Many small businesses start as a part-time effort that grow over time, and eventually become a profit generating venture. One of the difficult questions for a small business owner is, When do I need to form an entity? A follow-up question is which type of entity to form such as a corporation (sub-chapter S or C Corporation), limited partnership (LP), limited liability partnership (LLP), or limited liability company (LLC).

The business person who is a sole proprietor should be aware that his/her liability is virtually unlimited. When you do not have the protection of an entity under which your business operates, it is your personal assets that are at risk. Therefore, if a party were to sue you, your personal assets would be exposed.

Many states, such as Texas offer homestead protection so that creditors cannot foreclose on an individual’s home, but such laws vary from state to state.

The formation of a legitimate business entity offers varying forms of protection for a business person’s personal assets. Entity formation is the process whereby one establishes an entity authorized to conduct business within a certain jurisdiction. In Texas, one would file entity formation papers through the Secretary of State’s office.

Each state has a government office that handles entity formation. Generally, an entity can be created for as little as $50-$250 per application. Though this step often occurs later as a business grows, it is a small financial investment to make early on.

Creating an entity also gives your business credibility in that you have taken the steps to define it as a functioning entity.

The most common entity formed by a new start-up business is the LLC (Limited Liability Company). Limited liability companies are designed like partnerships, and therefore suitable to small businesses, but have asset protection similar to a corporation.

When your entity is set up you will also receive a tax ID from the state comptroller. Therefore, you will likely have to file a franchise tax return in your state(s) of operation. You should also request a federal tax identification number (FEIN). You may want to consult a CPA to determine which type of entity offers the most tax advantages in your state.

The other component in protecting personal assets is to purchase business liability insurance. Most insurance carriers have business divisions which write general liability insurance polices. Contact your current carrier and see if you can obtain insurance this way. Additionally, you may be covered under your homeowners policy depending on the business you are in, anticipated revenues, and the potential exposure. Speak with your insurance carrier to find out what you need to do to protect yourself.

You can apply for the entity yourself or with the aid of an attorney. As mentioned earlier, you should speak with a tax attorney or CPA about which entity offers you the best tax advantage in your state.

Disclaimer: This article does not constitute legal advice nor does this create an attorney-client relationship.

Shannon Cavers is a Houston, Texas based lawyer practicing in business law, divorce, family law and probate. More information and articles can be found at www.caverslaw.com

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by T.J. Becker

Do you remember McDonald’s Arch Deluxe or Clear Pepsi? Both products are among the estimated 80% of launches that fizzle. Were they bad ideas? Not necessarily. Many flops simply don’t get recognized in a crowded marketplace.

Here are five strategies to increase your new products’ chances of success

Understand your entire customer experience.
Don’t develop tunnel vision by concentrating too heavily on your product’s features. Customers don’t care about features; they care about their experience with your product. What does it do for them? Great features can contribute to a better experience, but don’t guarantee one. Example: Beta-formatted tapes may have performed better than VHS, but VHS was more readily available. Beta’s superior features didn’t matter.

Target the highest-value customer segments.
Every-one wants to hit big markets with large-volume users. But by concentrating on those markets, you may miss the smaller niche markets that would most value your product.

Remember your channel partners.
Many manufacturers overlook their distributors when marketing a new product. But you should consider what would motivate them to carry a new product. Offer incentives to distributors who carry it and sell it well.

Quantify your product’s value.
Both direct customers and distributors want to know what your product is worth to them. Vague benefits aren’t enough. Don’t say your widget will increase productivity; say it will increase productivity between 15% and 20%.

Forget who you are.
What made you successful in the past may not make you successful in the future.

Source: The Edward Lowe Report, a publication targeting growth entrepreneurs, published by the Edward Lowe Foundation.

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While you are still in the planning stages of your start-up, it’s really easy to overlook a few things. According to Elena Fawkner, the 6 items on this list she compiled are the most commonly overlooked.

Checklist For the New Home-Based Business

So, you’ve decided to take the plunge and start your own home-based business. Congratulations! You’re on your way to true financial independence. Protect your business and your livelihood by making sure you have paid proper attention to the following:

1. Cash Flow

Do you have adequate working capital to support your business (to support you!)during its early stages? Have you started your business part-time while continuing to work full-time to make sure it is a viable income producer for you and that income is adequate for your needs? DON’T give
up your day job until you can give an unequivocal YES to these questions.

