Category: Entrepreneur

As a small business owner, there are many decisions you will need to make many decisions that will impact your company for years to come.

Among these decisions is which corporate entity is best for your business. In this blog, we will review 5 different types of business entities (single and multi-member LLC, C Corp, S Corp, Partnership, Sole Proprietorship) along with their advantages and disadvantages so you can decide which works best for your business.

Sole Proprietorship

Many small business owners form a sole proprietorship when they’re just starting out.

If you are a sole proprietor, this means that you own and operate your business by yourself. You have complete control. All the profits of your business are yours.

However, with a sole proprietorship, you have no liability protection, which means you are responsible for all losses and debts as well. If any legal issues arise, you will be held personally responsible and those debts will need to be paid from your personal account.

A sole proprietorship is one of the simplest and least expensive entities to form because no legal paperwork is needed. However, your city or state may require you to obtain a business license, so be sure to look into the requirements for your specific state. In addition, you will want to register your business name with your state.

When it comes to your business taxes, filing is quick and easy. You can file your business taxes with your personal taxes using a Schedule C form.

In addition, you can deduct expenses and losses from your business against any other income you might earn, which will lower your tax bill overall.

The one drawback about taxes for a sole proprietor is that you are expected to pay a 15% self-employment tax on all your net income, which covers Social Security and Medicare taxes.

You are also required to pay estimated quarterly taxes throughout the year. These payments are usually due April 15, June 15, September 15, and January 15. If you fail to pay estimated taxes quarterly, you may have to pay a penalty and interest on what you owe.

Overall, the advantages to forming a sole proprietorship are that it is the least expensive entity to form, you have complete control of your business, and tax preparation is quick and easy.

The biggest disadvantage is no liability protection.

General Partnership

A general partnership is simple to form. Like a sole proprietorship, your city or state may require you to obtain a business license, and you will want to register your business name with your state.

I’d also strongly recommend that you set up an operating agreement for your partnership. What are the roles and responsibilities of each partner involved? What percentage of the profits will you share? Determining this at the start will benefit your business as you get up and operating.

Like a sole proprietorship, a general partnership does not give you liability protection. This means each partner in the business is personally responsible for any debts or legal action.

General partnerships are also required to pay the 15% self-employment tax on all their net income as well as quarterly estimated taxes. However, as a partnership, you have a lot of flexibility and can deduct any losses in your business against other income to lower your taxes.

That’s where the similarities between a general partnership and a sole proprietorship end. Partnerships add more complexity because there are multiple owners involved.

In a partnership, you will file a partnership tax return every year on Form 1065. Then, each partner is given a Schedule K-1 showing their individual share of the profits and losses, based on your agreement. That means you will need to file a form as a partnership as well as the Schedule K-1 as part of your personal tax return.

Single Member LLC vs Multi Member LLC

The main two types of LLCs are single member LLC and multi member llc. Comparing single member LLc vs multi member LLC, you want to account for how many owners are involved in the business. More of the similarities and differences between these two business structures are discussed below.

Single-Member LLC

A limited liability corporation, or LLC, is more expensive to form than a sole proprietorship.

An LLC must be registered in the state where it does business. Each state varies slightly, but most require you to choose a distinct name and to file articles of organization. These articles of organization include information like your business name, address, and the names of its members. Many states charge a filing fee for the articles of organization. For most states, you file with the Secretary of State; however, each state is different, so carefully check the requirements in your state.

Unlike a sole proprietorship, an LLC offers liability protection, which means your business assets are separated from your personal assets. So, if your business is sued or runs into financial trouble, the business will be responsible for paying any fees, not you personally.

In addition, with a single-member LLC, you have complete control and flexibility. All the profits of the business are yours, and you can deduct any losses in your business against other income to lower your tax bill.

However, like a sole proprietorship and partnership, you will be required to pay self-employment tax on all of your net income to cover Social Security and Medicare taxes, unless you elect to be taxed as an S corporation. You are also required to make estimated quarterly tax payments.

