incorporate a business

What Does It Take To Turn A Summer Side Hustle Into A Small Business? by @DeborahSweeney

June 7, 2019 by Deborah Sweeney Leave a Comment

by Deborah Sweeney | Featured Contributor

Summertime and the living is easy — especially when business is booming from your side hustle! If you’ve been running a successful summer side hustle for a few years now, you might want to consider spinning it off into a full-time gig.

What does it take to turn a side hustle into a thriving small business? It’s a much less intensive process than many entrepreneurs may realize, and follows certain step-by-step guidelines. Take a look at the best ways to prepare your side hustle to become its own year-round small business.

1. Draft a traditional or lean business plan.

You might have already created a lean business plan for your side hustle. If that’s the case, it’s time to add more details about the business. If you don’t already have a business plan, it’s also the time to draft one.

Most entrepreneurs choose to draft a traditional business plan or a lean startup plan. The format decided upon often depends on the needs of their business.

Consider a summer side hustle that has been around for several years. It has a proven track record of steady cash flow and offerings that continually appeal to consumers. As this side hustle pivots into becoming a full-time small business, a traditional business plan will provide an objective look into the company’s future.

A traditional business plan outlines the following areas:

Executive summary. The ability to explain who you are, what the business does, its industry, location, how it makes money, and why consumers want these goods and services.
Business description, concept, and strategy. What do your products and/or services do, and what makes them unique?
Industry analysis. A thorough analysis of your brand’s competitors.
Market analysis. A thorough analysis of your brand’s target audience.
Organization and management. The core responsibilities of your team members (if you have any employed).
Financial projections. Tables that provide information about cash flow, projected profit and loss, and a break-even analysis.
Financing request. A section specifically created for businesses seeking funding from investors.
Other additional information as it pertains to the company, like letters of incorporation and trademark registration documents.

A lean startup plan is a little less intensive, but covers these key areas:

Value proposition. A clear statement summing up the value your business brings to its market.
Key partnerships, resources, and activities. Information about any partners your business may have and resources that allow the business to create value.
Customer segments, channels, and relationships. The ability to define your target audience.
Revenue streams. How the business is able to make money.

2. Incorporate the business.

Incorporating a business, even one that starts off as a side hustle, provides the company with tons of valuable benefits. It allows you to build credibility much faster than businesses that do not incorporate, which shows customers that your company is legitimate.

Entrepreneurs may choose from a variety of entities to incorporate their side hustle turned small business. Some of these may include sole proprietorships, partnerships, corporations, and limited liability companies. LLCs, or limited liability companies, often tend to be quite popular with entrepreneurs. The entity is flexible in terms of management and also provides liability protection. This acts as a safeguard between personal and professional assets. In the event of an unforeseen circumstance, like a lawsuit, liability protection ensures that your personal property like cars and houses will not be impacted.

3. Register for trademarks.

Earlier I mentioned that trademark registration documents are generally kept in the appendix of a business plan. Chances are pretty high that your side hustle may have a unique name, phrase, symbol, design, or logo associated with it. This unique mark differentiates your business from competitors. However, if you do not register a trademark the unprotected mark may end up in the wrong hands and be plagiarized by copycats.

Kick off your plans to register your mark by conducting a trademark search. You may do this through the United States Patent and Trademark Office trademark database. This database provides more information as to whether or not another entrepreneur has claimed a mark similar to or the same as your own and if there are any pending marks. If it turns out your trademark is not available, you may need to go back to the drawing board in creating a new one.

However, if the trademark is available it’s highly advised to file a trademark application as quickly as possible. This allows you to register the mark for your business and have the peace of mind in knowing the trademark associated with your brand is exclusively yours.

4. File for any necessary business licenses and permits.

Every side hustle turned business is different with varying needs. Once certain side hustles become full-time businesses, they may require business licenses and permits to operate and remain in compliance. Check in with your local Secretary of State to determine which business licenses and permits your company is required to have by the city and state you do business in. These often vary, depending on the location and industry of the small business.

5. Conduct annual maintenance.

As your side hustle transitions into a small business, you may pick up even more legal necessities along the way like an employer identification number (EIN) and doing business as name (DBA). Remember that businesses incorporated as LLCs and corporations are required to file an annual report. This allows them to communicate any changes made in the business and stay in compliance with the state.

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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

http://www.mycorporation.com

Should You Incorporate As A Professional Corporation Or Professional LLC? by @DeborahSweeney

April 26, 2019 by Deborah Sweeney Leave a Comment

by Deborah Sweeney | Featured Contributor

When it comes to incorporating a small business, I generally recommend a broad range of legal formations to entrepreneurs. These entities often include limited liability companies (LLCs), partnerships, and corporations. Each entity provides liability protection, which ensures the separation of personal and professional assets. Entities like these are also ideal across industries and occupations. Most entrepreneurs, whether they’re opening a bakery, starting a consulting business, or setting up a clothing boutique, can easily incorporate their business and find that their chosen entity is a good fit for them.

