Understanding the Pros and Cons of a Family Limited Partnership

Understanding the Pros and Cons of a Family Limited Partnership

A family limited partnership (FLP) is a legal entity that allows family members to pool their assets and manage them jointly, while still retaining the benefits of limited liability. Estate planners and asset protectors often use these partnerships as a tool.

Advantages

One of the main advantages of an FLP is that it allows family members to share ownership of assets while still maintaining control over them. This can be particularly beneficial for families that have multiple generations involved in the management of their assets. For example, parents can establish an FLP to manage assets for eventual transfer to their children while retaining decision-making power over those assets.

Another advantage of an FLP is that it can provide a significant tax benefit. By establishing an FLP, family members transfer ownership of assets into the partnership, taxed as a partnership instead of individually. This can result in a significant reduction in taxes for the family.

Disadvantages

However, there are also some potential downsides to an FLP. One of the main concerns is that the partnership agreement may be too restrictive for some family members. For example, requiring a majority vote for all decisions can make it difficult for minority members to influence outcomes.

Another potential downside of an FLP is that it can be difficult to dissolve the partnership. Unlike corporations, which shareholders can dissolve through a vote, dissolving an FLP requires all partners’ agreement. This can make it difficult for family members to separate their assets if they decide they no longer want to be in the partnership.

Another concern is that the partnership agreement may be too restrictive for some family members. For example, if the agreement states that all decisions must be made by a majority vote, it could be difficult for a minority member to have their voice heard.

There are also some potential legal issues that may arise with an FLP. For example, a poorly drafted partnership agreement could face legal challenges, and a court could dissolve a partnership not operated according to its agreement.

Despite these potential downsides, an FLP can be a useful tool for families that want to manage their assets jointly while still retaining the benefits of limited liability. Consulting a legal professional is crucial to ensure proper drafting of the partnership agreement and adherence to it in managing the partnership.

In Conclusion

Overall, family limited partnership is a great way to manage family assets and pass it on to the next generation while also enjoying the tax benefits. However, it is important to keep in mind that it has certain downsides as well like restrictions on decision making and dissolution of partnership. It is always recommended to consult a legal professional before creating an FLP and ensure that the partnership agreement is drafted properly and the partnership is run in accordance with the agreement. Contact Brenden Kelley Law at 216-644-3359 to schedule a consultation.


Connect with us: Business Law | Contact Us

Explore our other Blog Posts for Business Owners: Navigating the Resources of Small Business Administration in the U.S., Business Formation and Operation Using Series LLC in Ohio and Entrepreneurial Operating System: Align Your Team for Success.

Additional Resource: The Corporate Finance Institute provides a comprehensive overview and analysis of Family Limited Partnerships, including their advantages, disadvantages, and how they operate. This resource is valuable for understanding the intricacies of FLPs, including tax savings in estate planning, asset protection, and the transfer of family wealth to future generations

Entrepreneurial Operating System: Align Your Team for Success

Entrepreneurial Operating System: Align Your Team for Success

Learn the power of the Entrepreneurial Operating System. Teamwork is the lifeblood of every organization. Studies show that highly aligned companies increase revenue by 58% and are 72% more profitable. However, finding team alignment takes work. Some team members might have conflicting or competing priorities, while others might have misaligned goals and objectives, making it challenging to achieve organizational goals. Team alignment is critical for success in today’s fast-paced and competitive business landscape. 

Team alignment ensures that all teams, departments, and individuals within an organization work towards a common goal and are in sync with the overall strategy. It enables seamless execution of strategic initiatives, enhances productivity, and fosters collaboration, ultimately driving business growth. EOS (Entrepreneurial Operating System) helps organizations move forward by ensuring that all the energy within flows in one direction. It provides a framework for companies to get everyone on the same page, clarify their vision, set goals, and create a plan to achieve them.

What Is an Entrepreneurial Operating System or EOS?

