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Bimal Saraiya

Common Fears When It Comes to Starting a Business

Bimal Saraiya · August 11, 2016 ·

business meeting

Those considering starting a business may have a combination of fears that keep them from making the jump. Do you have strong enough financial backing? Is it worth leaving a secure job to pursue starting your own business? Do you have the skills needed to be successful? Will you have the support of your family?

The questions, doubts, and fears can get out of control. They can prevent you from attaining something you’ve likely spent years thinking about. They can stop you from achieving your goal.

Here are some ways to help you get over your fears and start a business.

Conquer the fear of failure

Look, fear of failure is not uncommon. In fact, there’s a scientific term for it. It is called atychiphobia. The fear of failure is so widespread, business-related magazines, like Forbes, have done articles on it and have provided tips on overcoming it. Motivator, life-coach, and teacher Tony Robbins has always taught that fear of loss is more powerful than the desire for gain. He also views fear as one the major factors in life and in business that hold us back.

Once you understand that fear is common and it can be overcome, let your determination take over. Remember, if you want to be successful in business, conquering the fear of failure is just the start.

If you were absolutely happy at your current job, you probably wouldn’t be considering starting your own business

Many avoid starting a full time business because they don’t want to lose the income and comfort of their present job. The fact is, if you were absolutely happy in your present situation you likely wouldn’t be thinking about becoming your own boss.

Something is wrong or missing from your present job if you want to start your own business. Embrace it. As long as you have a strong business plan, go for it.

Don’t be afraid to ask for help

Many burgeoning entrepreneurs feel like they have to have all the answers and do everything themselves and get stuck when they feel like they don’t know every minute detail. That is a big mistake on many levels. No new business owner can be expected to know all the current tax laws, human resource requirements, the latest marketing techniques, manufacturing prices, and more. You are going to need help to be successful.

There is plenty of assistance that is free. Don’t be afraid, however, to invest in professional assistance. Determine what you know and take the time to decide the areas where you need support. Don’t even think about going it alone.

Remember the times when you succeeded

It’s said success breeds success. Remember the times in your life when you succeeded. Maybe it was in getting that first job or when buying that first car. Perhaps it was getting your college diploma or even simply proving someone wrong. It may have even been summoning up the courage to ask that person to be your spouse.

Think about the times you overcame obstacles and fears, and how you benefited from it. It can be the fuel you need to conquer whatever fear may be stopping you.

They say there are no guarantees. There are.

They say that in business, there are no guarantees. That’s not exactly correct. While there may be no guarantee your business will be successful, it is guaranteed that if you don’t start your business, it never will even have the chance to be a success.

If you own or are considering starting a business in the Plano, Texas, area we can help. Contact us today and let’s talk about how you can get to the next level.

What is an LLC?

Bimal Saraiya · July 8, 2016 ·

what is a llcStarting up your own company is an excellent way to move past working for others and being constrained by their pay, working conditions, and required hours. However, you want to make sure you get your company up and running the right way, so you can have a great start and a bright future.

One of the ways you may be able to do that in Texas is through the formation of an LLC. In order to determine if that’s the right choice for you, you’ll want to be clear on what an LLC actually is, how to start one, how it operates, and the possible pitfalls you could encounter.

An LLC, or Limited Liability Company, is the United States version of the private, limited company. It gives you two big benefits:

  • Limitations on your personal liability
  • Pass-through taxation

Normally, pass-through taxation is seen with a partnership. This type of tax advantage means that you won’t have to pay dividend taxes or deal with double taxation, so it protects you financially and keeps your taxes potentially lower.

At the same time, you get the liability protection more typical of a corporation. While partners of a general partnership have unlimited liability, an LLC member is ordinarily not personally liable for the debts of the company. If someone decides to sue you, they will be suing the company and your personal assets will be protected in most cases. For many companies, an LLC is the way to go since they provide the tax benefits of a partnership and the liability protections of a corporation, all the while being relatively easy to form and operate.

How do you start an LLC in Texas?

Starting an LLC can vary a bit from state to state, so it’s important to follow all the rules for the state where your business will be created and operated. In Texas, you form an LLC through:

  1. Choosing a name for your company
  2. Filing a certificate of formation
  3. Appointing a registered agent
  4. Preparing an operating agreement
  5. Complying with regulatory and taxation requirements

Some states also have publication requirements, but Texas is not one of them.

While the creation of an LLC is not that difficult, it’s extremely important that it is done correctly in order to get all the protections and benefits that come with that type of business entity. An attorney who handles business formation can help you create your LLC to ensure that you file everything properly and have the right business structure.

Operation of an LLC (Member-Managed vs. Manager-Managed)

The creation of your LLC is not where your decision-making stops. You will also need to decide if you want the LLC to be member-managed or manager-managed. The difference between the two is that manager-managed LLCs are more hands off, where member-managed LLCs are more hands on.

When you have a member-managed LLC, the owners of the company are responsible for management. A manager-managed LLC means that others are appointed to run the company, leaving the owners to do other things. A Member can also be a Manager. Only you can decide how much active involvement you want in the operation of your LLC.

What are the pitfalls of a single-member LLC?

If you choose a single-member LLC, which you might pick as an individual looking for increased liability protection, you must consider that it is possible to lose this liability protection. It would be an unfortunate result after so carefully choosing your business entity type. To find that you didn’t have it and your company was not considered a separate entity could be financially devastating. Unfortunately, it can and does happen, especially if your LLC isn’t created or operated correctly.

