Workout From Home program that allows students to work on their post-quarantine bodies and boost their energy and moods with 20-minute workout sessions. Live workouts, including the signature TrapAerobics class, are accessible to one and all via smartphone, tablet, or desktop computer. They’re also inexpensive, with 20-minute classes priced at $5 each and no equipment necessary in order to work out.

Mollie Eliasof | Mollie Elisaof Therapy

Pivot: In-person therapy to tele-therapy.

Many individuals would like to see a therapist for mental health support. However, there are a few obstacles in the way as we continue to stay at home. Those on a budget may struggle to figure out how to pay for therapy. Remote workers with families and/or children may not have enough quiet time to set aside to keep an appointment.

Mollie Eliasof, CEO of Mollie Eliasof Therapy, has started providing virtual tele-therapy resources to clients in need. She shares free information on her social media platforms, like Instagram, and has been creating therapy content on publishing platforms including Forbes so readers may learn more by listening in and reading.

Wei-Shin Lai | AcousticSheep

Pivot: Inventing SleepPhones® to help people go to sleep.

Dr. Wei-Shin Lai’s pivot isn’t exactly a pivot as much as it is an innovative invention. The idea for SleepPhones® came after Lai, CEO of AcousticSheep, struggled to get back to sleep after taking patient calls in the middle of the night. The bulkiness of headphones and uncomfortable feeling of earbuds inspired Lai and her husband to invent their own headphones. SleepPhones® are headphones specifically designed for sleeping with a soft headband contained thin, removable speakers.

As more people work from home and struggle with anxiety and stress, a good night’s sleep matters now more than ever. This product enhances AccousticSheep’s existing offerings, including their specialized running headphones called RunPhones, and provides individuals everywhere with one-of-a-kind headband headphones that make it easier to drift into a deep sleep.

Deborah Sweeney

www.mycorporation.com

File This Paperwork to Prep Small Businesses for 2020 by @DeborahSweeney

November 13, 2019 by Deborah Sweeney 1 Comment

by Deborah Sweeney | Featured Contributor

Entrepreneurs are on the cusp of more than a new year. We’re approaching a whole new decade! How exciting is that? As small business owners say goodbye to 2019, it’s crucial that they enter the next decade in compliance. Forgetting to file or update outstanding documents could result in their business falling into bad standing with the state. Bad standing may result in penalty fees or worse, involuntary dissolution of the business.

However, bad standing doesn’t impact businesses that routinely keep up with corporate maintenance. File these three legal documents to stay in compliance and fully prepare your business to enter a fresh, new decade.

1. Update corporate minutes and bylaws.

Is your business incorporated as a corporation? If so, you may be familiar with corporate minutes and bylaws.

Minutes are notes that are taken during corporate meetings. Taking minutes ensures that the meeting’s purpose has been recorded and details important information. Should anyone need to go back and review their minutes, they’ll be able to easily find and reference these written records. Bylaws, on the other hand, are the written rules and regulations for a corporation. A corporation’s bylaws outline rules for adding and removing directors, the rights and responsibilities of owners, and guidelines for conducting and organizing meetings.

Updating corporate minutes and bylaws is a must before the year ends. Doing this does more than help keep your corporation in compliance. Staying on top of these details contributes to the overall success of the business. Thanks to well-documented minutes, team members have a thorough understanding of what they need to work on next. Both documents also work as tools to avoid conflict. If anyone has a question, they may refer to the corporate minutes and bylaws for clarity. Ultimately, updating corporate minutes and bylaws may lead to an increase in productivity. This added boost aids to your bottom line, especially if you’re starting 2020 with several New Year’s business resolutions!

2. File annual reports.

This is applicable to businesses that have filed as a corporation or LLC. Annual reports are filed yearly with your local Secretary of State office. An annual report documents changes and keeps the state updated on your activities. Some changes may include the names and addresses of members in the business, the business address, name and/or address of your registered agent, and changes in business activities.

