Choosing the Right Business Structure: LLC, Corporation, Partnership, or Sole Proprietorship

small business Feb 08, 2024

Which business structure should you choose when forming or reorganizing your business?

This is a question every entrepreneur should ask because the structure will greatly affect your taxes and administrative paperwork. 

While LLCs have a low paperwork burden (especially sole member LLCs), corporations have tons of paperwork the owner has to do even if there is only one stockholder.

But corporations can help the owner avoid many thousands of dollars in self employment taxes if structured and handled properly.  But the tradeoff is that you will have to run payroll.

Next you will need to consider how much the Secretary of State filing fees are, and how much your renewals cost each year.  Your state might charge a different amount for an LLC than it does for a corporation.

You will also have to consider your tax filing status with the IRS if you choose a corporation.  You will usually want to choose "S-corp" status so that you can avoid double taxation applicable to...

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Starting a new business? Start here.

small business Jan 24, 2024

Howdy! We designed Podnah specifically for small business startups and solopreneurs just like you.

I’ve represented many small business owners over the years and come from a long line of entrepreneurs. I’ve seen people ask the same questions over and over, like: should I form an LLC or an S-Corp? What is an S-corp? Are there tax advantages of one over the other? How do I protect my assets? Do I need insurance?

After a while you assume that everyone knows the best answer to these questions. But you realize they don’t because you advise one client and then the next client is a totally different person.

I thought, how do I automate all of this knowledge, all of these “pro tips” to help people who are starting up their own business? How do I get this information to them cheaper than what it takes to hire a lawyer and an accountant?

If you’re like most of us, you don’t have a Series A investment behind you with all the attendant advisors and...

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What is a startup?

small business Jan 24, 2024

What are startups, how are they different than any other small business, and how do you build one?

I wondered this same thing a few years ago. I did not know what differentiated “startups” from regular small businesses. I was weary from litigating for a living and my first love was business and being creative.

I asked myself, “How do I start my own startup doing something I enjoy?” How do I create my own online business at home? The business news was filled with startup founders taking their companies public and having what seemingly looked like tons of fun (and getting rich in the process). How could I get in on this business fun?

If you ask ChatGPT for the definition of “start up,” (OpenAI is another startup), you will get an answer like this:

What is a Start up?

“A start up is a company or organization that is in the early stages of its development, typically characterized by its focus on creating and bringing innovative products or...

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What startup idea should you work on?

small business Jan 24, 2024

How do you decide which startup or business idea to work on?

To me, this is the hardest question to answer in your startup / small business journey. If you have many interests like I do, but lack focus, like I do, you will struggle mightily with this. But don’t worry. There’s a way out of it.

I believe that there is “white space” for startups that don’t aim to “change the world” or that don’t intend to reach multi-billion dollar valuations. I believe there is room for startups that are successful enough to support real families even if they never list their stock on NASDAQ.

In this white space, I see smaller businesses that use tech and tangible assets to produce sub hundred million dollar valuations, for example. Would you not want to build out your business idea if you could only sell it for $20 million?

Most accelerators, incubators, venture capitalists and Wall Street firms are hamstrung by the law of large numbers. They need...

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What is the statute of limitations on credit card debt?

business debt Jan 24, 2024

This is a very important question to ask if you are over your head in unsecured credit card debt. And the answer can mean the difference of having to pay it back or being able to walk away from it altogether.

The statute of limitations for credit card debt can vary from state to state and can depend on several factors, including the type of contract and the specific circumstances. It’s important to note that these limitations can change, so it’s crucial to consult with an attorney or legal expert and refer to the most up-to-date state laws to get the exact information.

As of September 2021, the statute of limitations for credit card debt in each state are as follows:

  1. Alabama: 3 years
  2. Alaska: 3 years
  3. Arizona: 6 years
  4. Arkansas: 5 years
  5. California: 4 years
  6. Colorado: 6 years
  7. Connecticut: 6 years
  8. Delaware: 3 years
  9. District of Columbia: 3 years
  10. Florida: 5 years
  11. Georgia: 6 years
  12. Hawaii: 6 years
  13. Idaho: 5 years
  14. Illinois: 5 years
  15. Indiana: 6 years
  16. Iowa: 5 years
  17. Kansas: 3 years
  18. ...
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Best State to Start an LLC

corporations llc sma Jan 24, 2024

What is the best state to set up your LLC?

If you are looking to create an LLC, you are probably also wondering what state you should form the limited liability company. In this handy guide, we will try to answer these questions for you.

 

The best state to form an LLC really depends on your specific business needs, goals, and preferences. 

If you are forming an LLC, you are mainly concerned with limiting your personal liability for whatever activity your business does.  You don’t want to lose your house in the rare event your business is sued.

Are you in a high risk business, meaning, are you likely to be sued?  Or are you in a low risk business where you aren’t concerned with litigation?  Do you value privacy more than convenience?

For most people, the TLDR answer is to form their LLC in their home state.  

It’s just easier and cheaper since your registered agent can be you.  If you have an LLC in another state,...

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Wisdom in Business

small business Jan 24, 2024

If you are looking for entrepreneurial wisdom, it’s impossible to go wrong by looking to King Solomon:

“Blessed are those who find wisdom, those who gain understanding, for she is more profitable than silver and yields better returns than gold.” Proverbs 3:13-18

“How much better to get wisdom than gold, to get insight rather than silver!” Proverbs 16:16.

Solomon knew that wisdom was more precious than gold because it could solve a lot more problems than just gold could.

In my startup journey, the most important piece of business wisdom I have learned in working for myself and attempting different tech startups, is to learn from each mistake you make.

Basically, never make that same mistake twice. We should apply this business wisdom to help us decide what to work on, how to invest our time on our business, and how we handle our personal and business relationships.

We can read all the business books, how-to guides and accelerator articles in the world,...

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Money in the Mailbox

small business Jan 24, 2024

How hard is it to make so-called “mailbox money?”  Pretty hard we think.  There’s really no such thing unless you are a landlord, own IP rights to music, books or movies or own oil wells.

One of the myths we see all the time on Twitter and really just the internet all over is that you can easily make thousands of dollars a month by creating some low quality AI website tool, or crank out Youtube videos and the money will just roll in.

The problem with this is that it’s just wishful thinking.  If you really want money to come in each month (“passive income” as we call it in the biz) you will need to get serious about what it will take to generate passive income.

One way many people make passive “mailbox money” is by owning rental properties.  This could be farm land, commercial real estate, single family dwellings or apartment complexes.  Our family owns some rental houses and farm land.  But the amount of...

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