Month: November 2008

Just Like The Movies – G -Force Consulting

Having worked in the entertainment business I learned that a script has a beginning, a middle and an end.  It does not take a rocket scientist to figure that out.  But, did you know that every scene has a beginning, a middle and an end?  That’s what is taught in script writing.  So, each scene has 3 parts AND the whole movie has those same 3 parts.  I took that concept, and some various leadership materials and decided a presentation should work the same way.

We all know when you present you start by telling the people what you want to tell them, you tell them and then you tell them what you told them.  Right?  I took it a step further and decided for each topic I would communicate 3 parts.  Get the attention of the audience with a story (beginning), evoke emotion through that story (middle) and then provide a reason for them to want to change and / or implement what I am communicating (end).

Just for fun and added information…I was talking to a friend who mentors me on astrology.  I told him this concept and he helped me relate the entertainment business to astrology.  For you astrology people here goes…the Houses (you know when you do your astrology chart there are 12 houses).  The Houses are the sets in a movie.  The planets are the actors and the planets play out a different scene with each other in each House (set).  Pretty cool…or maybe I am just a HUGE geek!  🙂

DID YOU KNOW?!

Planets, meaning wanderers, are named after Roman deities: Mercury, messenger of the gods; Venus, the god of love and beauty; Mars, the god of war; Jupiter, king of the gods; and Saturn, father of Jupiter and god of agriculture; Neptune, god of the sea.

All the planets in the solar system rotate anticlockwise, except Venus. It is the only planet that rotates clockwise.

Earth is the densest planet in the solar system and the only one not named after a god.

Earth is not round; it is slightly pear-shaped. The North Pole radius is 44mm longer than the South Pole radius.


What I need next?  Small and medium sized companies with large, complex projects. I manage their projects to keep them focused, on budget and within their timelines.  This results in cost savings, increased revenue and being more proactive than reactive in their behaviors.

Sincerely,
Gail

When you feel like giving up, remember why you held on for so long in the first place.

– unknown

G Force Consulting, LLC
Cell: 972-951-3338
Email: [email protected]
Website: http://www.gforceconsulting.com

Choosing The Form Of Your Business Part 2 – Corporations & LLC’s

Corporations

A corporation is an artificial legal person that carries on business through its officers and directors for the benefit of it’s shareholders. In most states, one person may form a corporation and be the sole director, officer and shareholder. The corporation carries on business in its own name and shareholders, officers, directors, and employees are not personally liable for it’s acts (except in very specific instances). Most entities that intend to raise capital for long-term growth form a corporation. Corporations work well because their structure allows for a wide variety of financing options and there is a continuity of existence. When a corporation is young or has few assets, a lender may require the majority shareholder, the directors or the principal officers of the corporation to personally guarantee a corporate debt.

An S Corporation is a corporation that has filed Internal Revenue Service (IRS) Form 2553, electing to have all profits and losses pass through to the shareholders under Sub-chapter S of the Internal Revenue Code rather than being taxed at the corporate level. An S Corporation files a federal income tax return on Form 1120-S, but pays no federal or state tax. The profit shown on the S Corporation tax return is allocated on a prorated basis according to stock ownership, and is then reported on the shareholders’ personal tax returns.

If you plan to raise capital, be aware of a number of restrictions placed upon S Corporations. First, an S Corporation may only issue one class of stocks and it can only have up to one-hundred shareholders. Those shareholders will primarily be individuals, because S Corporations cannot be owned by C corporations, other S corporations many trusts, LLC’s or partnerships. In addition, S Corporations may not have any shareholders who are nonresident aliens. If an S Corporation were to violate any of these rules it would lose its S Corporation election and be taxed as a C corporation.

A C corporation is any corporation that has not elected to be taxed as an S Corporation. A C Corporation pays income tax on its own taxable income under Sub-chapter C of the Internal Revenue Code and files a federal income tax return on Form 1120. Thus, when dividends are paid to shareholders, they are taxed twice – once at the corporate level and again as the shareholders. Recent tax law changes favorable to shareholders have, in part, mitigated this tax burden.

Unlike S corporations, C Corporations have no restrictions on the number or types of shareholders, and they may also have multiple classes of stock. Classes of stock generally consist of common stock, which is voting stock and one or more classes of preferred stock. Preferred stock is generally nonvoting, but usually has first preference to receive declared dividends and a preference in payment in the even of liquidation. When the board of directors of a C corporation defines the preferences of a particular class of pe3rferred stock, the corporation must generally file those preferences with the state prior to issuance of the preferred shares.

Advantages

Shareholders have no liability for corporate debts and lawsuits. Officers and directors have no personal liability for their corporate acts. Management of the corporation is vested in a board of directors that is elected by the shareholders. The board of directors appoints the principal officers of the corporation. Unlike a partnership or an LLC, in which an extensive agreement must be drafted that defines the rights and liabilities of the parties, the board of directors adopt bylaws for the corporation that are based primarily upon state corporate statutes that spell out the rights and liabilities of the shareholders, officers, and directors. Unlike a sole proprietorship, a corporation may enter into contracts and own property in its own name, and capital may be raised by selling stock or taking on debt. The existence of a corporation is usually perpetual and it is easy to transfer ownership upon death.