As a single-member LLC, you can elect to be taxed as a sole proprietorship or as an S corporation, which we will discuss in more detail below.

Multi-Member LLC

A multi-member LLC shares many similarities with a single-member LLC. For example, you get the same liability protection. You also go through the same formation process and file documents with your state. And you can elect to be taxed as an S corporation.

The main differences between a single-member and multi-member LLC revolve around the fact that multiple business owners are involved. Because of this, you can not elect to be taxed as a sole proprietorship. Your LLC will need to file a business tax form and each partner will need to fill out a Schedule E on their personal tax return, unless you elect to be taxed as an S corp, which we will discuss below.

In addition, some complexities arise with sharing control of the business, which is why you will want to have an operating agreement in place.

S Corporation

S corps have the benefits of a corporation but are taxed as a partnership. Like an LLC, an S corp separates business owners and their assets from the business. Creditors can only go after the business but can’t touch the business owner’s assets.

However, establishing an S corp takes more leg work and paperwork than an LLC. Most S corps spend a considerable amount on attorney and accounting fees.

An S corp also requires more maintenance. For example, to be an S corp, you must develop a board and bylaws, issue stock, hold board meetings, and keep records of each board meeting.

In addition, the IRS also has the following requirements for S corps: 1) shareholders must be US citizens, 2) you cannot have more than 100 shareholders (spouses count as separate shareholders), and 3) you can only have one class of stock.

The taxation of an S corp is what sets it apart from other business entities. When you have an S corp, your business is taxed through the shareholders’ income, and those taxes are taken out throughout the year.

Any shareholder who works for the company must be paid a reasonable wage. After the wages are paid, the rest of the income from the business is passed onto the shareholders as dividends. The benefit of an S corp is that dividends are taxed at a low rate if they are taxed at all. An LLC taxed as an S corp can also take advantage of these benefits.

To take advantage of these tax benefits, you are required to set up payroll for your owners and employees. The laws for S corps are not the same in each state, so you will want to look into individual requirements for your state.

C Corporation

Unlike an S corp, a C corporation protects the small business owner or owners by acting as a fiduciary barrier between the income a business brings in and the progenitors and stakeholders responsible for its operations as executives.

While S corps are considered “flow-through” entities, C corps are not. C corps exist separately as a taxable party in the eyes of the government. This “double taxation” notion is the key reason many small business owners opt to establish themselves as LLCs or S corps instead.

The decision between LLC vs. S corp vs. C corp vs. partnership is often fraught with pitfalls. While many publicly-traded companies are C corps on the books, this classification is typically only chosen by those with the means to dodge double taxation at the end of the year. Two common examples are lawyers at the helm of their own firms and doctors in private practice.

So, which entity works best for your business?

Unfortunately, there is no simple answer. Depending on your business, industry, structure, and revenue, different benefits might outweigh some of the disadvantages.

In addition, what entity works best for your business might change as your business grows. So the best advice I can provide is to know these pros and cons. Then, as the complexity of your business increases, seek the advice of experts who can analyze what works best for your situation. Paying extra for expert insights now can have significant payoffs in the long run.

If you want customized insights into your business, reach out to our team! We would love to help. We specialize in small business accounting, bookkeeping, and taxes, and we enjoy having ongoing discussions with our clients to help them make decisions that will lead to their business success.

In the world of business “highly efficient” and “super productive” are more like super powers than they are a skill set. If you’ve been in business long, you know that there’s an advantage to increasing your work flows to gain more of either of these descriptive words. They often equate to more clients, more sales, and more money. For small business owners, growing your biz is not only a dream it’s your passion so focusing on efficiency and productivity is pretty important.

You’ve also probably heard the phrase, “too much of a good thing” and when it comes to increasing the business super powers mentioned above, that might just be the case. Here are 3 efficiency tactics that are actually wasting your time.