Filing an annual report is a fairly straightforward process. You may already be used to doing it, if you have been in business for some time. Before you file, check in with your local Secretary of State for the official filing deadline. These vary on a state to state basis. Some vary depending on your entity formation. File the annual report by its respective deadline and pay the filing fee to avoid delinquent penalties. Remember to also note the changes in your bylaws or operating agreement for your respective corporation or LLC, too!

3. Complete a delayed filing application.

Do you want to start a business this year? Consider completing a delayed filing application. A delayed filing allows you to delay the company’s effective date of incorporation.

Why would you want a delayed filing? Don’t you feel ready to incorporate now? There are a few benefits associated with delayed filings. If you incorporate in the final two months of the year, you will need to pay any additional fees associated with the business. You are also required to report and pay taxes with the IRS since the business has technically been in business for the 2019 calendar year. A delayed filing allows you to not just save money. Filing this paperwork in advance creates a more predictable start date for the business. While the state works on its processing and turnaround times, you may use this time to better prepare your business for its grand opening in the new year — and decade!

Deborah Sweeney is the CEO of MyCorporation.com which provides online legal filing services for entrepreneurs and businesses, startup bundles that include corporation and LLC formation, registered agent services, DBAs, and trademark and copyright filing services. You can find MyCorporation on Twitter at @MyCorporation.

Deborah Sweeney

www.mycorporation.com

National Women’s Small Business Month: 3 Ways To Be a Better Leader by @DeborahSweeney

October 4, 2019 by Deborah Sweeney Leave a Comment

by Deborah Sweeney | Featured Contributor

Did you know that there are more than 11 million woman-owned businesses in the United States? October is National Women’s Small Business Month, and in celebration the U.S. Small Business Administration (SBA) created a new infographic showing the impact female entrepreneurs have in business.

According to the infographic, these 11.3 million woman-owned businesses collectively generate $1.6 trillion in annual revenues and support nearly 9 million jobs. The best news is that woman-owned companies continue to grow. In fact, 1,071 woman-owned businesses are started every day.

As more women start businesses, they are stepping into entrepreneurial roles. Becoming a business owner or CEO automatically positions you as a leader. The general rule of thumb is to lead by example. Essentially, this means others will mirror your actions and behavior in the workplace. People take notice of hard working, positive leaders which is (hopefully!) the type of leader most business owners aspire to be.

That being said, women business owners must continually finesse their leadership skills with all stakeholders. Over time, you may discover that evolving your leadership style is ultimately key for the growth of your business. Let’s take a look at the small improvements you can make today that will make a big impact on your startup’s future.

1. Be present and observant.

Our office is on an open floor layout plan. Everyone sits out together on the same floor, grouped in desk “pods” of three. I also sit out on the floor with my team. I prefer it over being in an office for a few reasons. Sitting out on the floor shows that I am available and physically present to the team. If anyone has a question, I’m easy to reach (literally steps away) with an answer. Being present also allows me to be observant. Granted, I’m not whipping out a pair of binoculars to examine who really works the hardest or anything like that. I do, however, have a good understanding of what my team is up to and how they interact with one another. It’s all thanks to the vantage point of being out on the floor with everyone.

Look for ways to be present and observant of what’s happening at your business. Move out to the floor with your team, ask to be BCC’d on specific emails, and note how team members find ways to take initiative and contribute. If you practice this behavior every day, you’ll always be in the loop. You’ll continually learn more about the company and its team and be a key part of the growth conversation.

2. Encourage feedback.

This is a tough leadership skill to practice regularly because feedback, whether it comes from customers or employees, isn’t always positive. Negative feedback can sometimes feel like an “Ouch!” moment, especially for small businesses. You may be convinced you have been doing everything right only to find out that not everyone agrees.

