October 5, 2016

There are a number of significant benefits for a small business owner to consider when determining if incorporation is the right path for their business.

We’ll discuss these main advantages below as well as touch on the downsides that incorporation brings.

To start with, lets cover what business incorporation is exactly. When you incorporate a business, you are, as far as the law is concerned, providing a formal legal separation of your own personal assets and those that belong to the business. In effect,your company becomes a separate legal entity in its own right.

What does this mean to you as a small business owner? In very basic terms it means that should your business hit hard times and go bust, you as the owner are not liable for the debts owed by the business, because they are owed by the business and not you. So once incorporated you can run your business in the knowledge that your personal savings and assets are not at risk.

For businesses with a short trading history, or a poor financial history or with few assets, most lenders will ask for personal guarantees to be signed to provide them with extra security. But as the business grows the requirement for personal guarantees will diminish, because the business itself will have more assets to secure finance against.

If you company fails after being incorporated, shareholders are only liable up to the value of the equity investment made, other than any separate personal guarantees that may have been signed. In other words you liability is limited to your equity investment, so you can lose your investment in the company, but beyond that your personal savings and assets are safe.

As well as the personal limited liability protection that incorporation brings, another significant benefit is that once incorporated it is often easier to borrow money or raise further equity investment to finance the growth of your business.

It becomes more straightforward to raise additional capital for a number of reasons. Incorporation signals to the financial institutions that your business is planning to be around for a long time and gives them a degree of assurance. Also, following incorporation, you business has set share structures making it easier to value the worth of the company.

Being able to value the company independently makes it easier to raise finance as the debt to equity ratio of the business can be analysed, and the share structure itself means that shares can be issued to raise new equity investment. Having a share structure also makes the transfer of ownership more straightforward should the need arise.

Amongst the downsides to incorporation are the additional statutory and regulatory requirements that you will have to meet, which can be costly.

Taxation should also be considered. The business structure and the way shareholders and directors are remunerated will determine whether more tax is paid or not following incorporation.

It is always recommended that you seek professional legal and financial advice before proceeding along the incorporation …

Today, businesses require effective business analysis in order to maintain competitiveness in a highly competitive business world. Effective business analysis involves taking information gathered from a variety of sources and analyzing for the purpose of forecasting future trends, finding ways to make improvements in business strategies, improving businesses operations, and making smart business decisions to improve the company’s bottom line. Understanding key marketing areas is essential to helping a business generate revenue and cut down on excess waste.

Business analysis can include market research analysis such as analyzing consumer data from such sources as transaction records, consumer surveys, polls…etc. It can also include financial analysis, inventory analysis, product and service analysis, and much more. Effective business analysis helps a business avoid making incorrect decisions that can result in time and money being wasted when going back to fix any problems as well as finding the right solution. The result of finding the right solution the first time is projects get completed in a timely manner, strategies are executed with the results benefiting the business, and there is effective monitoring of the project that allows for the best adjustments that results in the best outcome.

Effective business analysis allows managers to make sure accurate information is distributed and understood by the entire project team. With the correct information, the team is able to work together in an efficient manner to create a plan that has a higher chance of success. Today, there is effective business analysis software and applications that allows managers to not only keep up with current consumer shopping trends as well as forecast future trends. For instance, a supermarket that analyses and tracks customer purchases will be able to design and implement marketing strategies around their customers’ personal shopping habits. As well, data from surveys is another example of analyzing the information to determine the best way to market products and services.

It is not just consumer analysis that will benefit a business. Financial analysis is also important for a business. This can include analyzing budgets, cash flows, inventory costs, profit and loss statements, and balance sheets. By performing effective financial analysis, a business can identify spending waste and streamline operations to make the business more profitable.

Due to changing demographics and consumer habits, it is important that a business has a clear understanding of their current and future trends in order to meet changing consumer preferences. Fortunately, there is quality data mining software available that can help a business collect and analyze relevant data to improve operations and marketing strategies. As well, it helps identify populations and lifestyles including current and future behavior trends, and helps forecast future business decisions.

In today’s highly competitive market, you cannot run a successful business without understanding your customers as well as all facets of the company. Effective business analysis ensures the right decisions are made that will best benefit the business and mitigate incidents of unrealistic expectations that results in disappointments and loss of revenue. Effective business analysis allows a …

If you’re considering incorporating your small business you’re probably already aware of the main advantages, like protection of your personal assets. In this article I’d like to discuss some of the disadvantages of creating a separate entity for your business. There may be some negative factors you haven’t considered, since we’re not selling legal services we don’t mind talking about them.

