Why an LLC or Corporation Alone Doesn’t Fully Protect a Business Owner from Liability

Are you a business owner that has chosen to form an LLC or a corporation? Rest assured you are not alone. According to Yahoo, 543,000 new businesses are started each day, and women in entrepreneurship grew by 114% according to Fundera.

Out of the 543,000 businesses that are started each day, many of them were LLC’s and corporations.

Don’t Co-mingle Money

Business owners who form LLC’s and corporations do so for the limited liability protection. However, did you know the protection is as good as the steps taken after the entities are formed? For example, a business owner may not be aware of the importance of having a business bank account. This type of account must be separate from the owner’s personal account. If a business owner does not keep these accounts separate, this is known as co-mingling and can cause serious liability issues.

The IRS and Your Business

Another important aspect to consider is the election status given only by the IRS. A business owner is notified about this election status provision when the EIN number is applied for.

An LLC that is single member will be treated by default as a sole-proprietorship by the IRS. A corporation will be treated as a C-Corporation by default. It will be taxed at the highest possible tax rate. Therefor, it is important to request an election that will benefit your business tax-wise in the long-run.

The IRS will either grant or deny your business the elections afforded through the IRS, and you will receive a letter in the mail notifying you of your business’ election status after you file the proper forms and the IRS completes the processing of your company’s information. The time limit to apply for a specific election for a new business is usually two months and fifteen days – specifically for S Corp election. You risk being assessed penalties if the paperwork for election isn’t filed in a timely manner.

Credibility, Credit, and Limited Liability

Business owners are oftentimes unaware of business credibility and business credit. These two things are not one and the same, yet they limit a business owner’s liability significantly, because the business will have its own identity apart from the owner. This identity is built on the company’s EIN number and not on the owner’s SSN.

Business credibility is something that is looked at by creditors, lenders, and vendors. It is also looked at by customers. A credible business will limit the liability of a business owner and when coupled with successful marketing will grow a company’s revenue exponentially.

Business credit is the foundation of a credible company. It is the credit that is reported on the company’s three business credit profiles when a company pays its debt on-time. When this credit is extended without a personal guarantee, it is limiting the liability of the owner and building the company’s creditworthiness.

The Thought of Not Having A Credible Company is Disturbing

It is important to speak with your consultant, tax professional, and legal professional when establishing your business. The information contained in this article is for informational purposes only and is not to be taken as legal or tax advice.

If you want more information about building the credibility of your company specifically you may arrange a free fifteen minute consultation by filling in your name, email address, and phone number in the box below.

https://learn.g2.com/small-business-statistics

 

 

Does Business & Spirituality Mesh?

Sleep Away

The mingling of business and spirituality has been questioned for centuries. This article will give a more bird’s eye view into the topic and uncover some hidden gems that may well just surprise you if your answer to this question is no.

Business owners come from all walks of life, all ethic backgrounds, and  different age groups. They have various religious backgrounds; some are atheists and with the different variables, business owners have different core values and beliefs according to their upbringing, religious beliefs, education, status, etc. With these factors coming into place, the duty of providing a good or service in exchange for money can seem far from any connection with spirituality as far as the North is from the South; however, in this article we are about to dive a bit deeper into history and modern times to assess any correlation between the two.

When Jesus Walked

Going back in time approximately two thousand years ago was a man who walked the earth whom many of us refer to as Jesus Christ. You don’t have to be a Christian to know of this man for his story has been told across the world. We aren’t going to evaluate the reason many say he came, but we are going to evaluate some details about his life when he walked the earth. You may ask, why reference Jesus? Well, in the culture that I live in, many profess to be Christian or Muslim and therefore, Jesus Christ is a very important figure in the lives of the aforementioned. This article doesn’t seek to leave out the other thousands of religions, but since we’re in a culture that relies heavily on Jesus as an example, we are referring to him today.

Jesus was a teacher and a great leader. He was able to take twelve men – who might I add were business owners and inspire them to go about the business of preaching a religious message to mass amounts of people. Four of the twelve were fishermen by trade and assisted in running family businesses; they were Simon aka Peter, his brother Andrew and James and his brother John. Matthew was as we know in modern times, a tax assessor, Simon was something of a politician, Luke was a doctor, Paul the 13th apostle was a tentmaker once he became a believer, and the others, – well we don’t want to assume, but more than likely they were business owners as well.

