Making Words Work

Posts tagged ‘United States’

Good Leaders are Good Communicators

Being a leader is a massive responsibility!  You are expected to get and keep the team up and running efficiently at all times. Anyone that has been a leader can tell you that the task is easier said than done.  After all, we are all human and have daily rhythms and emotions that we need to take into consideration.

Myth

One of the myths that leaders fall into is the myth that they are responsible for the team.  Each team member is responsible for themselves and their portion of the work.    As the leader, you are responsible TO the team, not for the team.  You are to provide the team members with the tools and opportunities to do the job but the members are responsible for making themselves happy.

Team

Most people want to belong to something larger than just them.  Most team members know there is something
larger than themselves in being a team member.  A healthy work environment contains team members that care for each other as well as themselves and the team as a whole.

Value Your Team

The best investment in your vision is to have the right people around you helping you achieve your goals. It is important that you show them you value them…a win-win opportunity.  You give them the opportunity and they give you great work in return.

Clear Roles

You, as the leader must give clear roles for each person in the team.  Each person should know their role in the organization and what you expect from them in their role.  You will need to have total trust in each person you put in each role and make sure that both are a good fit.

Respect and Gentle Conversations

Showing respect for others is a key in the leadership role.  Here is where you will be leading by example.  All eyes will be on you,
especially when things go wrong.  What you do in those times will set precedent with all other members of the
team.  If you are kind and gentle and show respect others will follow. No one is perfect and mistakes will happen.

Guidance

Most often in leading a group you are required to teach others.  What this really means is guiding others on their journey.  The
decisions you make must be based on the team benefit rather than your own personal agenda.  You will be a mentor,
advisor, role model and cheerleader.

Information Sharing

All team members must be willing to share information with others freely.  We all know what happens when information sharing is on a need to know basis…communication breaks down and everyone is trying to “catch up” but no one ever does.  When information is shared freely, the atmosphere becomes one of creativity instead of complaining.

Giving Back

We all want to give back to the community.  As a leader, make sure that people have the  knowledge and resources to give back to the community.  We all WANT to do this but only about 30% of  the people make it happen.  As a leader, you can help increase that percentage.

Limited Liability Corporations (LLC)

This is the third of a four-part series on Business Entities.

 

Limited Liability Corporations

The LLC is often described as a hybrid business form.  It combines the liability protection of a corporation with the tax treatment and ease of administration of a partnership.  As the name suggests, it offers liability protection to its owners from company debts and liabilities.  Most of the laws governing this type of business were passed in the 1980’s and 1990’s in the United States.

The cost of setting up an LLC is roughly the same as setting up a corporation. 

If the company grows too large for an LLC, it is easily converted to a corporation. 

Advantages of the LLC

 

  • LLCs do not require annual meetings and require few ongoing formalities
  • Owners are protected from personal liability for company debts and obligations
  • LLCs enjoy partnership-style, pass-through taxation, which is favorable to many small businesses

 

Disadvantages of the LLC

  • LLCs do not have a reliable body of legal precedent to guide owners and managers, although LLC law is becoming more reliable
  • An LLC is not an appropriate vehicle for businesses seeking to become public eventually or to raise money in the capital markets
  • LLCs are more expensive to set up than are partnerships
  • LLCs usually require annual fees and periodic filings with the state
  • Some states do not allow the organization of LLCs for certain professional vocations

 

Next up:  Corporations

How to Choose the Right Entity for Your New Business

Which entity is right for you?

Part One of a four-part series of posts

When starting a business, the first thing should be to decide what entity it will be. Most business owners don’t think about this until their CPA asks, “What entity is your business?” As a tax-preparer, I have seen the blank stare many times from clients that didn’t completely understand what they were getting into when they started their business.

Hopefully, this information will help.

The right entity for your business will depend on your business goals. You will need to answer questions and think of where you want to take your business in the future before you can answer most of them. Here is an easy to understand lesson in what each option means and a helpful chart (included in the 4th post) to help you choose wisely.

Let’s get started.

The entity that is heard about most often is a sole proprietorship.

A sole proprietorship is indivisible from its owner. It can operate under a trade name. No formal papers have to be filed; the status arises automatically from buying or selling goods.  A sole proprietorship is just a fictitious name or a “doing business as” clause. The real name is you. For instance: John Barr has a plumbing business. John Barr is the real name and the fictitious name is the company he operates, John’s Plumbing. Both John Barr and John’s Plumbing are one in the same.

Taxes for the Sole Proprietor

Because a sole proprietorship is indistinguishable from its owner, sole proprietorship taxation is quite simple. The income earned by a sole proprietorship is income earned by its owner. A sole proprietor reports the sole proprietorship income and/or losses and expenses by filling out a Schedule C along with the standard Form 1040.

A sole proprietor need not pay unemployment tax on themselves, although they must pay unemployment tax on any employees of the business. That means that if the business fails, the sole proprietor does not get unemployment.

Legalities

Sole proprietor’s are personally liable for all the debts of their business. The potential liability can be alarming. For example: Let’s assume the sole proprietor borrow money to operate, but the business loses its major customer, goes out of business, and is unable to repay the loan. The sole proprietor is liable for the amount of the loan, which can potentially consume all their personal assets. In other words, you have no protection since the real name of the company is yours. In order to repay the loan you may have to sell everything else you have to come up with the money. You have no protection against your personal assets. They can all go away.

Advantages of the Sole Proprietorship

○ Owners can establish a sole proprietorship easily and inexpensively.
○ Sole proprietorships carry little formalities
○ Sole proprietors don’t have to pay unemployment tax on themselves
○ Owners may freely mix business and personal assets

Disadvantages of the Sole Proprietorship

○ Owners are subject to unlimited personal liability for loses, debts, and liabilities of the business
○ Owners cannot raise capital by selling an interest in the business
○ Sole proprietorships rarely survive the death or incapacity of their owners and so do not retain value

When choosing an entity, it is important to make a choice based on facts but also to think about the future and do the “what ifs” for you and your family.

Next up: Partnerships

%d bloggers like this: