FISHER & WESLEY CONSULTING SERVICES
Welcome to the home page of Fisher & Wesley Consulting Services.
We provide business consulting services, start-up registrations with document filing, and business management support. This includes assistance in the development of business policies and procedures, accounting services and writing business specifications for reports or interfaces specific to a clients needs.
We are located in White Plains, MD and our services are offered throughout the Washington DC metro area.
When deciding whether to incorporate a business, form an LLC, Limited Partnership, or Non-profit company, please be sure you have examined all the possibilities before you have come to your conclusion. This would include consulting with your tax and legal advisors. We cannot make this decision for you. We are happy to provide the services for filing and registering your proposed company, but the "go ahead decision" and the order must come from you.
Fisher & Wesley consulting provides the services for registration of all these specific companies:
Sole Proprietor:
This is the simplest business type to set up. There is actually no state government registration involved nor annual fee to pay like corporations have. When choosing a name for your business, if the name does not contain your personal name in it, then a "DBA" or "Fictitious Business Name Registration" will be required, to record your new business activity. However, this type of business suffers from maximum legal liability. You as the business owner are personally and completely liable for all business debts.
General Partnership: This is a little more complex than Sole Proprietorship to set up. When two or more individuals or existing companies decide to run a business together and share the profits and expenses, the business is a "partnership." Although partners usually have written partnership agreements, which define each partner's rights and obligations, the law considers a business venture of this type as a partnership whether or not there is a written agreement, and no governmental startup filings are required. However, it will be in your best interest to have a written agreement. Each partner has an equal voting decision in the management and control of the business. Each partner generally has unlimited liability for the debts of the partnership and is legally responsible for other partners' acts on behalf of the business, whether or not a partner knows about such acts. Profits and losses are brought through to the partners in the percentage as specified in the partnership agreement, and pay taxes individually.
Corporation:
A primary advantage of incorporation is the limited liability the corporate entity affords its shareholders. Typically, shareholders are not liable for the debts and obligations of the corporation; thus, creditors will not come knocking at the door of a shareholder to pay debts of the corporation. In a partnership or sole proprietorship the owner's personal assets may be used to pay debts of the business. Other advantages include the following.
· A corporation's life is not dependent upon its members. A corporation possesses the feature of unlimited life. If an owner dies or wishes to sell their interest the corporation will continue to exist and do business.
· Retirement funds, qualified retirement plans (like 401k) may be set up more easily with a corporation.
· Ownership of a corporation is easily transferable.
· Capital can be raised more easily through the sale of stock.
· A corporation possesses centralized management.
LLC (Limited Liability Company):
The LLC is not a partnership or a corporation. It is a distinct business entity that offers an alternative to partnerships and corporations by combining the corporate advantages of limited liability with the partnership advantage of pass-through taxation. LLCs offer numerous advantages.
· LLCs allow for pass-through taxation. This means that earnings of an LLC are taxed only once. The earnings of an LLC are treated like the earnings from a partnership, sole proprietorships and most S corporations.
· The LLC owner's liability is generally limited to the amount of money which the person has invested in the LLC. Thus, LLC members are offered the same limited liability protection as a corporation's shareholders.
· Like general partnerships, LLCs are generally free to establish any organizational structure agreed on by its members. Thus, profit interests may be separated from voting interests.
Nonprofit Corporation:
A nonprofit corporation is simply a corporation that is formed pursuant to a different state law than a standard for-profit corporation. The corporation must be formed for some religious, charitable, educational, literary or scientific purpose. While a standard business corporation is designed to benefit and generate a profit for its shareholders, nonprofit do not have the profit motive. Nonprofit corporations are allowed to apply for tax-exempt status at both the federal and state level.
If your nonprofit is granted tax-exempt status under 501(c)(3) of the Tax Code, your corporation will be exempt from payment of federal corporate income taxes. With federal income tax rates at between 15% to 34% this can amount to quite a tax savings.
A 501(c)(3) nonprofit is eligible to receive both public and private grants. Individual donors can claim a federal income tax deduction of up to 50% of income for donations made to 501(c)(3) groups.
Nonprofits also receive the same limited liability protection as for profit companies. This means that directors or trustees, officers and members are typically not personally responsible for the debts and liabilities of the corporation.
Limited Partnership:
A Limited Partnership is typically set up for investment purposes. There must be a minimum of two persons involved, where one person must function as the manager of the company (called the "general partner"), and the other partner is the investor, who is the "limited partner". Commonly though, there are many limited partners. The limited partner is restricted from his active involvement in the company. Only the general partner controls the daily business and the decision-making for the company's operations. A limited partner cannot advise, object to, assist, approve or disapprove of the general partner's job as manager. The limited partner's gain is usually a set rate of return on his financial investment in the company. Many real estate or pooled investment opportunities are constructed as a Limited Partnership. This is a rather specialized form of business, and not very many companies are actually formed and operated as limited partnerships for this reason.
Financing Your New Business
This may be a more difficult issue, as banks and lending institutions generally are not willing to take a risk by lending you money for a completely new business. The banks want to see that their investment in you will be a profitable one to them. So, whom do you turn to?
Private financing is often the only source possible. Sources include your own personal savings, loans from relatives and friends, or loans from private financing companies. Bear in mind, that private financing companies usually have a much higher interest rate than banks, and they usually require collateral, that is, an agreement to secure your loan by equipment you may use in your business. Then, if your business is having problems, and you cannot repay the loan, they will take your equipment.
Increasingly, there are companies that specialize in the providing of startup funding for new enterprises, through organizations known as "business incubators". These organizations can provide counseling and assistance to obtain loans and grants for new business, especially if the new business involves certain types of industries or services to the needy, as in Nonprofit corporations. Simply search the Web using your favorite search engine such as Yahoo, Lycos, etc., on the keyword or words "incubator", or "business incubator", or variations on these words, and you will find many sites devoted to this topic.
Another source: If you have already established a relationship with your bank, such as by having a home mortgage, it may be possible to arrange for a personal loan with them as well, based on the value paid off on that mortgage. This is called an equity loan, or an equity line of credit.
What is most important to understand, is that without a doubt, it is not easy to obtain an unsecured business loan without having an existing profitable business. Financing remains one of the biggest obstacles in a new business startup.
Business Licenses and Permits
Nearly every business, no matter where located, will need either a license or a permit, or both, depending on the activity of the business operations.
A license is usually issued to a person or a company to practice a certain profession, such as an accountant, lawyer, architect, or doctor, and is given to you only after the government has been convinced that you are competent by giving you a test. Other examples are hair dressers cosmetologists, real estate agents, barbers, massage therapists. You have to be licensed by the state first in order to operate a business. By forming and registering a corporation with a company name that contains the word "medical" in it, does not automatically allow you to operate as a doctor, health clinic, etc.
A permit is usually given to all other businesses, and the fee is based either on a flat rate schedule, or may vary depending on the category of your business operations. Permits may also take into account the location your business will occupy to be sure it is appropriate for that area. This is usually called "Zoning", and often it is a separate application from the standard business permit. For example, if you lease office space in a tall office building, you cannot operate a car repair shop on the 15th floor of that building. And a veterinarian's office is also probably not allowed. This is because the building is "zoned" as an office, not for the other types of businesses.
Working Solo
SBA Loans
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Copyright © 2001 Mandy J. Fisher. All Rights Reserved