How to change your business entity — What small businesses need to know

How often do you think about the entity formation of your small business and whether you need to change your business entity?

Some entrepreneurs might feel completely satisfied with their legal formation. They know that they chose an entity from the outset that was the perfect fit for their company and its needs.

However, other business owners may be viewing their entities through a new lens thanks to COVID-19. Perhaps choosing to initially incorporate as a sole proprietorship isn’t the best decision for the startup’s long-term future. Or, amid unprecedented times, they might feel compelled to switch to a Certified B Corporation and combine making a profit with holding their business accountable to higher performance standards.

During this unprecedented time, it’s entirely possible that some business owners may decide their initial entity formation is not going to be their “forever” formation. If you feel like this applies to you and it’s time to make the switch to another business entity, this is what you need to know.

Disclaimer: This content should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.

Weigh your business entity formation options before making a change

For consistency’s sake, let’s use the example that your small business initially incorporated as a sole proprietorship. A sole proprietorship is an inexpensive structure that requires little paperwork to file and incorporate the business.

Why choose a sole proprietorship? This is one of the few entity formations where the owner is allowed to fully be the boss. The upside as a sole proprietor is that only the owner — aka you — may call the shots for the business.

Sole proprietors must be able to assume responsibility for their actions because this entity does not provide them with limited liability protection.

 

What is limited liability protection? Limited liability protection helps create a separation between personal and professional assets. If a sole proprietor was served lawsuit paperwork, for example, their personal assets could be at risk.

Unfortunately, sole proprietorship structures do not provide their owners with limited liability protection. However, the good news is that there are several entities that do offer limited liability protection. Here are a few highly common formations for you to consider:

Limited Liability Company (LLC)

In addition to offering limited liability protection, LLCs are fairly flexible entities. You may choose how you’d like the entity to be taxed, with a partnership and S Corporation as two popular options.

Owners within LLCs are also referred to as members. Depending on the number of members your LLC has and its structure, you may incorporate it under various LLC structure types. These include a single-member LLC, member-managed LLC and manager-managed LLC.

General Partnership

This entity formation is ideal for entrepreneurs who would like to go into business alongside a partner. This individual may be a family member, friend or close mentor.

There are several types of partnerships entrepreneurs may incorporate, including joint venture, silent and limited liability partnerships (LLPs).

Generally, however, most business owners will choose a general partnership. This partnership allows partners to equally divide all profits, liabilities and management duties between themselves. A written partnership agreement may be created that outlines each partner’s role and responsibilities. Partners can refer back to it as a reference, much like they do with a business plan.

S Corporation

This entity is one of the few that begins as a different business structure. S Corporations are initially an LLC or C Corporation that files for S Corporation status under the provisions of Chapter 1, Subchapter S of the IRS.

The company will not pay income taxes, deductions, credits or losses of the organization. Rather, those items will “pass through” to the owners. This makes the owners responsible for reporting taxable activity of the company on their personal income tax returns.

Nonprofit Corporation

This entity differs slightly from a typical nonprofit in that it is a corporation founded for a charitable purpose.

Nonprofit corporations are formed to benefit the general public and pursue a social mission.

 

Once a nonprofit corporation has been incorporated, bylaws must be established that state how the corporation operates. You must also create a mission statement for the nonprofit corporation and file for the appropriate tax-exempt status with the state and federal governments.

Related: How to write a mission statement

Certified B Corporation

A B corporation isn’t a type of entity in the traditional sense, as companies still have to be incorporated under traditional structures before applying for the certification.

B Corporations are a hybrid made up of a standard corporation and nonprofit. They may earn a profit in business while holding their entity accountable to higher social and environmental performance standards.

B Corporations earn their B Corp Certification with nonprofit group B Lab. In order to become a Certified B Corp, you must take and pass the B Impact Assessment (BIA) test, complete a virtual assessment review, and meet certain legal requirements contingent on your entity formation.

Consult a lawyer for additional guidance and support.

 

As a quick disclaimer, I help entrepreneurs incorporate their businesses and can provide information about relevant entity formations. However, I cannot offer legal advice. Each small business is unique. If you find you have additional questions about converting to a new entity formation, you may consult with a legal professional. They may provide further guidance as it specifically relates to the needs of your small business.