EOS is considered a people operating system. It was designed and developed by Gino Wickman to empower entrepreneurs like himself to take control of their businesses correctly and focus on what matters most in driving results and increasing efficiency and productivity. As a holistic business operating system, EOS fosters an inclusive, entrepreneurial mindset in all employees to recognize and address issues that hinder a company from achieving its leadership vision.

The system includes a comprehensive set of simple concepts and practical tools that provide a framework for getting everyone on the same page. It creates transparency and clarity within your organization so that improvements can be made where necessary or maintained where they are already successful.  

EOS is based on six key components that help you to neatly assess, organize, and prioritize the most critical areas that are otherwise easy to overlook. It also provides tools that help you manage and maintain the transparency of the vital components, supporting a healthier framework for business to operate effectively and efficiently. The essential elements of EOS that serve as a foundation for business growth and success are vision, people, data, issues, processes, and traction. 

Benefits of the Entrepreneurial Operating System (EOS)

The EOS can be used by any business, in any sector, and anywhere around the world. It heavily focuses on comprehensive business strategies and management theories that help you see the best way of doing what you want, control your business, and reduce mistakes. By implementing EOS, companies can benefit in the following ways:

Gain Better Clarity and Focus Within the Organization

The EOS framework helps leaders articulate their vision, set clear goals, and identify key priorities. Clarity is essential for a company’s success since it ensures that leaders and teams have the same understanding of the business’s goals, strategy, and operations. With clarity comes better decision-making, improved communication, and stronger team alignment, leading to increased efficiency, productivity, and profitability.

Improved Communication and Accountability

EOS includes accountability tools that leaders can use to ensure everyone works towards common goals. The accountability provided by EOS helps keep team members more focused and motivated by ensuring that everyone clearly understands their role in achieving your company’s vision.

Increased efficiency and productivity

The EOS concepts help businesses identify and eliminate inefficiencies in their processes, improving productivity and profitability. One of its key components is the process improvement framework, which provides a clear and concise procedure for establishing and improving key processes. The system also provides a framework for regular check-ins and progress updates, enabling leaders to keep tabs on implementing their process improvement plans.

More Decisive Leadership and Team Performance

EOS enables leaders to align their efforts and resources to a clear vision and set goals. When leaders clearly understand the direction they want their business to take, they can develop effective strategies to get there and make smarter decisions about how they allocate their resources.

How To Maximize the Key Components Of Entrepreneurial Operating System

Vision

A complex approach to strategic planning makes the process more daunting than it needs to be. Still, many organizations have trouble articulating the vision towards which they are meant to be driving growth. EOS tools streamline strategic planning and ensure leaders get right into it using simple templates with built-in deadlines. 

The model’s vision component includes eight questions plus the “Shared by All” concept. These questions help you pinpoint core values and focus. They also set a 10-year target and marketing strategy. You’ll outline a 3-year picture and a 1-year plan. Additionally, you list rocks and issues to address. These elements act as focus filters for your organization’s past, present, and future. The “Shared by All” concept ensures team unity towards common goals. It involves activating rituals and creating artifacts. Rituals are actions taken, and artifacts are created reminders of your vision.

It is vital to get everyone in your organization 100% on the same page with where you are going and how you plan to get there. For this reason, EOS has a component dedicated to an organization’s vision. Having plans puts you in control and gives your team a fixed place to return to should they lose direction.

People

You must have the right people around you to bring any vision to life. And this extends beyond the boardroom to include every position that your company needs to fill. Your organization must consist of people who understand your vision, believe in it, and promote it. There may be a lot of great candidates out there, but they might not be great for your company and vision.

The people component of the EOS consists of the right people and seats. To know if you have the right people, you must establish core values and ensure that team members align with them. On the other hand, the right seat is about having a robust Accountability Chart. This is a tool for organizational transparency that provides visibility to the roles and responsibilities for every seat and removes ambiguity about who does what. It also improves communication and collaboration throughout the organization.

Data


Your organization is awash in data, making tracking it nearly impossible. EOS lets you harness this data for your benefit. It includes a scorecard and measurables for an objective organization view. These tools ensure decisions rely on objective, trackable metrics, not opinions or feelings.