Loss of personal Tax Credits

Incorporating your small business might not result in a significant reduction of taxes. As a sole proprietor you may actually be able to take advantage of enough personal tax credits, especially if you have a large family and low revenues. Corporations are taxed for every penny they earn. Unless you’ve got some amazing legal and financial resources able to shift money from one entity to another like huge conglomerates, your operation will be required to pay taxes on all earnings.

Reduced Tax Flexibility

Corporations have far fewer options than solo proprietorships for coping with business losses. For example: If as a solo proprietor your small business incurs operating losses you have the option of reducing personal income for that year. A corporation, on the other hand, is forced to carry operational losses to another fiscal year in order to reduce the entity’s income in previous or following years.

Owners of incorporated businesses are often liable for more than expected

Limited liability is of course the main reason many small business owners wish to incorporate. What no one tells you is that personal guarantees to secure financing often render the owners liable anyway. Smaller small businesses with limited assets often have as much difficulty securing operating loans as individuals. If your business has a considerable lack of assets lenders typically insist on a personal guarantees for loans from the owners themselves using their personal assets in place of the corporation’s. So in the end the owners become personally liable.

Registration expenses associated with incorporating a small business can be prohibitive

Another disadvantage of incorporating over sole proprietorships are initial set up costs. A corporation is a far more complex legal structure and the fees associated with their creation reach into the hundreds of dollars. Over time maintenance fees and increased accounting costs can reach thousands of dollars.

One more tax return to file each year

Just because you have a corporation doesn’t mean that you no longer have to file a personal tax return. The increased accounting fees add up and as mentioned earlier if your corporation loses money, you must continue to pay yourself the same salary and in turn pay taxes on that salary. In addition to an additional tax return as a corporation you’re required to maintain additional paperwork like, corporate meeting minutes and registers of the board of directors their shares in the company.

Before rushing off to form a separate entity for your company consider the seldom discussed negative aspects mentioned above and compare them to the benefits of incorporating a small business like yours to decide if you’re making …

As affordable Home Insurance in Florida gets more difficult to attain, it is extremely important for home owners and future home owners to be fully informed before purchasing a new home or shopping for new home owners insurance.

If one of these SIX conditions exist in the home, “BUYER BEWARE” as insurance may be difficult and potentially impossible to bind.

1) Fuse Panel

A properly installed FUSE PANEL by itself is typically not a safety issue, however most insurance companies have banned this type of electrical service for all new policies written. There are a number of reasons, some of these are noted below.

The main safety issues from fuses come into play when a homeowner replaces a blown fuse with too large of a fuse (i.e. a blown 15 amp fuse replaced with a 30 amp fuse which is readily available on the utility room shelf). The circuit is designed to “blow” if a load greater than 15 amps passes through. Now the “trigger” is set at 30 amps. An extra 15 amps just might be enough for the wiring or other components to heat up enough to cause a fire or other serious injury or damage.

A typical fuse panel can be replaced with a circuit breaker panel for $750 to $2,000 depending on any other upgrades that may have to be made in the replacement. Always get a minimum of THREE QUOTES from reputable Contractors before authorizing any work done.

2) Knob and Tube Wiring

Knob and Tube Wiring (K & T) was used from the 1880’s into the 1930’s. This early method of electrical wiring did a great job for many years and is still used today in some select governmental and industrial applications. However this old rubber or cloth coated wiring that strings along on porcelain knobs has outlived its useful life and is no longer insurable or even legal in residential applications per the National Electrical Code.

An average size home re-wire can run from $8,000 to $20,000 depending on the unique layout and access to electrical components. Always get a minimum of THREE QUOTES from reputable Contractors before authorizing any work done.

3) Aluminum Branch Wiring

In Florida, Aluminum Wiring has been in the spot light since 2010 when tens of thousands of Florida home owners learned they could not get insurance if they have this common wiring that was used frequently between 1965 and 1973.

Aluminum wiring is known to “cold creep”. The wiring expands as it heats up and contracts as it cools down, this can cause the wire to come loose at the connection and this can cause an arc which can heat up fixtures and start fires. Aluminum also oxidizes over time which can contribute to this fire safety issue.

There are two options to get insurance if you have aluminum branch wiring. First, and most costly (but the one we highly recommend) is to completely rewire your branch wiring to copper. This can cost on average, $8,000 to …