Are you ready to receive feedback? The best advice I have for accepting feedback is to leave your ego out of it. It’s not personal, it’s business. Your business needs feedback of all kinds to make changes that will keep it growing and thriving. Ask for feedback and listen to what is said, positive and negative items alike. Once you have discovered a common thread of issues or successes, work on strategies that can improve the company’s overall ROI. Do more of what has been proven to work for you, and come up with solutions to fix what flops. Overall, the impact of feedback is about more than encouraging communication. It’s showing that you are listening to what everyone has to say. Everyone wants to feel like they have been heard, and it is exciting to see a business make changes based on how you spoke up.

3. Keep yourself on track.

Here are a few basic aspects of your business you will continually revise and revamp as time progresses:

Business plan. If you haven’t met certain goals that you set months ago, sync up your timeline so that you’re able to get back on track towards reaching them.
Mission statement. Is everything your business does still aligned with its purpose? You may revise the mission statement if there has been significant change or find ways to get back to your roots.
Company culture. As you welcome new generations and talent into the workplace, it’s important to keep reexamining your existing company culture. Focus on how you can continue to foster collaboration and inclusivity across all levels of the business.

Finally, don’t forget about yourself. Many leaders fall into a trap where work/life balance is prioritized late in the game. An effective leader is not one that is constantly exhausted or burned out. Know when to take a break. Find and practice self-care methods that allow you to recharge and ensure you’re at your most productive every day.

Deborah Sweeney

www.mycorporation.com

Why Does My Business Need State Unemployment Insurance? by @DeborahSweeney

July 26, 2019 by Deborah Sweeney 1 Comment

by Deborah Sweeney | Featured Contributor

Small businesses have no shortage of items to check off their initial to-do list. The journey begins once they have incorporated or formed an LLC. Then, they must look into registering trademarks, obtaining employer identification numbers (EINs), and getting relevant business licenses. Filing for state unemployment insurance might be a little further down that list, but that doesn’t mean small businesses should put off obtaining it.

However, if you don’t understand why businesses needs state unemployment insurance you might be less inclined to prioritize its filing. Let’s take a closer look at how SUI aids to small business growth.

What Is State Unemployment Insurance (SUI)?

Do you plan to hire employees to work for your business? Have you already hired employees at your profitable startup? Then you’ll need to file for state unemployment insurance, ASAP.

State unemployment insurance (often abbreviated as SUI) is an employer-funded tax program. SUI works to protect workers that find themselves involuntarily employed. Some examples of involuntary employment include the following scenarios:

Being laid off.
Being fired for reasons other than misconduct.
Being let go from a position due to health or personal problems.

Generally, the worker is at no fault for this type of employment. As the worker looks for new jobs, SUI provides them with short-term benefits through unemployment compensation.

Who Pays For Unemployment Insurance?

Earlier, I mentioned profitable businesses that plan to hire or have hired employees need to file for SUI withholding. Employers that have paid an employee more than $300 in wages are responsible for paying their state unemployment insurance.

It’s also not possible to avoid making these payments. Employers must submit their tax reports or tax and wage reports on a quarterly basis. What if your business has no paid employees during that quarter? You’re still required to submit the documents, and pay unemployment taxes on the employee’s state wages.

Do Self-Employed Entrepreneurs Need SUI?

Good question! Self-employed workers that have incorporated as a corporation or formed an LLC may pay themselves as an employee of the business. Others, like sole proprietors, may consider purchasing unemployment insurance as an additional safety net.

It’s recommended that you check in with your local Secretary of State before making any snap decisions. You can ask questions and learn more about the different laws related to the program.

How Much Will This Cost?

Paying for state unemployment insurance is not a one-size-fits-all situation across every state. SUI is run on a hybrid state-federal system where rates and maximum taxable wages are subject to change yearly. What employers pay in SUI withholding this year may not be the exact same as it was last year.

However, there is generally a state maximum wage up to which employers pay unemployment insurance. While they’ll report the full amount the employee made in their tax and wage reports, they will not need to exceed payments past that mark.

Because rates do fluctuate each year, it may be difficult to calculate rates for unemployment insurance. If you find this to be the case with your business, check in with the state for more information on their rate calculation process.

Should You Do SUI Withholding Yourself?