File necessary paperwork for conversion

Once you have determined which entity you would like to incorporate as, begin filing the necessary paperwork with your state of incorporation’s Secretary of State to make the switch.

Remember that you will also need to file for additional documents due to changes in your organization type. In the event that you switch from a sole proprietorship to an LLC, for instance, you will need to file articles of organization. Obtain a new employer identification number (EIN) and reapply for business licenses and permits necessary to operate under your new structure.

The post How to change your business entity — What small businesses need to know appeared first on GoDaddy Blog.

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Need Advice For Launch

I have been working on a website related to #carbuying guide and info. Providing basic info about the #cars before a customer makes the purchase. The aim is to reduce time as low as possible needed to check the information on #website and to give the best #customerservice #experience. Now i am wondering whats the best way to launch it and get as much of organic #traffic as possible.

FYI: We are still in Beta testing of the website but response has been good with whatever traffic we get and with 0.00% Bounce rate.

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Work In A Home Office Typing Jobs – Five Things You Need To Know

If you have exercise machines at home; like a treadmill, machine or a bike, all of them well. Divide your time among your machines. Normally, you need to do a 30-minute routine each cardio sewing machine.f you have Wii Fit, apply it your fitness advantage. You may also invite your son or daughter, or any family member, perform tennis (or any other game the sweat out) with you. The Kinect for Xbox 360 is an alternative to the Wii console. Use this motion sensing device to to be able to sweat finally out. You can play The Biggest Loser Ultimate Workout, Dance Central, Virtua Tennis 4 or Your Shape two.

If you’re just staring out trying to manage your schedule, you don’t have any need to bother with. You can easily be carried in a number of of workout sessions that is able to keep your heart pumping and suddenly your energy leaping. There are an involving ways to exercise whilst keeping a stressful work-at-home business or job.

Take spaces. Breaks aren’t just ways to avoid work; however essential for time management, especially with computer jobs or writing jobs. Because you naturally blink less when staring at computer screens, your eyes become irritated faster. Your posture, hands and arms also troubles continuous hunching and writing out. Over time, your quality function degrades from physical restraints. Try stretching or getting outdoors at least 10 minutes for every hour you type.

The first reason why work at home work is a better idea are exclusively for mothers and fathers or owners of pets which need a lot of care. Are usually are a stay inside your own home parent together with your kids have reached school as day, foods high in protein work throughout the day given that they are at school, nevertheless, you have the pliability to drop your work and will your children whenever you ought to to. This works just as with pets as well that have to have a lot of care.

You should be dedicated to get afflicted with a successful home sales. You need to view the laws in your area governing places of economic. You may find you have got to build other building while having property to store your business, rather than having customers enter house. This also can help make on a clean break from the home and business lifestyle.

Home companies are a lot of work, but does not need to be a miserable experience. Your main should be to have the available income roll while you sleep. Residual income can assist in paying bills while other try to do to usher in extra pay the price. Do you see how you could achieve solid residual total wages?

Productivity is developing is to write element here so work all this out an individual decide to start, you do not need to be feeling being forced as soon as get started to work from home. Discipline is issue in determining factor when working from home, many times home workers get distracted by family popping down into say hello just because they know the home, set your hours out and get friends and family to go away from you during times. Keep in mind if you were out working from an office you would have to be there at specific times, keep the same rules for work from home and you’ll be setting yourself up strategies ..

Like software or stock supplies the I spent most of my money was finding out how to do issues. There are associated with great classes on the internet that are free but direct training at a specific program or is actually the best and although it pretty cheap for the purpose you actually get, still seems much like fortune when you are strapped for cash.

Great social media idea need to be executed

Hi , I have a great social media idea which stand out from all others social media , I want to make it real , so i need to create the platform ( a website and a mobile app) , but i have a little of programming skills (htlm , css ) and I'm willing to learn to code to execute my idea .

So please how to create a website and a mobile app and what should i learn ?