The scorecard captures key numbers for your leadership team. This allows consistent business performance monitoring. Each team member also gets a scorecard to align and measure their performance with your vision. With the scorecard operational, you can spot trends and patterns to determine strengths and areas for improvement.

Issues

Issues are a normal part of business, and instead of being viewed as obstacles, they should be seen as an inspiration for better and more efficient work. There is potential for them to become real problems if not solved, and to be prepared for all the potential issues and problems that may occur, teams need to be aligned.

This component helps your organization become great at problem-solving. It consists of the Issues List and IDS, collectively called The Issues Solving Track. Every team has issues, and the Issues Solving Track helps organizations quickly identify issues, prioritize them, and then practice the proven process of IDS to identify, Discuss, and Solve them.

The Issues List allows you to collect all your issues in one place, and anyone can contribute to it. The list can be made of anything that needs to be solved; it can be an obstacle, problem, or an opportunity. Once you have the list of issues, you can order according to importance. You must go deep into the issue using the IDS concept to determine the root cause.

Process

Having processes in place that everyone consistently follows is critical to your company’s success. This component is all about systemizing your business by identifying and documenting core processes that define how it runs. For this, everyone has to be on the same page with the essential procedural steps and follow them consistently, efficiently, and in a scalable way.

This phase aims to streamline processes and eliminate repetition so that you only have procedures that sustain your vision. Additionally, documenting your core processes allows new team members to get a quick and detailed view of exactly what it is they do. Everyone can understand what is happening throughout the business, building stronger organizational alignment. 

Traction

This step lets you bring your vision to life and see it to completion. Traction is often the weakest part of most businesses. Traction ensures that you meet your goals by instilling focus, discipline, and accountability. EOS provides tools that help teams stay on track and consistently work towards their goals. Accountability enables you to tackle challenges before they escalate into problems, ensuring smooth progress and firm performance.

Entrepreneurial Operating System: Our Final Thoughts

The entrepreneurial operating system allows entrepreneurs to take a step back from daily operations and focus on their business’s overall direction and long-term health. It helps you get clear on your vision and double down on your process implementation, eliminating guesswork. Adopting the EOS sets everyone on the same path with the same goals to avoid employees constantly asking the same questions or doing whatever they want. 

In conclusion, EOS fosters team alignment and direction by ending vision procrastination, helping build a rockstar team, and enhancing employee focus.


Connect with us: Business Law | Contact Us

Explore our other Blog Posts for Business Owners: Navigating the Resources of Small Business Administration in the U.S. and Business Formation and Operation Using Series LLC in Ohio.

Additional Resource: The Startup Magazine’s evaluation of EOS: Is EOS Worth It For Businesses

Business Formation and Operation Using Series LLC in Ohio

Business Formation and Operation Using Series LLC in Ohio

The Ohio Revised Limited Liability Company Act took effect in February 2022. They made several significant changes to Ohio limited liability company (LLC) law. Among them, the Act authorized the formation and operation of a new type of business entity called a  “Series LLC.” Here’s what Ohio businesses and those considering incorporating here need to know. 

What Is a Series LLC?

A Series LLC is a limited liability company that can establish one or more subsidiary entities. Each is called a “series” or “series of assets” that are separate and distinct from each other and the LLC itself. Each series can have its members, managers, business purpose, obligations, assets, and liabilities. They can also independently transact business, sue and be sued, and grant liens and security interests. Assets owned by or associated with a properly maintained series are shielded from the liabilities of other series and the parent Series LLC, and vice versa. 

A Series LLC serves essentially the same function as an LLC holding company but is easier to create and (potentially) simpler to operate. An LLC holding company typically owns interests in one or more other LLCs. These must be organized, registered, and maintained as a stand-alone corporate entity. In comparison, it takes just one filing with the Secretary of State to form a Series LLC. After that, that entity can establish and operate multiple series at its discretion. This is provided it follows certain recordkeeping and administrative requirements. 

How Do I Form a Series LLC in Ohio?