It is possible that entrepreneurs can maintain their own SUI withholding. More often than not, however, they tend to utilize the assistance of a third party filing service. They may choose this option based on the following reasons:

Maintaining SUI administration is a big responsibility. If you fail to maintain paperwork or respond to unemployment claims on time, your business could face expensive penalties.
SUI withholding is a time consuming process to keep up with in addition to day-to-day responsibilities.
Businesses that have frequent unemployment claims filed and associated with their companies face an increased tax rate. This could make for more complicated paperwork — and even more time and energy spent on it.

Luckily, there are plenty of professionals that can assist entrepreneurs with SUI filing services. Best of all, when you work with a professional you maintain a bit of peace of mind. Your business has not fallen out of compliance, and is on top of it when it comes to maintaining unemployment insurance.

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Deborah Sweeney – Legal Expert, CEO, MyCorporation.com – Calabasas, CA

As CEO of MyCorporation Business Services, Inc., Deborah Sweeney is an advocate for protecting personal and business assets for business owners and entrepreneurs. With her experience in the fields of corporate and intellectual property law, Deborah has evolved from lawyer to business owner. She has extensive experience in the start-up and entrepreneurial industry as she has been involved in the formation of hundreds of thousands of businesses for MyCorporation.com’s customers.

Ms. Sweeney received her JD & MBA degrees from Pepperdine University. She is active in the community and loves working with students and aspiring entrepreneurs. She serves on the Board of Regents at California Lutheran University and is a founding member of Partners of Pepperdine. Deborah has served as an adjunct professor at the University of West Los Angeles and San Fernando School of Law in the areas of corporate and intellectual property law. Ms. Sweeney is also well-recognized for her written work online as a contributing writer with top business and entrepreneurial blogging sites. She is a regular contributor on Forbes, American Express, Social Media Today, and BlogHer among many others.

In her ‘free’ time, Deborah enjoys spending time with her husband and two sons, Benjamin (8) and Christopher (6). Deborah believes in the importance of family and credits the entrepreneurial business model for giving her the flexibility to enjoy both a career and motherhood. Follow her on Twitter @deborahsweeney and @mycorporation.

Deborah Sweeney

www.mycorporation.com

Angel Investors In America: 3 Facts Entrepreneurs Should Know About These Financers by @DeborahSweeney

December 6, 2018 by Deborah Sweeney Leave a Comment

by Deborah Sweeney | Featured Contributor

You may already know the definition of an angel investor. This is an individual who invests in a startup using a portion of their existing finances. Chances are you may also be familiar with an angel investor’s involvement with a business, too. Most investors, once they have provided a startup with funding, require a stake in the company in exchange. Typically, this stake translates to shares or an equity position.

What you may not realize — or even think about — are the angel investors themselves. Who are these people? According to the Angel Capital Association’s initiative The American Angel Campaign, angel investors invest an estimated $25 Billion in 71,000 startup deals every year. Yet we know very little about these existing angels, or emerging angels. Luckily, research has been conducted and provided through The American Angel Campaign. Their first in-depth report explores what it means to be an angel investor in the United States. Let’s take a look at some of its key findings.

30% of new angels are women.

It’s not exactly a shock to find out that the vast majority of angel investors are men. More women, however, are taking on investor roles. Today, 22.1% of angels are female. 30% of new angels are also women.

While this number may be small for now, it is mighty. Angel investors are more diverse than venture capitalists where studies have shown only 9% of decision-makers at VCs are women. Furthermore, 38% of women entrepreneurs that raised outside capital have specifically wanted to work with women investors. It’s not likely that female angel investors will explode in expansion overnight, but it is likely that as time progresses more women will assume this role and invest in businesses.

Angels are educated, and tend to come from entrepreneurial backgrounds.

Naturally, most entrepreneurs reach out to angel investors for financing purposes. It also helps that the angel has an entrepreneurial background — or at least an understanding of business. 72.8% of the angel investors surveyed in report revealed they hold more than a Bachelor’s Degree. 51% have achieved a Master’s or MBA. At a whopping 57%, business is also stated to be their primary area of study.