Disadvantages

The start-up costs for forming a corporation are generally lower than forming a partnership or LLC, because of the necessary drafting of a limited partnership agreement or LLC operating agreement. There are usually greater maintenance costs, however, because a corporation has statutory reporting and corporate formality requirements.

Whether you are operating an S or a C corporation, most states require that you file an initial report within thirty to ninety days of formation of the corporation, updating the contact information for the company, its registered agent, officers, and directors. All states require corporations to file some type of annual report updating the same information.

Required corporate formalities include adopting bylaws, holding annual meetings for the directors and shareholders of the corporation, electing directors, appointing officers, drafting resolutions to authorize corporate actions, keeping accurate minutes of meetings, maintaining corporate records, maintaining a registered agent, and paying taxes.

Limited Liability Company

Like a corporation, a limited liability company (LLC) is a separate legal entity formed under state law. Rather than being called a corporation, it is called a company, and it has members rather than shareholders. The document that governs the internal affairs of the company is called an operating agreement. Just like a corporation, some states require an initial report to be filed by an LLC within a short period of time after formation, and about half of the states require a report to be filed each year.

An LLC has the characteristics of a corporation in that all members have limited liability. If an LLC has only one person in its membership, it is taxed like a sole proprietorship (Form 1040, Schedule C.) If there is more than one member, the LLC is taxed like a partnership, so all items of profit and loss flow through to its members (Form 1065). An LLC may also elect to be taxed like a corporation.

An LLC can be governed like a corporation, with the board of managers and officers, or like a partnership, with a manager running the show. You can also have a member-managed LLC, in which all the members have decision-making powers. If you plan to raise capital from investors, however, you would want to have your LLC run by a manager or board of managers, as opposed to a member-managed LLC.

Advantages

An LLC offers the tax benefits of a partnership with the protection from the liability of a corporation. Like a corporation, an LLC offers a business owner protection from the debts, obligations, and liabilities of the business. Unlike a corporation, LLC’s are generally not required to have extensive corporate formalities, such as mandatory meetings and minutes. Unlike a limited partnership, members can participate in the operations of the business without jeopardizing their protection from liability.

An LLC is more flexible than an S Corporation because it can have different classes of ownership, a flexible management structure, an unlimited number of members, and resident aliens as members. In addition, an LLC may create special allocations of profits and losses for the different classes of ownership. If the company decides they would like to operate as a corporation later on, it can convert to a corporation tax-free under the IRS Code Section 351, with the LLC members exchanging their membership units for stock in a corporation.

Disadvantages

Formation costs for an LLC are comparable to a corporation, but because of an operating agreement needs to be drafted to allocate profits and losses of the LLC among the members and define control, extra costs may be incurred. Another disadvantage of an LLC is that all profits and losses are deemed distributed pro rata to members for tax purposes on the last day of the tax year, even though many companies need to retain some funds to meet their current expenses. As a result, some owners can be charged with income they have not actually received. Most well-drafted operating agreements provide for a mandatory tax distribution to cover the taxes due on the phantom income. Like a corporation, there is a remote possibility that members of an LLC may be held personally liable for the debts and obligations of an LLC. These cases are rare and are generally the result of the members disregarding the formalities of the entity and committing a fraudulent act that gives rise to personal liability.

See you next time with details on non-profits and more info on the formation of your business

Managing a Resilient Business

Keep your credit report updated

Ensure that your business is registered with the major reporting agencies such as Dun & Bradstreet, Experian, Equifax and TransUnion. If you’re already registered, review your company’s credit report for the following:

Check the details of your company profile, including the Service Industry Code (SIC).

Note if your credit rating is strong, average or poor.

Confirm the accuracy of your payment history.

Review your Uniform Commercial Code (UCC) to confirm accuracy of leases and liens.


Since lenders may take your personal and commercial credit bureau reports into account when assessing your ongoing creditworthiness, be sure to check your personal credit information for any errors as well.

Make timely payments

Another way to help build your business credit is to make your payments on time. A history of missed or late payments can make it more challenging to secure credit in the future.

It can also discourage potential clients and vendors who check your credit history from working with your business.

When it comes to American Express OPEN accounts, it can result in declined services at the point of sale, late fees, and a lowering of your line of credit.

Accounts that are continually delinquent may be reported to the credit bureaus and can be cancelled and sent to collections. Since many business owners’ business and personal finances are linked, this may negatively impact your personal credit as well.


Practice good debt management


It’s important to know that lenders may take your total debt levels into account when making lending decisions.

A key part of successful debt management is ensuring that you’re borrowing funds for essential business purposes – this can help keep debt levels down and may increase your ability to secure credit.

Another way to help strengthen creditworthiness is to avoid applying for credit from multiple sources in a short period of time.

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