Forming a Series LLC in Ohio differs slightly from forming a standard-issue LLC. As with any LLC formation, you must file Articles of Organization with the Secretary of State and pay a fee (currently $99). To make your new entity a Series LLC, you simply include a statement in the Articles of Organization that the LLC may have one or more series of assets subject to the limitations provided in division (A) of section 1706.761 of the Ohio Revised Code

What Are the Features and Benefits of an Ohio Series LLC?

Like any limited liability company organized in Ohio, a Series LLC must have at least one member and maintain a statutory agent. Ohio law also leaves all of the other decisions about how an LLC is structured and managed to the discretion of its members. These are who usually set forth the particulars in an operating agreement. Series LLCs (and LLCs generally) are not required to file annual reports in Ohio.  

It is relatively straightforward for an Ohio Series LLC’s operating agreement to establish or provide for establishing one or more series. The only requirements are that Series LLC must designate at least one of its members to be associated with each series and must give each series either: 

  • Separate rights, powers, or duties concerning specified property or obligations of the Series LLC
  • Or to profits and losses associated with specified property
  • Or obligations
  • A particular purpose or investment objective.

One significant benefit of a Series LLC is that a series can hold an asset indirectly. In other words, the parent LLC can retain title to an asset while associating that asset with a series, thereby shielding it from all liabilities except those the series incurs. This can create significant efficiencies for Ohio businesses historically relying on holding company structures, such as real estate ventures, hospitality groups, construction firms, and investment funds. To also secure these benefits, the Series LLC must merely maintain records that account for the assets associated with each series separately.

What Problems Might Arise with an Ohio Series LLC?

Although Series LLCs have been around for years (more than 20 states allow them), they are new to Ohio law. For now, some potentially complex business formation and operation questions related to Ohio Series LLCs remain open, such as:

  • What constitutes adequate record-keeping to maintain the separateness of a series?
  • Can a series file for bankruptcy separate from its parent LLC?
  • Will states with no Series LLC laws honor the legal separateness of a series created by an Ohio business?
  • Is a series a separate taxable entity?

In time, court decisions, regulations, and statutory updates will likely resolve these and related questions. But for now, the newness of Ohio’s Series LLC structure is something businesses here should keep in mind. 

Wrapping Up

Ohio’s recent authorization of Series LLCs is a potential boon for business owners for business formation. Adopting a Series LLC structure can lead to significant cost savings and administrative efficiency. But it also comes with some legal uncertainty. Businesses considering forming a Series LLC in the Buckeye State should discuss their options with an experienced commercial lawyer. Contact Brenden Kelley Law at 216-644-3359 today to schedule a consultation.


Connect with us: Business Law | Contact Us

Explore our other Blog Posts for Business Owners: Navigating the Resources of Small Business Administration in the U.S., 5 Important contracts to know when starting a Small Business and Choosing the Best Corporation in Ohio: S-Corp or C-Corp?

Additional Resource: For a general overview on starting a business in Ohio, you can refer to the “Starting a Business” section on the Ohio Secretary of State’s website: Starting a Business – Ohio Secretary of State.

Cuyahoga County Property Reappraisal 2024: What Homeowners & Businesses Need to Know

Cuyahoga County Property Reappraisal 2024: What Homeowners & Businesses Need to Know

Every six years, the comprehensive Cuyahoga County Property Reappraisal evaluates all commercial and residential properties. During these mandated checks, county assessors review the sale prices and property characteristics of homes and small businesses to establish new valuations. The forthcoming reappraisal in Cuyahoga County, scheduled to take place from October 2, 2022, through April 30, 2024, will impact over 522,000 properties, reports Cleveland.com.

The county assessor’s office arrives at this number by researching official property records to tally the total number of residential/commercial parcels within Cuyahoga County’s boundaries. New valuations determined through the reappraisal will take effect for the 2023 tax year and remain in play until the next six-year reappraisal is due. This periodic reassessment allows the county to distribute property taxes equitably based on accurate, up-to-date property values. As a Cuyahoga County resident, this guide can help you understand what to expect and how you can prepare.