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Need help with taking orders for an insta based bakery

My friend and I have started an online bakery based on instagram and Facebook. We were wondering what is the best way to standardize orders. For e.g a person places an order and we have a spreadsheet(?) that updates listing the order/name/address/phone number etc. We've been thinking about using Google Forms but don't know if that's the right platform. Is there any template someone knows that can we can use, or any other ideas/platforms that you guys know about? Any help would be appreciated

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Need Advice on Which Positions to Take and Which to Nuke?

Hi everyone, here's a list of the things I've been involved with. I primarily need help deciding between Startup AH and Startup C. I haven't started with AH yet but I have started with C, and I want to leave C, but I'd feel bad about leaving (ish)? Like the boss didn't do anything wrong, I feel like I'd just learn more from AH and that the internship is more structured.

I won't have time to do both AH and C as I'm already part of many things. I feel more excited about AH as healthcare is my jam, but C is giving me insight into the consumer goods space. And I feel like it could be more useful to have more experience in other industries as AH is just another healthcare gig (already have experience in healthcare).

Or…I could nuke something else on my list?

Here's the list so you all can have some context.

1) Own Business/Co-Founder

  • Marketing, social media strategy and outreach strategy

  • Started a startup nonprofit business with friends to curb some of the food insecurity and financial trouble caused by COVID

  • ~10 hours per week

2) Startup G

  • Marketing and SEO role

  • Architectural and design startup

  • I make occasional powerpoints about SEO and keyword strategy but that’s it

  • I kinda feel like I’m not doing much but it’s not a huge time commitment

  • ~3-5 hours a week

3) Startup MN

  • Marketing and analytics role

  • Healthcare startup

  • They’re really great and I’m learning a lot so I feel like I don’t want to leave this one

  • ~10 hours a week

4) Startup MV

  • Biz Dev role, not clearly defined yet

  • Mental health startup

  • We haven’t done anything yet but founder is letting us design our own goals which is nice

  • ~10 hours a week

5) Startup C

  • Public Relations Intern

  • Consumer goods startup

  • Writing articles and driving content ideas via keyword search tools

  • ~10 hours a week

6) Startup AH

  • Growth Marketing Intern

  • AI healthcare startup

  • developing content for a blog/ social creative to develop a strong following/ generate interest from customers.

  • work together to create a brand awareness and conversion strategy to get email signups from patients/ providers.

  • leverage analytics tools to produce relevant marketing content

  • use growth marketing techniques throughout the summer, educational material provided also

  • ~10 hours a week

7) Startup IM

  • Biotech startup, they JUST got back to me after I applied a month ago

  • have not interviewed with them yet so i don’t even know what the role is about

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Does single founder need vesting?

I'm setting up a DE c-corp using Gust Launch and need to set up stock grant. Right now I'm the only one working on the startup, and I may have a cofounder in the future but it's not 100%. Do I need to set up 4 year vesting even if I'm the only founder now? Vesting seems to add some unnecessary headache at this point like 83(b) election and so forth. Would appreciate any advice. Thanks a lot!

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Need advice: Our startup is having equity distribution issues

I am in the process of starting a business with some friends based on a game that one of them created for a weekend zoom call. We all thought it would be a fantastic idea to bring to the market and attempt to launch this thing as an LLC partnership. Right now we are having some discrepancies on how to divvy up the equity for the partnership and I am looking for some advice because as it stands, I'm not certain if we have covered the bases properly. Apologies for the clunkiness of this mobile posting! Here is our scenario:

First 50%:

Founder 1 (CEO): 40% TBD (CFO): 10%

Second 50% is where all seed money is coming from (19k):

Founder 2: 1k (2.63%) Founder 3: 1.5k (3.95%) Founder 4: 1.5k (3.95%) Founder 5: 2k (5.26%) Founder 6: 2k (5.26%) Founder 7: 3k (7.89%) Founder 8: 3k (7.89%) Founder 9: 5k (13.16%)

As it stands, the one half of the company is owned by the CEO and the CFO, and the other half is owned by the investors. The CEO, who came up with the original idea, is not able to invest at this time and the CFO has yet to be assigned and can be filled by any single individual.

So far we have decided that all partners will have an equal vote with the CEO having an additional tie breaker vote. We have also agreed to each put in an equal amount of work into the company and reassess our standings at the end of the calendar year.