Working During Vacation

It happens to all of us. We’ve worked hard to grow our business or build our career and that often means that vacation is pushed to the wayside. In a world where technology lets us stay on top of all the things, all the time – it’s easy to let work rule. Just like there’s buzz about efficiency there’s also buzz about “sharpening the saw” so we pencil in those vacation days and tell ourselves that we’re taking the time off so we’ll be better at work. Without fail, that vacation gets shortened or even worse, we take it but still try to tackle some work projects during those days off.

Working during vacation is a no-no. You may feel the quiet of your vacation schedule and think jumping into your emails or checking status on projects won’t hurt, but it does. Vacations are only restful if we actually rest. So when you’re poolside, turn the ringer of your phone off, ditch your laptop before you hit the beach – we’d even recommend leaving it at home! Take your vacation time as a moment not only to rest but to fuel your creativity – do things you wouldn’t normally do, try a new activity, mark something off your bucket list – it won’t only give you a chance to recharge, it will inspire you.

Doing Work-Related Stuff on Days Off

It’s 9AM on a Sunday morning and you hear your cell phone ding. Our hope is that it’s a friend or relative with a last minute brunch invite, but more often than not it’s a co-worker or boss getting in a little extra work on the weekend. Whether you’re the boss or the employee, working on the weekend or other days off hinders productivity rather than helps it. It gives the impression that you’re always available, and although that might seem like a good thing, it actually just shows that you might have problems managing your time.

When you’re at work, work. When you’re at home, be home. If work is your life, even on the weekends and those banking holidays that you’re lucky enough to get off, consider picking up a hobby or planning an outing with family or friends. If you’re worried about what others might think, make it a habit to come in early Monday morning, mention to your boss or co-workers that you’re working to be more thoughtful and focused both at work and home and that you won’t be answering emails until the work week starts again. Believe us, you’ll be more productive and focused and you’ll enjoy both your work week and weekend more.

Multi-Tasking

Doing all the things all the time isn’t efficiency, it’s just crazy. Technology is great and there might be those that tell you that multi-tasking is the way, but they’ve been duped by the promise of doing more in less time. Tasks take the time they take, and there are plenty of studies (not to mention it’s just plain common sense) that focusing on one task at a time will not only get it done faster, but better as well.

Instead of getting caught up doing all the things, make a list, prioritize and even consider setting a time allotment for each task. You’ll be surprised how much faster you get things done when you only have 20 minutes to do it.

What other tactics have you tried to help you be more productive? Did it work? We’d love to hear in the comments.

FAQs for Article on Efficiency Tactics That Are Actually Wasting Your Time

1. Why is working during vacation detrimental to productivity?

Working during vacation prevents you from fully resting and recharging. True relaxation requires disconnecting from work, which in turn fuels creativity and overall productivity when you return.

2. How does working on days off negatively impact efficiency?

Working on days off blurs the line between work and personal time, leading to burnout and reduced overall productivity. It’s important to maintain a clear separation to ensure you are fully rested and ready for the work week.

3. Why is multitasking considered counterproductive?

Multitasking spreads your attention thin, leading to lower quality work and slower task completion. Focusing on one task at a time increases efficiency and improves the quality of your work.

4. What are the benefits of prioritizing tasks instead of multitasking?

Prioritizing tasks helps you focus on the most important and urgent work first, ensuring that critical tasks are completed efficiently and effectively. This approach also reduces stress and enhances the quality of your output.

5. How can I make the most of my vacation and days off to boost productivity?

To maximize the benefits of your time off, completely disconnect from work-related tasks, engage in activities you enjoy, and try new experiences. This not only helps you recharge but also sparks creativity and fresh perspectives when you return to work.

It seems like goals is a buzzword in business these days. We hear about solopreneurs achieving lofty aspirations and turning their side hustle into a corporation almost overnight. We read about the best tactics for corporate goal setting and how to implement change, and we’re constantly focusing on how to beat our stats, implement metrics and strategies, and set and crush goals that were once thought of to be impossible.

But with all the good that goal setting does, it also can cause a dangerous distraction. You might be shaking your ahead in agreement – the SMART goals, seminars, ways to make $1M overnight, and other tactics can often create a roadblock for our success rather than propellling us forward. Why?