The Reappraisal Process: What Property Owners Can Expect

The Cuyahoga County property reappraisal process will involve teams of private sector appraisers and county employees reviewing each property. Reappraisals begin with county assessors inspecting properties to verify characteristics like living area size, number of bedrooms and bathrooms, and any renovations or upgrades.

Timeline and Methodology

Appointed appraisers will consider recent sale prices of comparable properties to determine current market values. Homeowners can expect a notice in the mail if assessors need to access the interior of their property. Once inspections are complete, assessors will analyze property characteristics and market trends to assign new valuations.

Once preliminary values are online, homeowners can review them and provide feedback before finalization. New property values aim to represent what the home could sell for in the current market. Increases in a home’s value do not necessarily mean taxes will rise by the same percentage. Homeowners have the chance to formally challenge the new valuation before the issuance of tax bills for the New Year if it seems off-market.

How Appraisers Can Help

Appraisers can provide documentation of any errors for assessors to review before determinations become final. Come January, homeowners will see the impacts of the new property values on their tax bills. Local governments and school districts set millage rates that, along with the home’s value, determine taxes. Property owners can ask their county auditor questions or concerns about the new amounts owed.

To ensure a smooth reappraisal process, homeowners should have records of all renovations or condition issues and consider hiring an appraiser to evaluate the home’s market value if disputing the new appraisal amount. Maintaining an accurate property profile helps ensure an equitable valuation.

Impact on Property Taxes

A property’s new appraised value affects the owed taxes, as they’re based on its proportion of the total taxable value within the area. The last reappraisal in 2021 saw an average property value increase of 16%, leading to higher tax bills for many owners as their properties made up a larger share of the taxed valuations.

Clarifying House Bill 920

If rising values continue, tax bills could increase even after applying Ohio’s tax reduction mechanisms. Fortunately, not all value increases translate to higher taxes, thanks to Ohio’s House Bill 920, which limits tax increases due to inflation. Passed in 1976, HB 920 caps annual tax increases on individual properties unless ownership changes; this provides stability for long-term owners.

However, this “safety net” may not fully offset higher taxes that result from substantial value increases over multiple reappraisal cycles. For example, a home that increased in value by 16% during the last reappraisal as values rose across the county could still see tax bills increase by more than 3% even with HB 920 caps.

What This Means to Business Owners

Business owners do not receive the same protections from HB 920 as residential owners. For them, large increases in the appraised value of commercial properties may translate directly into higher taxes each year—this cuts directly into profits.

With operating expenses also on the rise, marked property tax hikes could strain the finances of companies that own their facilities. Both homeowners and commercial property owners will want to carefully review the Final Tax Letters mailed by the county to understand how upcoming appraisal changes and tax rates will ultimately affect what they owe in 2024 and beyond.

Contesting Cuyahoga County Property Reappraisal Values

Property owners who disagree with their new appraised values have the right to an informal hearing with the Cuyahoga County Board of Revision. There are several reasons why this would happen. For starters, assessors could make mistakes when measuring a home or miss recent renovations that increased a property’s value.

During the Cuyahoga County property reappraisal, the comparison properties might not accurately reflect the specifics of the owner’s home. Market trends over the past six years in a neighborhood may have been volatile and not accurately captured. The assessor’s opinion of a property’s condition or quality could differ from the owner’s view.

Inspectors might overlook or misinterpret damage or structural issues found during their assessment. Simply put, appraisals, which involve human judgment, leave room for errors, so property owners have the right to contest values they feel are inaccurate. This is where assistance from the attorneys at Brenden Kelley Law comes in.

Importance of Legal Representation

It’s highly advisable for property owners contesting new appraised values to have qualified legal representation. A skilled real estate lawyer can review the appraisal details, identify any potential flaws in the assessment, and effectively argue the owner’s case before the Board of Revision.

It’s also not easy to navigate the legal process, let alone comprehend property assessment terminology. Representation from a law firm well-versed in property tax disputes greatly increases a homeowner’s or business owner’s chances of a successful appeal and a fairer valuation.