How the Disciples Handled Business

What is significant to mention is that oftentimes, these men would leave their duties as business owners behind for a time and follow Jesus to further the kingdom message or the gospel. In reading the details in the scriptures, they would go back to working in their trades for a time as well. This goes to show that when one is striving to further the will of God on a full-time basis, there may be little time to pursue business interests also. However, it is interesting to note that Paul would preach and find time to run his business at the same time as mentioned at Acts 18:2, 3. He also became acquainted with others who shared the same trade. They took care of their own needs by running businesses that would assist them in furthering the good news about God’s Kingdom. In this case Paul used a money earning profession to support a voluntary profession – preaching and teaching about God.

When Business and Spirituality Were Inappropriate

On one occasion, Jesus walked into the temple and there were business men selling sacrificial animals and accessories to the people. Jesus made a whip of ropes and drove them out of the temple. At Matthew 21:12, he said, “It is written, my house will be called a house of prayer, but you are making it a den of robbers.” Looking at the principle behind this, selling items in a place of worship to make a profit is akin to robbing and should not be done. There is a clear distinction here where business and spirituality and/or worship should not mix. It is offensive to God.

Tests of Morality

Let’s take a further look into the topic. Oftentimes, in business people are tested on matters of honesty, moral judgement, and integrity. For example, a business man may have been married for several years. He could have a very attractive assistant who works for him daily even taking trips with him to assist with business. Will he harness lustful eyes for her or will he continue to remember the agreement he made to be a faithful husband? He could erroneously reason that these are business trips, and having an affair with his assistant could relieve his stress from the hustle of handling business affairs while he is away from his wife, and it won’t go further than the office or the trips. Or he could take a spiritual look at the situation and look at his marriage as a contract between God, himself and his wife and vow to not breach the agreement. In this case, choosing to uphold morality is a spiritual decision on the context of business and beyond. They go hand-in-hand and would benefit this business man in the short-term and long-term in business and in his marriage.

Self Discipline or Self-Control

Another example to consider is that of self-discipline or self-control. A well disciplined individual is able to accomplish and complete goals that are set before them on behalf of themselves and others. Self – control is mentioned as a quality that is given as a spiritual gift – Galatians 5:23. Self – control is mastery over oneself, controlling various passions and desires that do not benefit the greater good. Self – control is a spiritual quality that is very much necessary in business. Take for example a person who is responsible for handling large amounts of money for others. This person is entrusted with responsibility and must have self-control in order to handle the money wisely. Many individuals who have lacked self-control or self-discipline have breached this trust and made off with millions of dollars. We hear of examples like these in the news quite often. One famous example is that of BernardBernie” Lawrence Madoff. He was responsible for a large Ponzi Scheme that left many without their life savings, and he serving federal time because of his lack of self-control and dishonesty. Also, at the root of this situation is greed which is spoken against in the holy writings. Greed can take a business under faster than a bolder in a boat with a hole in it.

Spiritual Values

Spiritual qualities – positive qualities that are unseen but are manifested through one’s actions can benefit a business owner. Business owners who have core spiritual values in essence do their best to treat people the way they would want to be treated. Ask yourself, “Do I like being lied to?” Would I want a cheating business partner? If I had a spouse who owned a business, would I want them sleeping with the staff?” If you don’t care, then this article isn’t for you, but if you can honestly answer these questions and reflect on how you would want to be treated and relay that treatment to others, you have in essence merged spirituality with business and your business will be built on a solid foundation, not a shaky one where you have to “watch your back” to see when you will “get got: so to speak.

The next article will discuss various spiritual values that can aid in growing a business’ revenue.

 

 

Failure is a Step to Success

You are looking to start a venture, a business, a blog, or you have an idea that you want to share with others so that you may improve their lives. You started implementing your idea, but then, something happened, the results were not as expected. Your audience did not respond the way you thought they would, the money did not flow, and your idea failed. Do you give up? Do you look yourself in the mirror and say, “I’m a failure. I will never amount to anything.” Through hell or high water, you should never say those words. You should never give up!

They Didn’t Give Up

Do you imagine that Albert Einstein succeeded the first time he attempted to implement his “Theory of Relativity?” Do you think the Wright Brothers succeeded the first time they attempted to fly? Or do you suppose modern day greats like Tyler Perry succeeded the first time he came up with an idea for a play and proceeded to implement it? The answer to all these questions as you most likely know is, no. They all failed the first, second, and even third attempts; however, the difference between you and them is this. They grew balls the size of Texas and went harder.

Woman, man, or child reading this article, you will come up with great ideas; however, if you never implement them, you have already failed. If you keep trying, guess what? You are putting the odds in your favor to being closer to that big break of success. So keep in mind this one thing, your failing at your great idea is getting you one step closer to your success story. If you shall succeed the first time, I applaud you! However, I will say what you have heard a million times, “Never give up!” Look for the next blog post on how to succeed after failure.

Here is a great success story about the founder of Moore Financial Services. Click here to read the article.