With Business Goals

Many successful businesses originally started out of a home office. Mary Kay and Apple are two well known companies that started out of a home. In recent years, starting a business from home has become a growing trend. Shows like "Shark Tank" have highlight individuals who start a businesses from home, but the show also highlights how important the correct planning is for success.

Home businesses present plenty of benefits, but there are also pitfalls that can quickly turn a home business sour if not carefully avoided. We've collected 5 tips that will make starting a business from home in 2019 your most successful New Year's resolution yet!

• Know Your Market. Researching and understanding the business industry you are attempting to enter is the first step to success. Your research phase will help you form your business to best suit you, your audience, and your financial means. Many businesses fail due to poor planning or a poor understanding of the desired market. Networking is another great way to do your research. Connect with business owners within your desired industry to gain a better understanding of what you will be facing when you start a business from home. 

• Incorporate Your Business. Incorporating your business is a crucial part of achieving success. This process designates the business as a separate entity from yourself. Through incorporation, you designate your business as a corporation or an LLC, and you can protect your personal assets, increase tax savings, and start raising capital. 

• Create a Business Plan. A business plan is a great way to gain an understanding of whether or not the business you have chosen will be successful. Follow a business plan and carefully work through each step. Creating this business plan before you start a business from home will help you better understand your business model, goals, and finances before a problem arises. 

• Hire a Professional for Taxation & Business Regulations. Understand the taxation rules and self-employment regulations at both national and state levels. Seek out a professional accountant to gain a better understanding of what paperwork you need to file and how this potential business will affect your taxes and tax bracket. Being educated and informed is half the battle. 

• Set Up The Space. When you decide to start a business from home you have to be ready to delegate a work space. A garage, a home office, or even a basement or attic, are perfectly acceptable spaces to start a business. Set up the area for business purposes and business purposes only. This space has to be able to accommodate the business you are planning, so be mindful of equipment and resource needs before deciding on a space.

Making the decision to start a business from home can be incredibly rewarding and lucrative, if planning has been thorough and complete. If you decide to start a business from home in 2019, we hope these tips will help you along the way! 

Each year your corporation's state of formation or domestication will set obligations.  These obligations are placed on corporate entities to maintain good standing with the state. The requirements vary by state, but can include paying a franchise tax to the Secretary of State or filing an annual report which lists officers and directors. 

What's an annual report? It is a document filed with the Secretary of State. The exact information required on the report and how often it is filed varies by state, but in general you should be prepared to answer questions such as the principal place of business, the company phone number and the names and addresses of officers and directors (or members and manages of an LLC). 

In order to maintain good standing, businesses must also maintain their registered agent office.  If they are using a commercial agent this generally means renewing that service annually.  Often the commercial registered agent can help companies meet their annual requirements through various compliance programs. 

Remember that these annual requirements are distinct and separate from any state or federal income tax that the company may owe.  You should consult your accountant for income tax requirements specific to your business venture. 

For many small businesses, the end of the year can be a busy time. Rectifying paperwork and dealing with the new year can take time and detailed effort. We've collected 5 year-end small business tips that will help ease end of year stress and lead you into a profitable 2016. 

1. Get Organized. It is important to take some time to review your books and make sure they're accurate. In this final stretch, getting things organized and catching up on regular organization will be a big help when tax time comes. Make sure that W-2 forms and 1099 forms are all together, organized and properly filed; if the forms aren't properly handled it, it can quickly turn into a problem for small business owners. 

2. Stock Up. Along with getting everything organized, it is a good idea for small businesses to deal with tax bracket issues before the close of the year. Buying new equipment before 2015 is officially over becomes a write off for the 2015 tax year; the same goes for donating to a charity during the Holiday season. 

3. Hire. Consider adding a Veteran to your payroll before the end of 2015. The government is offering tax credits up to $9,600 for employers who hire war veterans. The tax credit is especially helpful to small businesses, but the employment of a veteran is even better. Military vets generally have exceptional knowledge, discipline and work ethic; they are certainly an asset aside from tax credits. 