Well, sometimes the big, fancy finish distracts us from focusing on what it will take to get there. But you’ve gotten it broken down into a million steps and everything is planned, right? Although SMART goals and planning are effective sometimes it really does obscure the path because despite it all we’re focusing on the end result rather than on being the type of person that can actually make the end result happen (and last).

We’re not saying that you won’t get there with goal planning – but it might go a lot faster if you look at the obstacles that are blocking your path and solve those, rather than try to create your own personal roadmap to success.

Here are a few things to think about when it comes to finding and overcoming the obstacles that might stand in your way:

• do you have the skills needed to accomplish the goal you have in mind? If your plan is to have an astronomically large net worth, but you currently don’t have one, odds are that you might be lacking a few financial skills needed to obtain your wealth. Start listing the skills you think you need and then check them off your list when you’ve got them. Those that you don’t have – make them a priority.
• prioritize the obstacles – we talk about strategy in business so apply that to the obstacles you’re bound to encounter and you’ll find that you’ll be crossing the goal finish line sooner than you might think. It’s not enough just to have a to do list with things you need to become or learn, figure out the best way to get it done and what to tackle first. Prioritizing allows you to blaze a clear trail and you might find you can even kill 2 birds with 1 stone.
• keep the end goal vague so you can focus on the here and now –we’ve heard plenty of big goal setters say that knowing the details is what drives you to accomplish that big goal. Things change, flexibility is key, and it might not even be possible to do something exactly to plan. Our recommendation? Keep the end goal vague and instead focus on the details that are happening right now that will propel you to that end goal. When we say vague, we still want you to know where you’re headed just don’t start picking out your big expensive sports car and figuring out how you’ll rule the world just yet.

What are you big goals? Or maybe your obstacles? We love talking business and big dreams… tell us in the comments.

Frequently Asked Questions:

Why can goal setting sometimes be a distraction?

Goal setting can be a distraction because focusing too much on the end result can obscure the path to achieving it. It might cause you to overlook the necessary steps and skills required, leading to frustration and stagnation.

How can I identify the obstacles blocking my path to success?

Start by listing the skills and resources you need to achieve your goals. Identify which ones you lack and make acquiring them a priority. By breaking down the process, you can tackle obstacles systematically and more effectively.

What is the benefit of keeping the end goal vague?

Answer: Keeping the end goal vague allows you to remain flexible and adaptable to changes. It helps you focus on the present actions and decisions that will propel you toward success, rather than getting fixated on a rigid, detailed plan that might not be feasible.

How should I prioritize the obstacles I encounter?

Answer: Prioritize obstacles by assessing their impact on your progress. Focus on the most significant barriers first and create a strategic plan to overcome them. This approach ensures efficient use of your time and resources, helping you progress faster.

Why is it important to manage expectations when setting goals?

Answer: Managing expectations prevents undue stress and pressure, especially when goals are unrealistic or overly ambitious. Setting manageable and attainable goals allows for consistent growth and helps maintain motivation by celebrating incremental achievements.

It’s all too easy to let our day jobs rule our lives. With technology at our fingertips we can constantly be in contact – checking emails, answering texts, and fielding phone calls. Our work schedules quickly feel up with business meetings, and collaborating with teams on projects, new product launches and much, much more. As small business owners, we’re guardians of our time and our success and the two are definitely linked. Today we’re sharing our top tips for keeping organized when it comes to your business calendar.

Make an Optional Calendar

Life is busy. We say no to lots of things… even good things that might help us take our personal and professional lives to the next level. The reason? Time. But if you’re like us, you’ve had the occasional afternoon open up and you’re left coming up with what to do or worse, wishing you could remember the dozens of tasks that you’ve been meaning to get done.

