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Business start-up information:
• Types of business organizations
• The top ten entrepreneurial traps/mistakes
• Take these steps before you start your business
• Business regulations
Helpful Websites:
• CT: Chapters and Chambers of Commerce
• CT Economic Development Commissions (download word document)
Business plans:
• Case study
• Business plans outline (download word document)
• Business plans workbook (download word document)
• Business plan checklist (download word document)
• Risk management
• Excel Spreadsheets for starting your Business Plan
Types of business organizations:
When organizing a new business, one of the most important decisions to be made is choosing the structure of a business. Factors influencing your decision about your business organization include:
• Legal restrictions
• Liabilities assumed
• Type of business operation
• Earnings distribution
• Capital needs
• Number of employees
• Tax advantages or disadvantages
• Length of business operation
Sole proprietorships partnerships and corporations
Sole Proprietorship
This is the easiest and least costly way of starting a business. A sole proprietorship can be formed simply by opening the door for business. There are likely to be fees to obtain business name registration [a fictitious name certificate] and other necessary licenses. Attorney's fees for starting the business will be less than the other business forms because less preparation of documents is required and the owner has absolute authority over all business decisions.
Partnership
The two most common types are general and limited partnerships. A general partnership can be formed simply by an oral agreement between two or more persons, but a legal written agreement is highly recommended to help solve any disputes. However, partners are responsible for the other party’s business actions, as well as their own.
Corporation
(Note: A business may incorporate without an attorney, but legal is highly recommended.)
A "C" Corporation has a charter legally recognizing it as a separate entity having its own rights, privileges and liabilities apart from those of the individuals forming the corporation. It is the most complex form of business organization and is comprised of three groups: shareholders, directors and officers. The corporation can own assets, borrow money and perform business functions without directly involving the owner(s) of the corporation. Corporate earnings are subject to "double taxation" -when the corporation is taxed and when passed through as stockholder dividends. Corporations have the advantage of limited liability, but not total protection from lawsuits.
Subchapter S Corporation
A "Sub S" corporation is taxed as a partnership or sole proprietorship, with the profits taxed at the individual rather than the corporate rate. To qualify as a Subchapter "S" corporation, a business must meet certain requirements (see IRS publication 589).
LLC’s and LLP’s
The Limited Liability Company (LLC) is rapidly becoming a very popular business form. An LLC combines selected corporate and partnership characteristics while still maintaining status as a legal entity distinct from its owners. As a separate entity, it can acquire assets, incur liabilities and conduct business. As the name implies, however, it provides limited liability for the owners. LLC owners risk only their investment. Personal assets are not at risk.
The Limited Liability Partnership (LLP) is similar to the LLC with the exception that it is aimed at professional organizations.