What about entrepreneurs in niche-based industries, like doctors and lawyers? These types of entrepreneurs come with specific practices and licenses. Their businesses are subsequently structured a bit differently and as such, would need to incorporate as either a professional corporation (PC) or professional LLC (PLLC).

Sounds like this describes your current occupation? Keep reading as we dig into what each entity does and why they matter for these types of professions.

Professional Corporation (PC)

What does a professional corporation do?

A professional corporation is a legal structure designed specifically by state law to protect the personal assets of licensed professionals. The entity provides limited liability protection, much like that of a traditional LLC. Your personal assets will remain protected in the event of a lawsuit or other legal obligations.

How does a professional corporation differ versus a traditional corporation? Again, much of the answer is found in what the practice does and its licenses. Shareholders, directors, and officers must all be part of the same profession. Proof of good standing, such as their licenses, must also be provided in order to qualify as a professional corporation.

A professional corporation is an ideal entity for… Businesses that offer professional services that require state licenses. Typically, these include companies that participate in the following activities.

Medical services
Legal services and representation
Accounting and financial services
Architectural services

What kinds of professionals benefit from a professional corporation? Take a look at the list below to see if you might qualify to incorporate as a PC.

Lawyers
Physicians
Engineers
Doctors
Dentists
Optometrists
Accountants
Architects

Are there are any additional benefits to incorporating as a professional corporation (PC)?

One of the greatest benefits to incorporating as a professional corporation is protection from any negligence or malpractice of the practice’s associates.

Many professional services have more than partner and/or owner associated with it. Let’s use the example that a partner working for a medical service caused an injury. Even if it was accidental, there is a possibility that this partner could be the target of a lawsuit. What would happen to the other owners? Would they also be at fault for what the partner caused? No. The professional corporation would step in and shield the assets of the other owners.

Professional LLC (PLLC)

What does a professional LLC do?

A professional LLC is necessary for professionals that work out of states where licenses are required in order to perform services. Much like a typical limited liability company, a professional LLC will separate a professional’s workplace and personal assets. A PLLC also limited personal liability for claims that are related to the negligence or errors of partners.

A professional LLC is an ideal entity for… Businesses that offer professional services that require state licenses. Sound familiar? All of the aforementioned companies, like those in the medical and accounting industries, may file for a PLLC. The same goes for the listed occupations, including doctors, lawyers, and engineers.

Should I know anything else about incorporating as a professional LLC (PLLC)?

One of the biggest benefits to incorporating as a PLLC is the ability to establish a professional identity for your business and its services. However, it’s important to research whether or not the state you do business out of has authorized PLLCs.

What does that mean? Essentially, you want to make sure that the state has given PLLCs the go-ahead to limit personal liability for claims related to a co-partner’s negligence, so one partner is not solely liable for these claims. Some states provide this legislation. Others do not. Before moving forward with this entity, it’s a good idea to check in with the state you plan to do business in to see if they are authorized to offer PLLC formations.

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

Deborah Sweeney

http://www.mycorporation.com

What Do Entrepreneurs Gain From Incorporating A Business? by @DeborahSweeney

March 26, 2019 by Deborah Sweeney Leave a Comment

by Deborah Sweeney | Featured Contributor

Should you incorporate your business? Is it really necessary to incorporate if you want to run a business? As the leader of a business that specializes in document filing services, I hear the first question asked quite a bit by new and existing entrepreneurs alike. My answer is always a resounding ‘Yes!’ — and not just because it’s what I specialize in doing, either.

The second question is a little trickier to answer. In theory, you don’t have to incorporate a small business. Some entrepreneurs have side hustles that they choose not to incorporate. The reasons for this may vary. The gig, for instance, could be a side project you’re passionate about, but don’t make much money from or have a desire to expand into working on full-time. Another reason could be the incorporation process itself. This is often viewed as too time-consuming and boring to do… so entrepreneurs avoid doing it. However, entrepreneurs may not realize just how many benefits they’re missing out on simply because they chose not to incorporate.

Should you incorporate a business? Yes! Is it really necessary to incorporate? Also, yes! Let’s talk about all the great things you (and your business) gains from getting started.

Liability Protection

If you decide to form a limited liability company (LLC) or corporation for your business, these entities ensure that it receives liability protection.

What does this term mean, exactly? Liability protection maintains a separation between your professional and personal assets. If your business was delinquent on its debt, liability protection would ensure that personal assets, like houses and cars, were not impacted outside of the business.

Are there any entities that do not provide liability protection? The most prominent one is a sole proprietor. Many entrepreneurs incorporate under this entity due to its affordability. Acting as a sole proprietor also ensures that you, the business owner, are in control of the business. This kind of responsibility, however, means that any and everything that can happen — from accidents to product damages — holds you fully accountable. If the thought of unforeseen circumstances keeps you up at night, you may consider switching entities for liability protection.

