"I wanted to get back to being close to entrepreneurs. I wanted to be able to do things at my own pace, make mistakes, and nobody would care. People who observe me say I'm so much happier." Jerry Yang, founder and former CEO of Yahoo, on why he chose to start his investing fund after his departure from Yahoo
There are so many decisions to make as an entrepreneur starting a new business. From your business name to commercial leases to financing, there are decisions to be made at every turn. One decision that should not be taken lightly is your entity selection (also known as corporate structure or form). The type of entity or structure you select has both short-term and long-term implications for your business. You will save yourself money, time and a lot of headache in the long-run if you do a little upfront homework and select a form that serves both immediate and distant goals.
Sole Proprietorships What are they? A sole proprietorship is simplest business form and that is because you are your business. There is no legal distinction between you and your business when you are a sole proprietor. Any profits, losses, debts and liabilities incurred in your business are yours and yours alone. Establishing a sole proprietorship costs next-to-nothing as there are just the minimal fees associated with registering your business and obtaining necessary licenses/permits. The ease and cost-effectiveness of establishing a sole proprietorship are the biggest advantages of this structure. The biggest disadvantage is that owners’ personal assets are fair game if things go south with the business’ finances. Sole proprietors are also inherently limited in how much they can grow because of how exposed they are to liability. Who are they good for? Sole proprietorships are generally good for one-person, service-based businesses that do not carry large amounts of risk and no do not require large amounts of outside capital (investments). Independent designers, copywriters, accountants and consultants are a few professionals that come to mind as good candidates for sole proprietorships.
The Jumpstart Our Business Startups Act (JOBS Act) of 2012 set out to modernize federal law in an effort to encourage the creation, growth and success of businesses. The JOBS Act changed a number of securities regulations that were long viewed as overly burdensome on start-up and small businesses. Divided into seven sections or “titles,” the Act addresses a range of issues including the governance of emerging growth companies, online crowdfunding and the triggers that will require companies to register with the Securities Exchange Commission (SEC). Title I: Reopening American Capital Markets to Emerging Growth Companies Title I of the JOBS Act contemplates those businesses that are at the stage where they are preparing to become publicly-traded and owned. If these businesses have less than $1B in revenues over the previous fiscal year, they are classified as “emerging growth companies” (EGCs) and gain a number of privileges and exemptions under the JOBS Act. These changes are designed to make the process of an initial public offering (IPO) less arduous from a regulatory standpoint. For example, the SEC now requires two years of audited financial statements, instead of the previous three years, for a business’ IPO registration statement if that business qualifies as as EGC. The same relaxed two-year requirement applies to management discussion and analysis disclosures that are also required by the SEC. Producing these disclosures is both time-intensive and costly so decreasing the requirement from three years to two years is helpful to businesses at this stage. Other areas with relaxed requirements include executive compensation disclosures; auditor attestation reports (under the Sarbanes-Oxley Act); compliance with new accounting standards; submission and review of SEC registration requirements; restrictions on the publication of analyst research and communications; and, pre-filing communications with qualified institutional buyers.
Welcome to Coffeeshop Culture (CC)! If you've ever studied or worked out of a coffeeshop, you know there is an energy in coffeeshops that is hard to recreate anywhere else. That energy is innovative, persistent, enterprising, collegial, inspiring, bold and a little crazy. You have to harness all of these energies if you want to be an entrepreneur. The mission of CC is to provide you with a little virtual caffeine jolt that feeds your energy and motivates you to achieve the goals you have set out for yourself and your organization.
You may wonder how CC will energize and motivate you. Blog posts, interviews, videos, cheat sheets, breaking news....the sky is the limit! Ultimately, CC wants to be responsive to your needs as a business owner. Feel free to share your questions, comments, ideas, suggestions or general feedback by emailing BeansOfBizWiz@gmail.com.
DISCLAIMER: This blog is for informational purposes only and none of the information contained herein creates an attorney-client relationship. This blog is intended to serve as a resource and should not replace the hiring of an attorney.