Preparing for a Board of Revision Hearing

The Cuyahoga County Board of Revision is the initial reviewing body that hears formal complaints and appeals from Ohio property owners regarding their newly appraised property values. It has the authority to determine whether the assessed valuations are equitable and make adjustments if evidence demonstrates errors in the appraisal.

Board Member Responsibilities

Board members are tasked with fairly evaluating the testimony and documentation presented by property owners and county assessors to decide whether the contested valuations should remain unchanged or be modified.

Appeals Process

The decisions of the Board of Revision may then be further appealed to the Ohio Board of Property Tax Appeals or the county Court of Common Pleas. To request a hearing, owners must submit an application for the review of real property value between 1st January and 31st March 2025. The application requests information about the property, including the owner’s rationale for disagreeing with the appraised value.

Evidence Consideration

Note that submissions received after the deadline may not be accepted for review in the current cycle. The Board of Revision, consisting of county employees, will consider evidence such as comparable sales, estimates for repairs or upgrades, and recent purchase amounts.

Prepare All Documentation

All evidence must be clearly presented and explained at the hearing to demonstrate why the appraisal is inaccurate. Owners and assessors will have a chance to discuss the evidence and reasoning before the Board. To prepare, one must consolidate documentation like appraisals, contractor bids, permits, and photographs.

While property owners can represent themselves at hearings, hiring an attorney familiar with property tax law gives petitioners a leg up during what can sometimes be a protracted process. An experienced real estate attorney can ensure all necessary documentation is prepared and submitted correctly. They can also present the owner’s case and address any counterarguments from the assessor with professional ease.

Board Decision

Finally, the Board issues decisions by March 31, and based on the evidence presented, decisions will notify owners if the value has been lowered, upheld, or raised. Any value adjustments will be reflected in tax bills for the following year, and owners dissatisfied with the decision can further appeal to the county or state boards.

Community Implications and Historical Context

Cuyahoga County experienced its largest property value increase in over 30 years at 16% in 2021. This impacted tax bills and the local housing market. Rising values benefit the county through increased tax revenue but can strain homeowners and small businesses.

The upcoming Cuyahoga County property reappraisal is likely to have wide-reaching economic and social consequences for the community while values and taxes adjust. Past reappraisals have driven renovation projects as owners sought to increase property values. They’ve also led to higher rents that have impacted tenants. Local leaders will monitor impacts on affordability, development, and whether certain areas see declining values.

Cuyahoga County Property Reappraisal: Let Brenden Kelley Law Be Your Expert Guide

The upcoming Cuyahoga County property reappraisal will undoubtedly result in changed property values and tax impacts for many residents and business owners. Given the magnitude of this county-wide reassessment and the potential for market fluctuations or appraisal errors, some property owners may disagree with their newly assigned values. Handling an appeal through the Board of Revision process is no easy feat without experience in property tax disputes. The attorneys at Brenden Kelley Law have extensive expertise advocating for residential and commercial clients contesting unwarranted reappraisals. Our representation will help ensure property owners receive a fair hearing if they believe errors were made in valuing their properties under the upcoming reassessment. Call us at 216-644-3359 today to schedule a consultation for a comprehensive case assessment.


Connect with us: Property Tax Appeals | Contact Us

Explore our other Blog Posts for Property Owners: Navigating Unfavorable Property Tax Assessments: How to Appeal and Why You Need an Attorney

Additional Resources: Understanding Property Taxes in Ohio – This page from the Ohio Department of Taxation provides an in-depth look at how property taxes work in Ohio, including assessment processes and taxpayer rights. Board of Revision Filing Guide – Cuyahoga County’s official Board of Revision page offers a step-by-step guide on filing a property tax complaint, including deadlines and requirements.

Navigating the Resources of Small Business Administration in the U.S.

Navigating the Resources of Small Business Administration in the U.S.

Small businesses are the backbone of the American economy. 61.7 million Americans work for small businesses, defined as businesses with less than 500 employees. The U.S. Small Business Administration was put together to help support these businesses through loans and other resources. However, many small business owners are unfamiliar with these resources, which are well-designed to help you with your unique challenges.