2. Business Licensing

Have you obtained all necessary licenses and registrations for your business? Do you comply with your local zoning regulations? This is especially important for both legal and insurance reasons if you expect to have clients visit yourhome office.

3. Insurance

If you expect to have clients visit your home office, have you taken out insurance in case they are injured on your premises? Your normal homeowner’s insurance will NOT cover
business visitors unless you notify your insurance company that you are operating a business from home and the insurance company endorses your policy to include this risk.

In all other cases you should take out a separate policy to cover your business visitors. In this regard, whether you comply with local zoning regulations may be important. Your insurance company may refuse to cover you if you are conducting your business illegally. For these reasons it
is imperative that you obtain all proper registrations and licenses for your business.

Another type of insurance you should take out is public risk insurance. No matter the nature of your business, if you are dealing with other people (and what business isn’t?),you should have public risk insurance to cover you in case of a claim for negligence.

A third type of insurance to consider is income protection insurance. If you have made the transition from paid employment to self-employment, you no longer have the benefits that went along with your paid job which may have included disability or income protection insurance. You will need to purchase this cover for yourself.

4. Benefits

Once you have left the paid workforce,you may find that you have also left behind your medical, dental and optical benefits.You need to make sure you purchase adequate
insurance for these expenses.

5. Accounting and Tax Advice

The best time to seek accounting and tax advice is before you start your new business. Your accountant will be able to advise you about things such as the most tax-effective structure for your particular business and what types of expenses you can claim against your business income. It is important to obtain this advice at the beginning of your business venture so you know exactly what records you should be keeping and whether it is best for you to purchase or rent capital equipment such as your computer.

6. Time Management

Make sure you have thought through how you will deal with the day to day distractions that will come up when you work from home and plan accordingly. For example,if you know you will not be working from 3:00 pm until 8:00 pm because this is the time between when your children return from school and when they go to bed, try to schedule as many non-business activities for this time period as possible rather than taking breaks during your business hours. Need milk? Get it when you’re out picking the kids up from school, not at 11:00 am because it’s easier than starting that new webpage. Remember, self-discipline is your best friend and vital when working from home. Procrastination, on the other hand,is your greatest enemy.

Working from home is the dream of many. Don’t let that dream turn to ashes by overlooking the “basics” of sound business and risk management.

About the Author: Elena Fawkner is editor of A Home-Based Business Online, practical ideas, resources and strategies for your home-based or online business.  http://www.ahbbo.com

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Nine out of ten employees have had thoughts of entrepreneurship at one time or another, whether they admit it or not. No matter how great the job and how great the pay, sometimes the pressures of a 9 to 5 job can get to you. Sometimes the idea of being in control, of making decisions solo, of working for as little and as long as you like sends surges of excitement throughout your brain and leads you to daydreaming and brainstorming by your lonesome.

It’s not impossible. Some of the biggest companies and the most successful businesses we now know and respect began life as home businesses. Don’t believe me? Check out Banana Republic’s roots.

If you’re seriously falling out of love with your job, finding less and less joy in working and the thought of looking for another employer freezes you from head to toe, then maybe those dreams of entrepreneurship might just work for you. If you earnestly believe this is your path, then here are a few tips to keep your fires burning.

Got the dream? Make it work

You are only a king/queen in your dreams. When you wake up, there won’t be a throne waiting to catch you when you fall. While dreaming is an excellent way of generating ideas, it really will earn you zero dollars if you don’t see if they actually work. Visualizing yourself enjoying the fruits of your home business may prepare your mind for future achievement, but in the end it is your hands that will determine whether your dream will work or not.

Have a plan

Plans are the blueprint of your dreams, the closest you will get to touching them at this point in time. Don’t be afraid of lists and make one detailing your personal characteristics, abilities and weaknesses. Break down your dreams into smaller bits and match your abilities with those units. This will let you see what you lack in terms of preparation and resources.

List down as many sources of information and supplies as you can and try to get what you need day after day. You may be approaching your dream home business in small increments, but this means you’re moving forward, and moving forward means progress.

Use what you know

The old adage, ˜work with what you love and the money will follow” is only true if you go in with enough skills and knowledge about your service or product. The entrepreneurs who actually became success stories while claiming zero to little knowledge of the business are more the exception than the rule.

Accept what you can and cannot do and concentrate on tasks that can make effective use of your abilities. As for aspects you know little or nothing about, get help.

