Are two heads always better than one?
When it comes to taking on a partner to start or grow a small business, there’s no right or wrong answer.
Partners can complement each other’s management skills and bring benefits such as special expertise and client relationships.
As with any relationship, there are trade-offs that must be carefully considered before deciding whether adding a partner is a wise move, and then you have to find the right person for the role.
If it sounds a bit like marriage, you’re not far off. Having the right partner can be a terrific advantage for a business. Making the partnership successful takes as much energy, effort, and positive feelings for one another as it does to make a marriage work.
There are several important things to consider before choosing a partner and entering into a business partnership. Continue reading
New entrepreneurs have a long list of to-dos when starting their businesses. Among the tasks to check off that list is deciding their business structure. For small businesses with a sole owner and no (or very few) employees, the two most popular options are:
- Sole proprietorship
- Single-member LLC (Limited Liability Company)
So, which one might be the best choice for your business?
I advise you to consider talking with an attorney and accountant to dig into the advantages and disadvantages of each for your specific situation.
In the meantime, let’s take a look at some of the basic characteristics of each so that you’ll have some fundamental information as you start your research. Continue reading
Starting a business with a cause offers much satisfaction as you work to make lives better for others. To launch a nonprofit corporation, it requires taking many of the same steps a for-profit corporation or LLC does, but there are differences, too. Nonprofits must comply with some requirements that don’t affect other businesses.
So, where do you begin?
1. Understand what it means to be a nonprofit.
A nonprofit may be created a nonprofit for charitable, educational or certain other purposes—as long as they don’t directly benefit the owner. Nonprofits (if approved by the federal government) operate tax-free, and they can accept donations and apply for grants.
While a nonprofit business can make profits, surpluses must be used toward fulfilling the organization’s objectives—such as buying computer software to run the business more efficiently or investing in resources that deliver value to those that it serves. Continue reading
The passage of the Tax Cuts and Jobs Act (TCJA) brought renewed focus upon pass-through entities (PTEs). In spite of their widespread popularity, PTEs are commonly misunderstood. While thought of primarily as small businesses with few employees that generate a fraction of overall business profits, the truth about PTEs tells a very different story.
As it turns out, pass-through entities are the most popular structure in the US, employing millions of workers and churning out billions of dollars in annual revenues.
This article will demystify many of the misconceptions about PTEs and explain how the TCJA will affect these companies—and the US economy—in the future. Continue reading
The process to change a business structure (for example, change from a sole proprietorship to a corporation) is the same as starting a new business.
Use the Business Licensing Wizard to get information and links that will help you do the following:
- Create your business structure with the Washington Secretary of State. (Skip this step if you are changing to a sole proprietor or general partnership.)
- Submit a new Business License Application to apply for a new Business License. You will be given a new Unified Business Identifier (UBI) number to be used on tax returns and other documents.
- Reapply for any applicable specialty, and/or city endorsements (for example, Nursery endorsements).
Note: You will probably need to re-apply for all of the licenses you currently have. For example, if you are a building contractor, you will need to reapply for your contractor’s license with the Department of Labor and Industries.
This information has been borrowed from the Washington State Business Licensing Service website. (link)
Although the simplicity and affordability of running a business as a sole proprietorship may have attractive perks, there are reasons why you might benefit from forming an LLC (limited liability company) or corporation instead.
How can you recognize that a change may be in order? Continue reading
Nearly every professional freelancer eventually faces the question of whether to remain a sole proprietor or form an LLC. The question becomes more taxing as business grows and the potential for liability increases.
As a freelancer, you may have heard that forming an LLC provides liability protection. While this is true, it is not an impenetrable shield.
Understanding how liability works is crucial for protecting you and your freelance business.
The most important difference between a sole proprietorship and an LLC is that the limited liability company is a legal entity separate from you, the freelancer. If your LLC is sued while pursuing its business, the company’s assets are at risk, but your personal assets are not. Continue reading