Beyond school, the vast majority of angels have also held prominent leadership roles. The five most common careers included CEO of a startup (55%), for-profit company executive (55%), consultant (48%), for-profit company board member (46%), and middle management roles (38%).

There is a lovely line in the report that the angels surveyed are, essentially, “founders funding founders.” They might hail from various industries, but they understand the fundamentals of business and have held leadership roles. This makes them all the more valuable to work alongside bright-eyed startup business owners. Over time, they may even be able to build up a mentor-mentee relationship with their investor. For now, startups have the peace of mind in knowing they are working with accomplished individuals.

Many angels do not live in major cities.

We often assume that in order to get an angel investor’s attention, one needs to live or have a business in New York or California. However, 63% of angels surveyed in the study don’t live in New York City, San Francisco, or Boston. The greatest percentage of angel investors, 16.2% surveyed, reside in one of the Great Lakes states. These include Illinois, Wisconsin, Indiana, Ohio, and Michigan, as noted in their infographic.

Location may play a role in the size of checks written, too. The report reveals that angels outside of New York, California, and New England actually write larger checks compared to angels residing in these states. The median size check for New York, California, and New England is $32,432. Other geographic areas enjoy a bit of a bump — $36,920 — with their checks.

What does this mean for entrepreneurs? The report suggests that it may be beneficial to startups to seek funding beyond states traditionally associated with angel investments. However, it also states that the median check size is $25,000 across the United States. Angel investors, unlike venture capitalists, cannot invest millions into a small business. It’s important that you determine your financing needs and thoroughly understand where the money will go before approaching an angel investor. If you know you need more than what they can provide, a venture capitalist, or perhaps even a small business loan, may be a better fit.

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Deborah Sweeney – Legal Expert, CEO, MyCorporation.com – Calabasas, CA

Deborah Sweeney

www.mycorporation.com

What “The Four Agreements” Can Teach Entrepreneurs About Running a Business by @DeborahSweeney

July 6, 2018 by Deborah Sweeney 1 Comment

by Deborah Sweeney | Featured Contributor

What book would you make required reading for everyone on Earth? That’s the question posed by the July/August 2018 issue of The Atlantic, which drew on answers from a wide variety of sources including literary critics, film directors, and published authors. One author, Imbolo Mbue, recommended “The Four Agreements” by Don Miguel Ruiz.

Published in 1997, Ruiz drew upon the personal conduct codes learned from his Toltec ancestors in his book that serves as a practical guide to personal freedom. There are four specific agreements that, once followed, allow us to obtain personal freedom from beliefs we make with ourselves. These agreements can resonate with anyone reading this book, but I’d like to think it would hit home for entrepreneurs especially and provide a little extra insight into how to run a small business.

1. “Be impeccable with your word.”

More often than not we are messy, not impeccable, with our words. Entrepreneurs don’t always have the luxury of treating every word with care. They must be responsive to emails, text messages, and phone calls, and meetings and attend to the needs of everyone surrounding them from employees to customers at all times. Sometimes words are too much and we are left with only consonants — replying to an employee text with “K.”

Entrepreneurs are always encouraged to be the best version of their selves and bring their A game to their small business, so why not push to be better with our words? Whether spoken aloud or written down, the key is to pause and think before you express anything. By being impeccable with your word, which should be optimistic and thoughtful, you are able to create a domino effect where your words are able to positively impact others.

2. “Don’t take anything personally.”

This is a difficult agreement to follow because everyone, entrepreneur or not, has had a moment in their life where they have taken an insult (whether direct or indirect) too personally. Maybe someone tweeted a rude comment to the company Twitter account, a customer complaint was posted on Yelp, or you overheard someone gossiping about you.

However, Ruiz argues that no matter what happens around you or seems to be about you, it really has nothing to do with you. By taking something personally, Ruiz says, we are superimposing our worlds onto others and assuming that everyone else knows what’s happening in our world. The reality is that they don’t. Nobody does! It’s hard to do, but when entrepreneurs don’t take things personally we are unable to become prey to predatory thoughts that want us to become vulnerable. We learn to trust ourselves instead and that trust developed within allows us to go the extra mile forward.