Seek an alternative

Sometimes you just really want to test the waters, so to speak. It’s not really the fear and apprehension, but it’s more likely that you have no idea what the risks will be until you actually expose yourself. If you don’t want to take a full dive, then go part-time.

Getting a feel of the business part-time will allow you to experience its operations without too much risk while giving yourself the opportunity to push your business using a hands-on approach. Plus, there’s less apprehension factor since you have the assurance of your full time job.

Learn from the masters

If possible, get someone to teach you the ropes. Even the best sources from books, magazines, the internet and graduate schools will not be enough to help you survive the shaky initial stages of building your home business. Learn from someone who has been there, do your research, ask questions.

Seeing green

The prospect of earning unlimited income is probably one of the most attractive possibilities in setting up a home business. After all, you will be your own boss. Every single cent you earn from your little venture will go to no one else’s pocket but yours. But when it comes to earnings, it’s worth knowing that you need money to make money.

It is also important that you keep your expectations to a realistic minimum.

To the brave belongs the prize

You’ll never know what you’ll get until you do it. Possibilities can only be turned into opportunities if you’re willing to have a go at it. Luck and feng shui may calm your jitters, but they won’t do much for you if you just sit around biting your nails. If you want it hard enough, then make it come true. Your dream home business can only materialize if you and no one else, make it so.

About the Author
Thomas Salathe:
For further information visit his website http://www.findahomebusiness4u.com

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You decide to create a website and join the online market place, you buy an ebook telling you “Everything you need to know about online marketing”, you start reading, the mists & myths start disappearing and your ideas start firing.

Then just into the first chapter you come across a hyperlink, it is a ‘must have’ information source or piece of software, so you click (just to see what it is) before you forget. The website opens up and you start reading the sales text or information presented, it is very interesting and solves another thing you have been puzzling over.

But wait! What about the ebook you were reading?

So you bookmark the website in your favourites list and say to yourself “I’ll come back to that later”.

So you get back to the ebook and quickly review what you have already read to get your focus back, you see that hyperlink again and think “I’ve dealt with that” and start reading again, two pages later there’s another link, what should you do?

Make a mental note to visit it later and finish the ebook or go and bookmark it now? So you decide to keep reading this time but two paragraphs later the ebook mentions something to do with the resource you just skipped, you don’t quite understand so you need to go back and review the information connected with the link. You go back and click it, WOW! This info is really great and it is free! Just put your name and email address in these two boxes and you will receive a free downloadable ebook which will explain another vital aspect of the online business. So you download it straight away so you don’t forget where it is, bam! Another pdf opens in your reader on top of the one you were reading (and you still have the browser open at the other website to read when you finish the first ebook).

This goes on and on and on, it is good to get all this info and to get lots of it free, but, there is so much of it you will be in danger of getting “analysis paralysis”. It also takes a lot of time to absorb all of the information, classify it, file it away so you can retrieve it quickly and finally to remember where it is when you need it.

The answer is to do the following:

1. Decide on a very clear and focused goal when you start researching, this might be a specific question or an objective.

2. Get a piece of paper or note book and write down the objective before you start. 3. Try to stick with one thing at a time and go from start to finish before doing anything else (whenever possible).

4. Have a pen & paper next to you so you can write down notes & thoughts, this stops you interrupting your flow.

5. Even if you don’t understand everything you are reading get an over view of what you are studying.

6. Make each area where you still have a query a new focused goal or research subject and research that in isolation.

7. If you file things on your computer use very descriptive file & folder names, put all the key words about the document or file into the name so it is easy to find with a search later.

8. Take Action on your ideas immediately, don’t keep on reading and studying without end, never leave the scene of an idea without taking some action. If you are told about a new tip or trick try it out straight away after reading

9. If there are resources recommended wait until you have finished and go through everyone you are interested in, review them quickly, file the info you need or want and make notes on how & when you will use them or read them more fully.

10. Everytime you learn new skills apply them to your online business immediately, take daily actions and make daily improvements, implement them on your site and see the effect. It this way you will be making solid steps towards building your business.

These are just a few ideas to help you remain focused and avoid “analysis paralysis” and information overload.

About The Author

I’m Carl Henry, if you would like more help & support in building your online business please think about joining our http://com1com.com Affiliate Partner Program at http://www.com1com.com/partners.

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