- Focus on money, even if that’s not your motivation
Millennials have earned a reputation for caring more about meaning and purpose than money. That’s a great outlook to have, but it won’t create a successful business. Running a successful business requires turning a profit, and someone in the company needs to have their eye on the almighty dollar. If your business doesn’t turn a profit, you can’t pay your bills, employees, or yourself.
You don’t need to make money your primary focus or motivation, but don’t ignore opportunities to increase profits.
- Research your desired name before registering your business
Before filing an application for your business name, make sure the name is available. If you don’t search ahead of time and your name is taken, filing your application will be a waste of time and money.
To run a quick search in your state, head over to IncFile’s business name search tool to find out if your proposed business name is already registered as an LLC or corporation. The search results will reflect up-to-date information and if your name is available you can form your business on the spot.
- Research entity options before forming a legal entity
If you’re already conducting business but haven’t formed an entity, it’s best to get it done as quickly as possible. However, avoid forming an entity just to check it off your list. Dig into each possible entity to figure out which one is right for your business. For example, you can register as a Sole Proprietor, S-Corporation, C-Corporation, Partnership, or an LLC. Each entity has advantages and disadvantages that vary depending on your long-term goals and your industry.
While you’re researching, you’ll probably get advice from friends, family members, and even your business partners. Thank people for their input, but consider only the advice from people with direct experience in forming and operating an entity. For instance, if your business partner has created several successful businesses under an LLC, their input will be relevant and valuable. However, friends and family might only be advising you based on what they’ve read or heard. Take inexperienced advice with a grain of salt.
- Know the difference between an LLC and a C-Corporation
There are major differences between an LLC and a C-Corp. However, the biggest difference outside of management requirements is that C-Corps are taxed twice. First, the business is taxed on profits. Then, dividends are paid to shareholders and those shareholders are required to pay taxes on their earnings. An LLC is a pass-through entity, which means the business itself isn’t taxed. Profits are distributed according to the agreement and each individual is responsible for paying taxes on the money they receive.
Forming an LLC is easier than forming a corporation, but that doesn’t mean it’s right for every business. While an LLC is perfect for many small businesses, in a high-risk industry you need the extra protection of a C-Corp. Also, if you plan on taking your company public in the future, a C-Corp will create a smooth transition when you’re ready.
If you’re not in a high-risk industry and you don’t want to deal with a Board of Directors and a full governing body, an LLC is probably the right choice. However, if your business requires a BOD and governing body to function, you should consider a C-Corp regardless of the tedious management requirements.
- Compromise when it’s the rational option
You might see compromise as a detriment, but it’s not always a bad thing. Sometimes a compromise can be in your best interest. When presented with a compromise, it’s worth taking time to consider.
For example, say you’re about to get your logo printed on 10,000 t-shirts and your business partner points out that the company logo might not fully represent the brand yet. They suggest printing a smaller batch of t-shirts just to be sure. No matter how much you believe your logo is perfect, you may want to consider compromising with your partner and holding off just in case. Six months later, you might change your logo and you’ll be stuck with t-shirts that no longer represent your brand.
Know when to compromise with business partners and when doing deals, but don’t be afraid to say no.
- Don’t compromise your values
While compromising on business decisions can be beneficial, don’t compromise your values. If you have high standards, you’ll butt heads with plenty of people, but eventually you’ll find partners and associates who get your vision and share your values.