Building Credibility

How do you feel after you’ve done business with a company that had an “Inc.” or “Corp.” in its name? There’s a bit of added trust that comes with shopping or investing with these types of businesses. Incorporating gives businesses an added boost credibility. This legitimizes the business, making it a win-win for both the company’s reputation and the trust customers are able to quickly establish with it.

Understanding The Structure Of Your Business

It’s not uncommon for an entrepreneur starting a business to ask themselves what type of business they want to own and operate. They have a pretty good idea of what their offerings will be and their given industry. What about the company’s legal structure?

Incorporating does more than provide liability protection, potential tax savings, and establish credibility for a small business. It also provides them with an entity that helps structure the company.

Let’s take a moment to compare and contrast what it means to incorporate as an LLC versus a corporation. An LLC provides a bit of added flexibility in its legal structure, such as the ability to choose an S Corporation as its tax entity. Forming an LLC is also ideal for small businesses that wish to stay small and independent. In the event that you choose to expand and would like to take the business public, you do not need to remain an LLC forever. You may change the entity to a public legal structure like a C Corporation when the time is right.

Corporations, on the other hand, are much more strict legal structures. Entrepreneurs that choose to incorporate as a corporation usually have big plans for their business, like raising capital, going public with an IPO, and expanding worldwide. A corporation would be the ideal entity for this kind of business structure. It allows entrepreneurs to accept money from investors, issue stock, and still keep the company protected through liability protection.

Incorporating Is Just The First Step!

Understanding the entity you want, and need, before incorporating your business ultimately provides it with a great foundation for success.

Don’t forget that you’ll need to check a few legal items off your to-do list after incorporating, too! Apply for basic business licenses that pertain to your company and its offerings, business insurance, an employer identification number (EIN), and any trademarks or copyrights necessary to protect your intellectual property.

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

Deborah Sweeney

http://www.mycorporation.com

3 Compliance Tips for Entrepreneurs Setting up Multiple Businesses by @DeborahSweeney

March 2, 2017 by Deborah Sweeney Leave a Comment

by Deborah Sweeney | Featured Contributor

You know what’s better than owning one small business? Owning two — or maybe even three or four! If an entrepreneur has an existing, successful startup and is passionate about creating products or services for other industries, it’s worth making the leap into establishing multiple businesses. However, before you begin the process all over again, it’s important to note that you might not be able to do everything exactly as you did the first go around. From creating additional bank accounts to whether or not you should keep startups under the same entity, here are a few compliance details for entrepreneurs to consider when starting multiple businesses.

1) Separately incorporate each new business.

As tempting as it may be to house both companies under the same formation umbrella, like an existing LLC for example, it’s actually a risky practice for both businesses involved. One company can negatively impact the other if a business goes under or carries too much debt — and the last thing an entrepreneur wants is their startup hindered early on.

When starting an entirely different business, it’s a smart move to incorporate it separately so as to not let the risks and liabilities impact your current business. The reputation of the business aside, this is also beneficial for the reputation of the owner. Professionals with professional licenses like contractors, doctors, and lawyers have licensing boards that limit what they can do under the umbrella of their business including who can be the owners and what they can offer. It’s neither a wise business idea nor within the licensing board’s rules to co-mingle businesses, so it’s better to separate from the start.

2) Avoid co-mingling finances.

When running a couple of businesses, the best financial advice is to keep everything separated. If all funds are mixed together, there could be confusion regarding which business had what expenses or overall revenue performance.

In addition to incorporating each business separately, keep finances separate with different bank accounts and accounting books. In the event that you decide to sell one of the businesses, you will be required to present a comprehensive look at the company’s performance. The more separate the finances are, the more you can provide prospective buyers with the accurate value of the business.

3) Protect intellectual property assets with trademarks.

While you’re incorporating your next business and getting its finances in order, you will also need to conduct a search and file for a trademark application for the new startup name, logo, or design. Doing do allows you to claim the name and protect that unique business identity as well as keep anyone else from plagiarizing or copying the assets.

What should entrepreneurs do if they’re interested in a business spinoff (like starting an initiative for a new service or product that spins off of an existing popular one)? It’s a new product offering, so there’s no need to form a separate business for it. Regardless of whether you start up a spinoff or create a new business altogether, maintain the hard work and passion you put in for both of them without letting either one fall to the wayside. If you’re not sure what you need to do to make that happen, take a cue from Richard Branson, founder of Virgin. He says that in order to run a business, entrepreneurs must master how to engage their target audience, pay attention to cash flow, look after their team, and highlight their unique selling point. Branson advises that once you’ve been able to apply those skills to one business, you can apply them to the next. It’s a little like a domino effect for every new business you start up from here on out!

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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

http://www.mycorporation.com