4. Review Your Website. Small businesses that do not keet their website up to date are missing out on many opportunities. You need to maintain your website in order to continue attracting customers. Web content grows old quickly, so take a look at your website and add new, fresh content. This can really give a small business a lift for the new year

5. Get Social. Social media is a branch of marketing that simply can not be avoided or ignored by small businesses . One of the best end of year small business tips that a business can utilize  is to get connected on the newest sites; or at the very least update existing profiles and websites. Adding Facebook, Twitter, and Google+ allows small businesses to "join the conversation" and generate new interest and business. There are plenty of social media management software applications out there to help small businesses manage social media and analyze changes in consumer activity. 

Take a look at these tools recommended for social media management.

HootSuite  With this tool, you're able to manage multiple social profiles, schedule messages and tweets, and track brand mentions.

Klout By using Klout, you'll receive a score, highlighting your influence and strong categories within social media. 

By utilizing these end of year small business tips, the new year can be bright, fresh and wonderfully profitable. Stay tuned for more year end tips as we come closer to the end of the year!

If you haven't incorporated your business yet, learn more about how you can protect your personal assets through incorporation!

What is the corporate veil?

The corporate veil is the term used to describe the separation of personal and business assets that occurs when a business is formally incorporated. This is not an automatic protection however, and business owners must make sure they meet all legal requirements to avoid having the corporate veil pierced.

What are the requirements?

A corporation must make sure they maintain a clear separation between all personal assets and business assets including credit cards, bank accounts and loans. Additionally, corporations are required to maintain documented records of required annual meetings and changes in ownership or by-laws.

LLC's have fewer requirements but also must meet any and all annual filing requirements with the state.  It is important to make sure you are meeting all statutory requirements - failure to do so can void liability protection that incorporating provides and leave your personal assets vulnerable to satisfy business debts. 

Find the answers to all of your major incorporation questions in our new eBook

By-laws, Operating Agreements, Resolutions and More

Around the time of incorporation, you will draft your corporate by-laws or operating agreement. Both outline the rules and protocols of how the company will conduct business and who will be in positions of ownership and management. Both remain part of the company's permanent record unless amended by a resolution.

Corporate By-Laws summarize the responsibilities of the officers and directors, describe how the Board of Directors will function, explain when and how board and shareholder meetings will be held, as well as where to find corporate meeting minutes. This document is typically authorized by the initial directors named on the Certificate of Incorporation. Corporate by-laws are not filed with any government authority, but should be filed with other company documents. They remain part of the company's permanent record unless they are amended via corporate resolution. 

Operating agreements (much like corporate by-laws of a corporation) outlines the rules and protocols for how the LLC will operate.  It represents an agreement among the members managing the limited liability company. Specifically, the operating agreement describes the responsibilities of the managers and members, the percentage of member ownership, as well as voting rights. This operating agreement is crucial to providing liability protection to the members of the LLC. It should be maintained with other corporate records such as meeting minutes and membership certificates. 

A corporate kit is a formal binder used to store corporate documents. Because it is so important to protect the corporate veil of your company, a corporate kit is an ideal tool for organizing and maintaning vital corporate records.  The kit includes stock or membership certificates, sample operating agreements and by-laws, as well as minute books.  Corporate kits can be ordered here

Find the answers to all of your major incorporation questions in our new eBook

The Best Home-State for your Business

Incorporation is a state-level process so you must choose a state in which to form your corporation.  This becomes your “home state” or “domestic state”. For most businesses this is the state where your headquarters are located, whether it’s your garage or a corporate suite.

If a company chooses to form in a state where they are not located or if the company conducts business nationally, internationally, or is not U.S.-based, the home state chosen will be based on costs to form, taxes and other legal factors. 

Popular Formation States

Delaware – low formation cost, moderate annual fees, no state income tax and the most favorable legal environment (Chancery Court with well-developed laws)

Nevada – low formation cost, moderate annual fees, no state income tax, similar legal environment to Delaware but with shorter case history)

Wyoming – low formation cost, low annual fees, no state income tax (tax on assets held in Wyoming), corporate and LLC laws which are favorable to corporations.

Florida – low formation cost, moderate annual fees, good online business infrastructure.

South Dakota – moderate formation cost, low annual fees

Colorado – low formation cost, low annual fees

For businesses outside of the U.S., some choose New York or DC as a formation state due to the prestige of the location, particularly in foreign markets.  Neither would be considered low cost, however some U.S. based businesses might find the prestige factor useful for their line of products or services.