I'm here for advice because right now I am feeling like the CEO and CFO equity amounts are far too high, especially that our CEO (Founder 1) is not putting in any seed money at all and does not plan to buy into the company either. The understanding is that since he came up with the original idea and that he will be putting in the most work towards the company is how we came to the original 40%. My feeling at this point is that the money investors are not getting the right cut at this moment when we have all agreed to put an effort into this company. The company would likely not start or run without the labor of the investors. I am also at the feeling that the CFO percent is far too high being that our startup has zero overhead and little/no costs. Essentially the job would be basic book keeping is how I see it at the moment. I proposed that both of these be lowered to 32/6 equity between the two positions leaving 62% to the seed investors.

I'm curious if anyone has had to deal with this scenario and if they have any structural advice?

Thank you!!

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Taking a Bite Out of Unemployment, OurCrowd Portfolio Companies Need 350 Employees

Even as the coronavirus pandemic rages, startups are offering hundreds of new jobs. `
The number of vacant positions at OurCrowd’s portfolio companies has risen to 350, with 90 new job vacancies added since the start of April, 41 of them in Israel.

Despite Israel’s unprecedented unemployment situation, high-tech companies are still recruiting. Now that Israel has gone back to work on the downside of the virus curve, entrepreneurs and startups have a huge role to play in getting our nation back to work.

OurTalent, OurCrowd’s jobs portal, currently lists 350 vacant positions from within its portfolio companies, with fresh opportunities added each week. The top recruiting companies include SixGill, BioCatch, and Locusview.

OurCrowd portfolio companies offer work in Israel and around the world. There are vacancies listed in Jerusalem, Tel Aviv and other Israeli locations, but also positions across the globe including New York, Toronto, California, Brazil and Barcelona.

Positions advertised on OurTalent are continuously updated as a service to our companies. Applicants are invited to contact the companies directly.

While global tech giants like Uber, Lyft and Airbnb are laying off staff, other startups are providing solutions people need while they are working from home and social distancing, which means many OurCrowd companies are actually expanding quicker than they originally planned.

“Even in these tough times, your dream job could be waiting at the Startup Nation’s next billion-dollar unicorn. Startups of all sizes are looking for a range of talent, from bookkeepers to illustrators to full-stack engineers,” says Laly David, OurCrowd Partner and head of Business Development.

SixGill, a company based in Netanya, is a cyber-intelligence company that analyses and monitors the deep web and dark web, providing threat intelligence for businesses against hackers and cyber-attacks. Demand for its services has grown as cyber-criminals use the pandemic crisis as cover to increase their attacks.

“SixGill is in an unprecedented momentum of growth,” says Hadar Hen, SixGill’s human resources director. “We recently closed a fundraising round and we now see it as our national duty to grow out of the crisis and set an example. As cyber intelligence technology leaders, we are looking for talents that will allow us to move on to the next stage of the field’s evolution.”

For its technical teams, SixGill is looking for people with deep knowledge of cutting-edge technology.

“We are looking for individuals with a passion for innovation and specialization in a range of leading technologies today,” Hen says. “For those looking for jobs, I would advise taking the time to acquire capabilities, especially in the fields of artificial intelligence and big data as well as polishing your resume and social profiles, and generally working on your brand to be prepared for the day after.

But the company is also looking to fill more traditional roles. It is currently searching for a full-time controller for its accounting and finance department.

LocusView is an Israeli-American tech company providing a digital platform that collects, validates, and manages new construction data for energy infrastructure.

“Our goal at Locusview is to help energy utilities build a safer world and prepare for the coming challenges of building smarter energy infrastructure,” says Rony Kaufman, the company’s Human Resources Manager. “This is a long-distance goal that isn’t removed by COVID19 or its implications. In this sense, we were lucky enough to be part of an essential industry. When COVID19 started we realized that we must give our team as much certainty as possible. We didn’t do any pay cuts and didn’t lay off any of our staff.  We understand that now is the time to find the people who want to be part of a team that continues to grow even in times of uncertainty.”

The post Taking a Bite Out of Unemployment, OurCrowd Portfolio Companies Need 350 Employees appeared first on OurCrowd.

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