3. “Don’t make assumptions.”

When has making an assumption been a good thing for anyone? The trouble with assumptions, as Ruiz points out, is that we think they are the truth. Rather than ask for somebody to better clarify it for us, we just assume that it’s true because if someone says it is then it must be… right? Rather than make an assumption about anything, entrepreneurs should go straight to the source and clarify the answer from the beginning. The sooner this is done, the better, to avoid any confusion later on down the line.

4. “Always do your best.”

One of the most fascinating aspects to “doing our best” that Ruiz expresses is that it changes from moment to moment. Entrepreneurs tend to look at what they did when they first started their business and often wish they could go back. They might have done things a little bit better, if they knew what they know now.

Or would things really have been done “better” in the past, if you knew what you do now? Wouldn’t going back and redoing things to be perfect mean that we missed out on opportunities for trial and error? To make mistakes, take risks, and learn from those things that did not go according to plan? Truthfully speaking, sometimes all we have this is moment and our existing circumstances to work with in order to do our best. If we do great work in the here and now, we can be content with knowing later on that we did do well with what we had and where we were in our entrepreneurial journey.

Deborah Sweeney

www.mycorporation.com

How to Properly Hire Your First Employee by @DeborahSweeney

June 8, 2018 by Deborah Sweeney Leave a Comment

by Deborah Sweeney | Featured Contributor

The United States economy is currently enjoying “a hiring spree,” according to a recent report from The Washington Post. 223,000 jobs were added in May 2018, allowing the unemployment rate to fall to 3.8 percent which is the lowest it has been since 2000.

As more jobs continue to be added and businesses make the decision to bring on full-time employees, entrepreneurs that have never hired before may be curious about the legal requirements necessary for hiring new team members. If you’re planning to hire your first employee, here’s a look at the documents and records you’ll need to ensure a smooth — and compliant — process.

1. File for an Employer Identification Number.

An Employer Identification Number, or EIN, is a federal tax ID issued by the IRS to uniquely identify employer tax accounts. If your business wants to hire employees, you’ll need to file for an EIN first. Outside of hiring employees, you’ll also need to file for an EIN if you plan to open a business bank account, change your organization type, or establish a credit profile.

2. File Form I-9.

According to the U.S. Citizenship and Immigration Services, Form I-9 is used to verify the identity and employment authorization of your employee’s eligibility to work in the United States. U.S. employers are required to complete this form, along with employees (including citizens and noncitizens), for each hired individual. Once the form has been completed, employers must keep it on file for each person on their payroll who was required to complete it. It is not to be filed with the U.S. Citizenship and Immigration Services (USCIS).

3. Begin withholding taxes.

Once you, the employer, have decided to hire an employee with the intention of paying them, you are required by the IRS to withhold their income, Social Security, and Medicare taxes. New employees must complete and return to their employer Form W-4 Employee’s Withholding Allowance Certificate in order to have federal income taxes withheld. Form W-2 withholds federal Social Security and Medicare taxes and is completed by the employer. There may be additional state forms to complete as well, which may differ depending on your state’s tax regulations. During this time, you may consider whether you will administer payroll in-house or by using an external service.

4. Report new hires to the state.

Once an employer has hired a new employee, they must report that information to the state. Each state will vary in their reporting requirements, but don’t worry — it’s not meant to be an intimidating process.

Let’s use the state of California where my business is an employer, for example. If I hired any new employees who work in California, I would need to report that information to the New Employee Registry within 20 days of their start-of-work date. I can send the report electronically or through the mail. The only situation where I would not need to submit a report is if I did not hire any new employees.

5. Create compensation plans and obtain workers’ compensation insurance.

There are several compensation plans every business will need to create for its team. Let’s take a moment to explore the required ones.

