Tuesday, June 15, 2010

Hope and the magic lottery (Seth Godin)

I get so many clients who come in my office with the "magic lottery" business idea.  I don't want to be a dream killer, but sometimes they need a dose of reality.  Seth hits it on the head with this post.  You gotta work hard to put yourself and/or your business in a position to be successful!!

Entrepreneurial hope is essential. It gets us over the hump and through the dip. There's a variety of this hope, though, that's far more damaging than helpful.

This is the hope of the magic lottery ticket.

A fledgling entrepreneur ambushes a venture capitalist who just appeared on a panel. "Excuse me," she says, then launches into a two, then six and eventually twenty minute pitch that will never (sorry, never) lead to the VC saying, "Great, here's a check for $2 million on your terms."

Or the fledgling author, the one who has been turned down by ten agents and then copies his manuscript and fedexes it to twenty large publishing houses--what is he hoping for, exactly? Perhaps he's hoping to win the magic lottery, to be the one piece of slush chosen out of a million (literally a million!) that goes on to be published and revered.

You deserve better than the dashed hopes of a magic lottery.

There's a hard work alternative to the magic lottery, one in which you can incrementally lay the groundwork and integrate into the system you say you want to work with. And yet instead of doing that work, our instinct is to demonize the person that wants to take away our ticket, to confuse the math of the situation (there are very few glass slippers available) with someone trying to slam the door in your faith/face.

You can either work yourself to point where you don't need the transom, or you can play a different game altogether, but throwing your stuff over the transom isn't worthy of the work you've done so far.

Starbucks didn't become Starbucks by getting discovered by Oprah Winfrey or being blessed by Warren Buffet when they only had a few stores. No, they plugged along. They raised bits of money here and there, flirted with disaster, added one store and then another, tweaked and measured and improved and repeated. Day by day, they dripped their way to success. No magic lottery.

What chance is there that Mark Cuban or Carlos Slim is going to agree to be your mentor, to open all doors and give you a shortcut to the top? Better, I think, to avoid wasting a moment of your time hoping for a fairy godmother. You're in a hurry and this is a dead end.

When someone encourages you to avoid the magic lottery, they're not criticizing your idea nor are they trying to shatter your faith or take away your hope. Instead, they're pointing out that shortcuts are rarely dependable (or particularly short) and that instead, perhaps, you should follow the longer, more deliberate, less magical path if you truly want to succeed.

If your business or your music or your art or your project is truly worth your energy and your passion, then don't sell it short by putting its future into a lottery ticket.

Here's another way to think about it: delight the audience you already have, amaze the customers you can already reach, dazzle the small investors who already trust you enough to listen to you. Take the permission you have and work your way up. Leaps look good in the movies, but in fact, success is mostly about finding a path and walking it one step at a time.

Originally posted by Seth Godin at Hope and the magic lottery.

Wednesday, June 9, 2010

Top 10 Reasons to Contact an Attorney Before Choosing a Business Form

Before starting a business you need to have a great idea and some money to invest in the enterprise. Will you start the business by yourself or with family members? Will there be other partners or investors who will not be involved with the management of the business? Will the new business be a sole proprietorship, partnership, corporation, or limited liability company (LLC)? It is best to consult a lawyer regarding the laws governing these different business forms, especially in areas such as personal liability for business debts, and the business's tax obligations. Call (951) 737-4040 ext. 2 or email Daniel J. Alexander II to discuss all of the following important business considerations.  Investing in preventative law on the front end will save you thousands of dollars and hours of frustration. 

10. Contracts. Most businesses implement contracts for space, services, and supplies. Business agreements between partners, investors, and employees are essential to forming a successful company. It is important to get it right to avoid ending up in court.  I spent over twelve years litigating business disputes and hundreds of those disputes revolved around ambiguous contracts.  I will make sure all your written agreements are as tight and straight forward as possible.

9. Registering, Licensing, and Permits. It is important to understand what is required of you when starting a business. For instance, some business entities must register with the state in order to be recognized; in other situations they may only be required to obtain licenses or permits. Consult Daniel J. Alexander II for more information.

8. Control. The manner in which a business is operated greatly depends on the type of business entity that is decided. Choosing the wrong entity may make you personally responsible for the wrongs of employees or partners.

7. Multi-State Business. The preconditions to forming and conducting a business entity vary by state. Be careful, as the protections you have in your home state of operations may be lost if you do business in another state.

6. Strict Conformity. It is important to note that with some business entities you must strictly conform to the state laws governing that business form or you may jeopardize losing certain benefits and protections.

5. Capital. Raising money, keeping accurate records of income and distributions, and behaving in a fiscally responsible manner are each very important to ensuring a successful business. Different business entities may have their own particular procedures for raising capital and making distributions.

4. Variety of Entities. Although there are five basic business entities, there are other alternatives within these entities that establish things like double taxation and liability for the acts of partners. The Out-House General Counsel understands all the ins and outs of business law.  For more information regarding your business entity, call Daniel J. Alexander II at (951) 737-4040 ext. 2. 

3. Autonomy. For many business entities, what you do not decide on will be decided for you. Most states have adopted "Uniform Laws" that fill in the gaps for business entities where their charters, by-laws, and other organizing documents are silent. You may be subject to a whole set of laws and regulations that you don't even know exist. The Out-House General Counsel knows California business state laws and regulations. To learn more about what “Uniform Laws” may affect your business, I encourage you to contact me.

2. Tax. There are a variety of business forms that provide different tax advantages and disadvantages. The only thing more crucial to a new business is cash flow and saving on taxes puts more of your business’ money to work for you.  I work with several business CPA's who will ensure that you are taking full advantage of all the tax advantages available to you.

1. Liability. Different business forms provide different protections and risks to the business owner/investor. Personal liability means that your business puts everything you own at risk. Speaking with an attorney can help you to avoid this situation or minimize your risk. Knowing about your personal liability and reducing the risk that your business may devastate the economic well-being of you and your family is worth the visit to your attorney. 

If you have any questions about any of the above, please do not hesitate to contact me at The Out-House General Counsel or (951) 737-4040 ext. 2.

Thursday, June 3, 2010

Are you a business owner behind on your payroll taxes?

If you are a business owner with employees and fail to file and pay your IRS Payroll Taxes, it will not go unnoticed. The IRS requires that you withhold Federal Income Tax, Social Security and Medicare taxes from your employees' wages. How much should be withheld depends on the employee's Form W-4.

These IRS Payroll Taxes must be paid on a quarterly basis: March, June, September, and December. Under certain circumstances, some small business owners may be eligible to file these taxes on an annual basis. Deposits can be made to the IRS electronically or by taking the deposit and required forms to a Federal Reserve Bank or other authorized financial institution. The IRS determines how often deposits are to be made, and they update these requirements each year, based on the annual payroll.

If you owe back IRS Payroll Taxes, the IRS can and will be very aggressive in its collection attempts. And the penalties the IRS can assess to a liability can drastically increase the amount owed in a very short period of time. The failure to make timely deposits is a large portion of these penalties.

And, not only is your business at risk, but you may be personally liable for any or all IRS Payroll Taxes owed. If the IRS determines the business cannot pay it's past due taxes, they will then focus on any individuals who the IRS deems as responsible.

If you owe back IRS Payroll Taxes, a business attorney or accountant may be able to help by designing a plan for paying those taxes and negotiating with the IRS so you don't get assessed with a bank levy or lien. If you are currently dealing with this issue contact The Out-House General Counsel to see if I can put you in contact with a tax professional who can help.  I can also be reached at (951) 737-4040 ext.2.