Find out about the tools and services the SBA provides to help you plan and grow your business.

Plan Your Business: Laying the Foundation

Success as a small business owner requires intention and planning. Some people may accidentally “fall” into entrepreneurship, perhaps after a job loss in a difficult economy. But those businesses that thrive are those that have a plan. The Small Business Administration can help with this.

Market Research and Competitive Analysis

Do you know who your audience is? Do you understand the competition? Is there space for your business in the area you most want to go into? Answering these questions requires the thing a new business has the least of: data.

The SBA provides market research and competitive analysis resources. These include resources to help you find existing sources that can show things like household incomes and industry trends. They also have resources to help you do your research through surveys or focus groups. You can get time with a counselor to help you design your market research plan and put limited resources where they will be most effective.

Many free, reliable sources can help you with your research and analysis, such as the U.S. Census, consumer spending statistics, etc. The Small Business Administration brings them all together in one place.

Writing a Business Plan

You have to have a robust business plan, but knowing how to write one is a skill that not everyone possesses…including many business owners. Your business plan should go through everything from the initial structure to your five- or ten-year growth plan. A good business plan can help you attract business partners and angel investors. There’s no right way to write one, but the SBA provides advice and templates to help you create a business plan that is clear and understandable.

Reading example business plans can help you understand what needs to be in there and why. For example, you need to include your financial projections, your marketing strategy, and the legal structure of your business.

Startup Costs and Business Credit

Your new business needs money to start, but to get a business loan; your business needs a credit score. You can’t afford to risk unless you have a nest egg; this can be a problem.

The SBA can help in two ways. First of all, they have resources to allow you to calculate all of your startup costs. This is helpful if you’re trying to get investors or a grant. It can also help you estimate when you will start to turn a profit and, thus, how much you need to potentially set aside for your living expenses. The Small Business Administration has fillable spreadsheets and advice on which costs to consider.

Secondly, they have advice on how to build credit for your business. Your business’ starting credit score is based on your personal credit history, so it’s a very good idea to pay off your credit cards before starting a business. The SBA has resources for improving personal credit and establishing and managing business credit.

Launch Your Business: From Vision to Reality

Most businesses that fail do so soon after launch. A solid launch moves your business onto the trajectory of success. However, a mismanaged one will put you on the scrap heap of “That was a good idea.”

The Small Business Administration can help with several areas of properly launching your business.

Choosing the Right Location and Structure

Your business’s location might be affected by non-business concerns, such as a spouse’s job, the need to be near your parents, putting your kids in good schools, etc. However, if you have location flexibility, you can choose a jurisdiction that has favorable tax and regulatory conditions. For some businesses, you might also want to include the location of your target market, the level of competition in a particular area, or suggestions from business partners.

You might, for example, relocate to an underserved area to start your home improvement company. Or you might relocate yourself to a favorable tax and business license environment if running an online business.

As for structure, you may choose to stay as a sole proprietorship if you have no intention of hiring employees, become an LLC (if your business is higher risk), or establish a C corp or S corp. Forming a corporation can help you attract more investors, but C corps aren’t always favorable tax-wise. The SBA has a variety of resources to help you compare different business structures as well as research the best location.

Business Registration and Compliance

Most businesses need to be registered. Some states don’t require you to register if you are doing business under your legal name and aren’t in a regulated profession. However, doing so can provide tax benefits, make it easier to prove profit intent if you are a pass-through entity and get audited, and potentially protect clients by demonstrating that you are not their employee.

The Small Business Administration can help you navigate this and work out whether you should register your business. They can also help you with tax paperwork, getting a federal tax ID, or trademark protection.

Financial Management

Opening a business bank account can be complicated or straightforward. (All businesses should have a separate bank account, including sole proprietorships). The SBA can help you choose the right bank, which may or may not be the bank you are already using, and get together the paperwork you need. You should also get a business credit card rather than putting business expenses on a personal card.

You should also get business insurance. The Small Business Administration offers a clear explanation of what kind of business insurance you should get and how to do so. In some cases, you may be required to get certain types of insurance.