You’ve probably seen on your own digital calendar that you can set up multiple calendars and have them appear at a click of a button a master calendar. Events are color coded and it’s not only pretty to look at but effective. That said, it can still cause a lot of stress and an over-programmed life. When you say no to an event or project that you’d like to say yes to, slip it onto a “Optional Calendar” that way you’ve got the information at hand when your afternoon seems to open up and you’ve got free time you didn’t know you had. And you can shut down the regret of having to say no by simply turning the view option on that calendar off.  With an Optional Calendar, you can spend the time doing more rather than figuring out what to do with your free time.

Work in Blocks of Time

You’ve heard of batching tasks and we’ve even talked about automating processes, but there’s something to be said for blocking off chunks of time so you can hunker down and get things done. You’ve probably heard of many an entrepreneur or CEO that hits the office early so that they get a jump on the day – they’ve scheduled blocks of time for answering emails or brainstorming projects – often those things that aren’t easy to accomplish amidst a dozen interruptions.

Take a look at your schedule. Can you move your meetings all to the afternoon so you’ve got time in your office to take care of daily tasks? Maybe it’s best to schedule out reading and answering emails before 10 AM. No matter what you do, look for tasks that you do often or that require similar circumstances (like peace and quiet to return phone calls, etc.) and then group like tasks together.

Prep for Tomorrow

Half the battle of a successful day is being ready for what it holds. Some of the most successful small business owners we know make it a habit to spend the last few minutes of the day getting ready for the next. So what is it that they do?

Some review their schedule for the next day? Others write the last few emails and hit send, others clear off their desk, close out of tabs in their internet browser, and scribble down a short list of to do’s so they can hit the ground running. The best way to figure out what to do to prepare for the next day is to take note of what things you’re doing first thing in the morning – then add those tasks to your end of day and you’ll start the next day ahead.

Prioritize Tasks & Do What You Can, Now

The almighty to do list can get awfully long, so make sure you prioritize it once you’ve created it. Most efficiency experts say that planning to accomplish 3 major tasks each day is  a definite win. But what about all the little things you put on your list – where do those fit in? Instead of pushing them into tomorrow’s schedule stop and do them now.

Don’t wait to respond to that employee that needs an answer tomorrow – craft a short response and send it now. Once you prioritize your tasks you’ll be able to see which items need more thought and which ones can easily be accomplished or eliminated completely.

So what are some of the ways you stay organized in your business calendar and life? We’d love to hear your ideas in the comments below.

FAQs: Staying Organized on Your Business Calendar

1. What is an optional calendar, and how can it help me stay organized?

An optional calendar is a secondary calendar where you can add events or tasks you would like to do but are not essential. This helps you avoid over-scheduling and provides a list of productive activities when you find unexpected free time.

2. How can blocking time improve my productivity?

Blocking time involves scheduling dedicated chunks of time for specific tasks. This minimizes interruptions, helps maintain focus, and allows you to complete similar tasks more efficiently, improving overall productivity.

3. What are some tips for preparing for the next day?

Spend the last few minutes of your day reviewing the next day’s schedule, sending any final emails, clearing your desk, and making a to-do list. This preparation ensures you start the next day with a clear plan and focus.

4. How should I prioritize tasks on my to-do list?

Focus on accomplishing three major tasks each day. Prioritize by importance and urgency, and try to handle quick tasks immediately to keep your list manageable and prevent procrastination.

5. Why is it important to respond to small tasks immediately?

Addressing small tasks immediately prevents them from piling up and becoming overwhelming. It also ensures timely communication and keeps your workflow smooth and efficient.

Entrepreneurs and small business owners are often one-man shows. But just because your headcount is small doesn’t mean that your business has to be. In fact, you can save time, stress less and earn more by spending a little bit of time thinking through your daily tasks and implementing process automation where you can. For many small business owners, process automation sounds like something that’s only for large corporations or businesses that have exponential growth – but we’ve seen that process automation doesn’t just cut down on stress and save time, it also helps businesses grow – and grow quickly.