Please keep in mind that if you choose to form outside of your home-state, you may have to file as a “foreign corporation” in your state. This “foreign” designation is what states use to differentiate between companies that began their corporate life (filed the papers) in-state (domestic), as opposed to registering after forming in another state.

For more information on state by state incorporation visit our page: Which State?

Find the answers to all of your major incorporation questions in our new eBook

Thinking of Incorporating? You'll Need to Appoint a Registered Agent

What’s a registered agent? This is a commonly asked question among entrepreneurs who are new to the incorporation process.  It is a statutory requirement that all entities appoint a registered agent, also known as resident agent or statutory agent, when incorporating. The registered agent can be an individual or business entity and must have a physical address in the state of incorporation. The primary responsibility of the registered agent is to receive legal correspondence on the entity’s behalf, in addition to, any official notices from the Secretary of State. Failure to maintain a registered office in the state of incorporation can cause the entity to fall out of good standing and even be declared Void if a new agent is not appointed.

There is often a misconception that the registered agent address is the same as the principal office address. This is not the case. The two are very different and serve different purposes. Most jurisdictions allow business entities to maintain a principal place of business outside the state. If the business does not operate or maintain an address in the state of incorporation, a commercial registered agent can be appointed. Many companies elect to appoint a "commercial" registered agent - like American Incorporators - to accept all legal and tax notices on behalf of a company and then forward it to the client. Designation of the registered agent is typically made on the formation documents. By electing a commercial registered agent the company does not have to worry about service providers arriving at their place of business, nor does their personal address have to be disclosed for public record or amended if it's a new address. 

Do I need a Registered Agent? Yes,virtually every state requires a registered agent be appointed to receive service of process and annual tax notices on behalf of the business entity. However, a registered agent is defined as a registered address in the state of formation. Thus, people who form their business in the state where they reside can serve as their own registered agent. Most people do, however, elect a commercial registered agent - 

Find the answers to all of your major incorporation questions in our new eBook

Shareholders, Directors and Officers

Each of these positions play an important and distinct role within a corporation. The same individual can hold one or more of these positions. The roles of each are defined in a corporation's initial Articles of Incorporation and/or By-laws.

Shareholders are owners of the company based on their holdings. They purchase stock in the company and may receive dividends if the company is profitable. They may also vote on major company decisions such as mergers or liquidation. Shareholders are also known as stockholders

Directors, typically operating as part of a Board, make up the governing body elected by shareholders. They are responsible for the management of a corporation's business and affairs. 

Officers often consist of roles such as President, Vice President, Treasurer, and Secretary. Officers are appointed by the Board of Directors. They are responsible for carrying out the Board's policies and they are responsible for making day-to-day decisions. The number of board members and officers (and their responsibilities) will vary and is generally defined in the articles of incorporation or by-laws.

Find the answers to all of your major incorporation questions in our new eBook

State to State Business Requirements

Business owners often differ in where they decide to incorporate. Some prefer to incorporate in their home state, while others prefer the benefits of corporate friendly states like Delaware or Nevada. However, it is important to consider state requirements, particularly requirements about qualification. 

1) Do I have to operate my business in the state where I incorporate?

The short answer is no. No state requires that you form your company in the state where you are doing business. And states like Delaware do not require that you conduct business in their state.  However, most states mandate that companies not formed there, but are conducting business in their boundaries, file a Certificate of Authority.This document in effect qualifies a business formed in another state to do business in the new state.  So if you form a Delaware LLC but are in fact conducting business in California you will have to qualify your business in California before you can do anything, including opening a bank account. This is much more expensive than simply filling your initial business in California. There are many factors that go into deciding where to form your business ans we recommend you speak with a lawyer or accountant if you are unsure. 

2) What does it mean to qualify in another state?

Qualifying to do business in another state is what happens when you are conducting business in a state other than where you initially formed your business. This may happen as your company grows and you decide to expand it in order to service neighboring states.  In other cases this happens because an individual decides for a number of reasons to form their company in a corporate friendly state like Delaware but plans to actually conduct business somewhere else. In this instance they can take advantage of Delaware laws and courts should they ever be sued, but qualify their business where they are actually located. 

Find the answers to all of your major incorporation questions in our new eBook

Incorporating without a Lawyer