Grow Your Business: Expansion and Adaptation

Some people are happy with a business that is doing what they do best. Others have the goal of selling the business or want to grow it further. As your business grows, the SBA will help you develop it in various areas.

Financial Management and Employee Hiring

As your business grows, you will need to get more serious about financial management. Many business owners hire a CPA, but you still need to have basic bookkeeping skills yourself. Their resources explain how to do a cost-benefit analysis, how to choose an accounting method (most small businesses start at cash but may move to accrual later), and understand GAAP.

Hiring your first employee is a major milestone for your company. The Small Business Administration explains the basics of compliance and how to distinguish between employees and contractors. It also has resources on required and optional employee benefits. Labor law compliance is extremely important, and even when you are too small to have to abide by a lot of the regulations, it’s best practice to stick with them from the start.

Marketing, Sales, and Cybersecurity

Unfortunately, you can’t just put a product or service out there and hope for the best. Marketing and sales are part of doing business, and the SBA has advice on how to make a marketing plan, when to measure and update it, and how best to accept various types of payment. They also have an example marketing plan to help you understand how to write your own.

Most small businesses don’t have much in the way of cybersecurity, but they are often targets because they don’t have the same security infrastructure as larger firms. Most small business owners feel vulnerable, but can’t afford professional IT solutions. The Small Business Administration advises on best practices, such as training employees to spot phishing emails and using good antivirus software. The SBA and its resource partners also offer in-person and virtual cybersecurity training events regularly.

Emergency Preparedness

How would your business cope if your town was hit by a natural disaster? What about a data breach? For very small companies, what if a key employee (or you) winds up in the hospital? Most small businesses don’t have proper emergency preparedness. In this situation, the SBA addresses this by providing disaster recovery checklists for a variety of disasters, as well as emergency toolkits and guidance. The SBA also offers low-interest loans for businesses struck by disasters to help you get back on your feet. There is no cost to apply for these loans.

Manage Your Business: Sustaining Success

Once you have a business, keeping it never ceases to be a challenge. While a lot of the SBA’s resources are dedicated to fragile early-stage businesses, they also have help for ones that are well-established but may need a little bit of assistance.

Obtaining Additional Funding and Expansion

If your business needs more funds, you might need to attract new investors. It can be easier to go back to people who have helped you in the past, but that’s not always an issue. The Small Business Administration can help you make a case, such as for money to get through the slow time of year. The SBA runs local resource centers where you can meet with business mentors and local experts (and if you become successful enough)… Lender Match will help you find a lender who offers an SBA-guaranteed loan, which is handy for high-risk businesses.

Sometimes, the best way to grow is a new business location. This can get complicated, especially if you end up with locations (and employees) in multiple states. The SBA can help with this and advise if you’re ready to take the major step of selling franchises.

Special Focus on Diverse Businesses

Finally, the SBA offers special advice and assistance for diverse businesses. This includes offices for women-owned, Native American-owned, Veteran-owned, military spouse, LGBTQ-owned, rural, and minority-owned businesses. If you fall into any of these categories, you may be able to get extra help. You may get assistance, including access to women’s business centers or help for rural businesses in historically underused business zones.

Empower Your Small Business Administration in the U.S.

The U.S. Small Business Administration offers comprehensive tools and services for small businesses at every stage. You can leverage these resources to build stronger, more resilient businesses that thrive in today’s market. We can provide practical and actionable advice to help you make the most of this.

If you need legal representation, we help with options to fit your budget and needs, as well as advising on compliance issues and regulations. Contact Brenden Kelley Law to find out more!


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Explore our other Blog Posts for Business Owners: 5 Important contracts to know when starting a Small Business and Choosing the Best Corporation in Ohio: S-Corp or C-Corp?

Additional Resource: The Small Business Administration’s page Calculate Your Startup Costs, helps entrepreneurs estimate the costs of starting their business, which is crucial for securing funding and setting financial goals. It includes guidance on conducting a break-even analysis and other financial planning tools.