Workers’ compensation insurance is required in the event that an employee suffers an injury or unforeseen circumstance on the job. Employers can obtain this insurance through their state’s workers’ compensation program or through a third party provider.
Disability insurance, which is required in California, Hawaii, New Jersey, New York, Rhode Island, and Puerto Rico.
You may register for unemployment insurance with your state workforce agency.
Leave benefits, outside of the Family and Medical Leave Act (FMLA), may be optional, but are worth discussing additional options with your employees.

For brick and mortar storefronts or offices, remember that you will be required to post OSHA workplace posters in a conspicuous place where all workers are able to see it. If you don’t already have one, you may order a print copy online or on the phone or download it from the OSHA website.

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Deborah Sweeney – Legal Expert, CEO, MyCorporation.com – Calabasas, CA

As CEO of MyCorporation Business Services, Inc. (MyCorporation.com), Deborah Sweeney is an advocate for protecting personal and business assets for business owners and entrepreneurs. With her experience in the fields of corporate and intellectual property law, Deborah has evolved from lawyer to business owner. She has extensive experience in the start-up and entrepreneurial industry as she has been involved in the formation of hundreds of thousands of businesses for MyCorporation.com’s customers.

Deborah Sweeney

www.mycorporation.com

Self-Employed or in the Gig Economy? Why the Difference Matters for Taxes by @DeborahSweeney

March 20, 2018 by Deborah Sweeney Leave a Comment

by Deborah Sweeney | Featured Contributor

Unless you happen to fall into one of the two categories, you may not know the difference between self-employed professionals and gig economy workers. According to the Second Annual Self-Employment Report released by accounting software company FreshBooks, these two groups are often categorized as a single entity despite their differences. Self-employed professionals are defined as having a primary income that comes from independent, client based work. Members of the gig economy, on the other hand, work side gigs such as rideshare driving or freelance writing in addition to maintaining a traditional full-time job. Their primary source of income is the paycheck from their full-time position, with side hustles bringing in a little extra money.

With 27 million Americans estimated to exit traditional employment for self-employment by 2020, defining the difference between the two groups has become crucial for tax purposes. As you work on filing tax returns, here are the key areas for both self-employed professionals and gig economy workers to keep in mind.

Make sure you have been properly classified

Both self-employed and gig economy professionals must be properly classified for the services that they provided. The IRS states that business owners must correctly determine if these individuals are employees or independent contractors (AKA self-employed).

Self-employed individuals are in business for their own self and therefore do not have businesses that withhold or pay their taxes. Businesses that work with gig economy professionals use common law rules to determine if these workers are employees or independent contractors. The major three factors are behavioral (control, or not, as to how the worker does their job), financial (if there are business aspects of the worker’s job controlled by the payer), and their relationship type (such as written contracts).

Once these three factors have been examined, businesses will have contractors complete and file the appropriate forms like Form W-9 or Form 1099-MISC to pay their associated taxes.

Determine if you will need to pay estimated taxes

Paying estimated taxes is a tax strategy that self-employed professionals and members of the gig economy may consider doing, if they haven’t started already. Estimated tax payments are used by taxpayers to pay income and self-employment taxes. These quarterly payments are due on the 15th of April, June, September, and January.

If you do decide to start making estimated tax payments, remember that your payments must be made in full and on time. Failure to do so may result in being charged a penalty for underpaid taxes.

How are your records looking?

One of the most strategic moves that anyone, self-employed, in the gig economy, or an employee, can do when filing their tax returns is to keep their paperwork organized. Who did you work for or complete work throughout the year? Did you receive all of your necessary tax forms or are you still waiting on a few? What about deductions? Do you have your receipts handy for business expenses you can deduct? Establish a solid recordkeeping system for every year that you are self-employed or a member of the gig economy and keep it as up-to-date as possible. Doing this allows you to document and track your income and expenses and can come in quite handy if you need to provide proof of your professional activities within a specified timespan.

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Deborah Sweeney – Legal Expert, CEO, MyCorporation.com – Calabasas, CA

Deborah Sweeney