What Process Automation Can Do For Your Business

Just so that we’re clear, they type or process automation we’re talking about is anything that brings structure to repeated tasks or eliminates additional work. If you’ve created your business from the ground up, you probably either remember the days (or are still in them) where you’re crafting the same emails over and over, or feeling like you’re reinventing the wheel for every client, new product launch or customer service issue. The start up phase of any business is so focused on bringing in enough cash to support the business that we spend a lot of time spinning our wheels.

Why Process Automation Helps You Grow?

The simple answer – it frees up your time so you can focus on other tasks. But it also helps in a bunch of other ways. Process automation can save you money. For example, we have lots of clients who tell us that they’re super busy and need to hire an assistant. But when we look at their books, we can see that they might not be able to pay an assistant and that the income their brining in doesn’t seem to match up very well with the hours they tell us their spending. Hiring an assistant seems like a great way to reduce stress, but it could actually increase it. Instead, we recommend taking a brief look at the work you’re completing every day. Are you still drafting out customer service emails when needed or do you have a file of templates that you can tweak as needed? Do you process and package orders individually or do you batch tasks? You can see that answering a few simple questions and then putting together a little bit of a structured plan can quickly convince you that you actually don’t need an assistant you need process automation.

How to Get Started with Process Automation

We touched on this slightly above – the first step is to stop and look at what you’re doing over and over again. If you feel like you’re having to recreate the wheel, chances are you’ve got an area of your business that could benefit from process automation. Before you rush out and buy new equipment or purchase expensive software – make sure you stop and see if there isn’t an easy fix. Here’s our short list of process automation ideas that don’t require spending a bunch of additional money, but rather just a little bit of time:

• emails – dig through your sent email box and pull out those you’ve already drafted and that seem to need to be written again and again. Make a file of email templates, even save them in your drafts folder right there in your inbox and then make sure to just cut and paste and tweak as necessary. Even if you only have a template or two, you’ll be saving yourself at least a half hour each day.
• batching tasks – it’s one of the first things people suggest but also one of the last suggestions people actually take. But the time you can save by batching tasks is amazing. And it also simplifies your work day so that you’re not stressing about the fact that you didn’t get much done. Take 20 minutes and brainstorm all the areas of your business. You may only answer customer service emails during lunch time, and spend mornings picking product, packaging and getting it ready to ship. If you find yourself constantly brainstorming ideas for marketing or new products – schedule time to do it once a week rather than every day.
• bring in technology only when it’s needed – it’s true, tech and additional software can help streamline a process, but learning that software or implementing it can take time. If it’s a good trade off, then by all means bring on the tech, but if it’s going to take longer to learn/implement than the time it will save – it might not be worth it, at least not at this point. We find that lots of our clients have purchased software in hopes to save a buck and DIY their own taxes and monthly bookkeeping – we’ve also found that most save more money by outsourcing it to us than they ever did trying to do it themselves with a fancy software program. This isn’t always the case, but hiring an expert or specialist might be a better fit so don’t rule it out before you’ve checked into your options.
• buy in bulk & subscribe if possible for repeat purchases – when your business was new, you might have saved a buck or two by buying only what you needed right then. But a great way to cut cost and time is to buy in bulk. Packaging materials or raw material you use for product/services is a great place to put this method to practice. If you’re constantly shipping goods, consider purchasing larger quantities of packing material from a supplier rather than picking up just what you need at a retail store. If you’re a service based business requires that you keep certain tools or equipment on hand (like if you’re window washer and you know you’re going to need cleaner, rags and window cleaning tools) plan to not only buy in bulk but utilize a subscription option for your products if it’s available so you don’t even have to spend time filling your shopping cart with the needed products each month.
• keep a history – writing down how you do certain tasks while you do them will help you figure out what processes need or could be automated. It will also help you streamline how you attack events that happen over and over again in your business. Product launches, marketing campaigns, seasonal tasks – they’re all important but they might happen more infrequently than the day to day tasks. Keeping a history of what you did and then referring to it when it’s time to do it again will help save time and even help you pinpoint areas where you want to improve.

So what areas of your business could use a little streamlining? We’d love to hear what areas you’re going to add process automation to first!