| Every business requires a structure that will | | | | the pool of money required in funding a |
| withstand necessary legal and governmental | | | | business. Usually units of a Limited |
| scrutiny. The choice of how to organize a new | | | | Partnership are sold in equal dollar amounts. |
| enterprise should be made based on the needs | | | | Be sure and read the deal prospectus |
| and capacity of the owner(s) to maintain and | | | | carefully and skeptically. In addition, be |
| detail the records, history and finances of | | | | sure to familiarize yourself with the laws of |
| the business.Many simple service businesses | | | | the state where the business entity will be |
| are set up as a sole proprietorship. The lawn | | | | domiciled as the various states have |
| service I utilize is a sole proprietorship. I | | | | different laws in this area.A Limited |
| make out the check in the name of the person | | | | Liability Corporation is a relatively new |
| providing the service. If I do not spend over | | | | corporate structure that offers many of the |
| $600 per year with any sole proprietor I am | | | | advantages of the corporation and the |
| not required to fill out tax form 1099 and | | | | benefits of individual tax rates. An attorney |
| provide the information to the Internal | | | | will be able to advise if the Limited |
| Revenue Service and the service provider.The | | | | Liability Corporation is appropriate for your |
| sole proprietor is the method of structuring | | | | particular needs. |
| most entrepreneurs utilize when starting out | | | | |
| in a small-scale commercial venture. This | | | | A Corporation is the vehicle that requires |
| works if services provided are simple, of | | | | the most care and maintenance, as well as |
| relatively small transaction size, small | | | | providing maximum personal protection. A |
| inventory required and there is no need for | | | | Corporation is ostensibly a legal entity that |
| hiring and paying employees. As sales grow | | | | acts as if it were a person. Losses are |
| and the need to expand becomes apparent the | | | | incurred by the legal entity of the |
| entrepreneur will probably want to consider a | | | | Corporation, not by the shareholders of the |
| more formidable structure.Here is my advice | | | | Corporation. Assets of an incorporated |
| when considering the business structure best | | | | business are property of the Corporation, not |
| suited for your business, based on present | | | | the individual shareholders. The owners of |
| and future needs: consult an attorney. Taxes, | | | | stock in the Corporation enjoy benefits based |
| investment vehicles, partnering, harvesting | | | | on the number and status of their shares.An |
| profits, incorporation options, and | | | | attorney can advise the best state in which |
| depreciation or only a few of the areas of | | | | to incorporate based on your anticipated |
| concern a new business may need to consider | | | | needs. Nevada is the best state for secrecy. |
| and decide upon. A business attorney will | | | | Delaware is excellent for transparency and |
| have expertise in every area of concern and | | | | resolution of disputes. Some states are more |
| can construct the most appropriate structure | | | | business friendly from a tax and regulation |
| for your business and personal needs. The | | | | standpoint and all of these areas must be |
| ability to memorialize in precise legal | | | | considered before filing for incorporation.A |
| documents the exact terms, conditions, and | | | | Corporation will need to be assigned a |
| responsibilities of all officers and/or share | | | | Federal Identification Number in order to |
| holders in the company is invaluable when | | | | open a bank account at any financial |
| disagreements occur.The importance of written | | | | institution in the United States. The Federal |
| agreements and contracts, signed by all | | | | Government utilizes this number when tracking |
| parties to the transaction, cannot be | | | | tax, financial and employment data on every |
| overstated. No one ever enters into a | | | | incorporated business.The Articles of |
| business situation if they are 100% sure it | | | | Incorporation, annual meeting minutes, a |
| will fail. There is always an air of | | | | board of directors, corporate fees and |
| confident expectation that the business has a | | | | filings, state compliance and filing local, |
| good chance of success and will ultimately | | | | state and federal tax returns require a |
| prosper. Unfortunately, there is always a | | | | detailed, and potentially costly execution of |
| significant chance that results will be | | | | corporate governance. In addition, stock |
| disappointing and disagreements will occur. | | | | certificates must be appropriately accounted |
| Make sure that all parties to a deal have a | | | | for and capitalization requirements met and |
| full awareness of the business structure they | | | | maintained.Be realistic when choosing the |
| are participating in.Oral contracts and | | | | business structure that will offer your |
| agreements have been upheld in courts. | | | | fledgling enterprise the most useful features |
| However, they are much more difficult to | | | | based on present and future needs. Many |
| enforce than properly written and executed | | | | people file for incorporation, then realize |
| business structures. Do not leave important | | | | they do not need the hassle of maintaining |
| details to chance. Have proper documentation | | | | detailed books and records. Use the business |
| on hand for the protection of all | | | | structure that enables you to legally perform |
| parties.Partnerships, limited partnerships, | | | | every obligation required, while allowing you |
| limited liability corporations, and | | | | to be a slave to your business opportunity, |
| corporations are popular vehicles for housing | | | | not a slave to your corporate structure.Geoff |
| the legal structure of a business. Each has | | | | Ficke has been a serial entrepreneur for |
| benefits and liabilities, depending on the | | | | almost 50 years. As a small boy, earning his |
| needs and requirements of the business | | | | spending money doing odd jobs in the |
| owner(s).A partnership can be useful when | | | | neighborhood, he learned the value of selling |
| several parties bring complimentary assets to | | | | himself, offering service and value for |
| a venture. One partner might have a patent | | | | money.After putting himself through the |
| that represents a commercial opportunity. | | | | University of Kentucky (B.A. Broadcast |
| Another might have investment resources they | | | | Journalism, 1969) and serving in the United |
| can bring to bear. Yet another potential | | | | States Marine Corp, Mr. Ficke commenced a |
| partner has specific management experience to | | | | career in the cosmetic industry. After rising |
| contribute.I have entered into several | | | | to National Sales Manager for Vidal Sassoon |
| partnerships in the past with mixed results. | | | | Hair Care at age 28, he then launched a |
| If there is a bit of advice I can offer to | | | | number of ventures, including Rubigo |
| potential partners before they start it is | | | | Cosmetics, Parfums Pierre Wulff Paris, Le |
| this: have full agreement on how to harvest | | | | Bain Couture and Fashion Fragrance.Mr. Ficke |
| profit/loss when success/failure occurs. One | | | | and his consulting firm, Duquesa Marketing, |
| partner wants to grow and mature a business, | | | | Inc. ( has assisted businesses large and |
| while another wishes to cash out after a few | | | | small, domestic and international, |
| years and this is where the seeds of | | | | entrepreneurs, inventors and students in new |
| destruction are sown. Goals, as well as | | | | product development, capital formation, |
| duties and responsibilities must be fully | | | | licensing, marketing, sales and business |
| transparent.The Limited Partnership can be an | | | | plans and successful implementation of his |
| excellent opportunity for the entrepreneur | | | | customized strategies. He is a Senior Fellow |
| wishing to put capital to work, but not | | | | at the Page Center for Entrepreneurial |
| physically committing to work on a project. | | | | Studies, Business School, Miami University, |
| Typically a General Partner will manage the | | | | Oxford, Ohio. |
| business, and the Limited Partners provide | | | | |