A single-member LLC owner may also have a higher than average audit risk by the IRS.

When it comes to court rulings on separation between a single person and their company, the decisions have been somewhat inconsistent. Much of the determination will center upon how much separation you generally showed, on a consistent basis, between yourself and the company. An attorney can help you work toward the highest possible level of separation and protection if you decide a single-member LLC is right you.

 

Photo by Dennis Skley / CC BY

Common Business Types

Bimal Saraiya · March 25, 2016 ·

Before starting your new business, there are a number of important decisions you need to make. One of these is choosing a business entity.

A business entity is the structure under which your company operates. Different types of business entities have different characteristics, such as tax treatment, liability protection, operating requirements, and statutory requirements. Some of the common entity types are summarized below (please note that this post is primarily focused on Texas business entities. For information on other states, please contact us).

Sole-Proprietorship

The simplest type of business is the Sole-Proprietorship. As the name implies, a sole proprietorship is a business which is owned by only one person. A Sole Proprietorship generally operates under the name of the owner, and federal income taxes are paid under the name of the individual owner. The Sole-Proprietorship is the easiest business to form because it requires no state or federal filings. The entity is formed as soon as an individual begins his or her business venture. One disadvantage to the Sole-Proprietorship is it subjects the owner to full liability for the debts of the business.

This is an important factor to keep in mind, as other business entities can be deemed a Sole-Proprietorship under certain circumstances. This will be a topic in a future post.

General Partnership

The next entity type is a General Partnership. This is very similar to the Sole-Proprietorship, except it has more than one owner. There is no state filing required to form a Partnership; simply having 2 or more persons associate to carry on a business for profit forms the partnership. Most partnerships will want to have a written partnership agreement that spells out how the partnership will be operated, but there is no requirement that such an agreement exist. Like a Sole-Proprietorship, partners of a General Partnership have unlimited liability for the debts of the business.

Corporation

A corporation is an entity in which the business acts as its own distinct “person” apart from its owners. Ownership is represented by shares of stock. That is, each individual, business, or other entity that owns those shares of the company’s stock (the shareholders) are owners of the company.

Management of the company is usually vested in the Directors of the company. The Directors are elected by the shareholders, and Directors need not, but can be, shareholders. One advantage of a corporation is that its shareholders are not liable for the debts of the company; their potential loss is restricted to the value of the shares themselves. Other advantages of a corporation include its ease of ownership transferability and its management structure.

To form a corporation, a filing with the Texas Secretary of State is required. Further, the corporation itself must file its own tax return and pays taxes on its income. Shareholders can receive dividends from the company that represents extra capital the company has generated from its operations.

S-Corporation

An S-Corporation is a corporation that has made a specific federal tax filing with the IRS. This filing is strictly a federal tax filing and has no impact on the operation of the business, which is governed by state law. As explained above, further discussion of taxes and an S Corporation election is beyond the scope of this post.

Limited Liability Company

A Limited Liability Company (LLC) is a creature of state law only. Compared to the sole-proprietorship, general partnership, and corporation business entities, it is a relatively new business entity. Each state has its own law or statute that authorizes the formation of an LLC and its operation.

Ownership consists of one or more persons, individuals, or entities and each such owner is called a “Member”. The hallmark of an LLC is that each Member has limited liability. A member can only lose the amount they invested in the company. However, under certain circumstances, the limited liability may be stripped from a member under certain circumstances which will be discussed in a later post.

An LLC can be managed by either its members or by its managers. However, the form of management under either of these management structures can vary widely and is usually spelled out in the LLC’s Operating Agreement.

To form an LLC, a filing, called a Certificate of Formation in Texas, must be filed with the Texas Secretary of State. This filing must include certain minimum statutory information, including the management structure of the LLC. An LLC is usually treated by the IRS as a partnership and members thus enjoy pass-through tax treatment like a partner in a partnership.

Other business entities not described above include the Limited Partnership, the Limited Liability Partnership, the Professional Limited Liability Company, the Professional Corporation, and the Professional Association.

If you are planning on starting a business, please contact one of our attorneys today to learn more about how we can help you form your new business.

What is Trademark Prosecution?

Bimal Saraiya · March 17, 2016 ·

When I tell people I practice Trademark Prosecution, they often assume I litigate trademark disputes. That’s not what it means at all. Trademark prosecution, in fact, has nothing to do with litigation. Rather, it is the process of obtaining a trademark.

The legal world is full of words that are used based on a historical context, often involving Latin. This term, trademark prosecution (and it’s big brother, patent prosecution) is no different. If I look up the definition of prosecution online, I will learn that its 2nd definition is “the continuation of a course of action with a view to its completion.” Reading further, I’d learn that it comes from the Latin word prosequi which means “pursue, accompany.”

Now it starts to make a little more sense. Trademark prosecution is pursuing a trademark, and continuing that pursuit with a view to obtaining that trademark. In other words, its the process of obtaining a trademark.

This may not have been a question that’s been keeping you up at night, but hopefully the next time someone mentions trademark prosecution, you can wax eloquently on the history behind the phrase.

To learn more about trademarks and how they can help your business, contact us online or call us at 469-277-3402.

 

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Saraiya Pllc
Business, Trademark, & Estate Planning Lawyers
7160 Preston Road, Suite 100
Plano, TX 75024
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info@saraiyalaw.com

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