Still, I’m sure that seeing their parents run their own business will plant the seed for entrepreneurship, the way it did for me watching my grandparents own several restaurants while I was growing up.

If you’d love to pass on your entrepreneurial passion, try the following suggestions.

Get Them Started Early

Even if your kids don’t grow up to be the next generation of Shark Tank participants, being young entrepreneurs now will make them more excited to continue that entrepreneurial streak later in life.

There are multiple types of businesses that kids can run at virtually any age. Here are a few ideas:

• Kids 10 and under: lemonade stand on hot summer days
• Teens: mowing yards, babysitting, pet sitting, and walking

If you have several children as I do, find a way where they can all work together. Maybe your teen manages the social media and website while the younger ones do the selling. After all,  who can resist an adorable 5-year-old asking for money?

Involve Them in Your Business

When you start a business, you might be tempted to separate your personal life from the business, but if you want your kids to understand what it means to be an entrepreneur, it’s important that they learn how to run a business firsthand.

Show them what you do every day. Introduce them to your staff. Explain that Mommy or Daddy gets to call the shots, and how cool is that? If it’s summer, give them jobs to do in your office so that they feel like part of it.

If yours is a family-run business (or you’d like it to be down the road), see what interest your child has in being a part of it when he’s older. It may be early to determine that he’d be a great asset on your sales team now, but if the inclination is there, you can vet and train him as he gets older.

Encourage Free Thinking

We entrepreneurs are a pretty creative bunch, and kids thrive at creativity. Encourage them to share their wildest ideas for a business with you, then take it seriously. What would they sell? Who would their customers be? Even if you have no plans to actually start this business, it gives them the confidence to know that you believe in their ideas, no matter how wacky they are.

Kids are amazing, passionate creatures, and they’re exactly who we want to take over the next generation of entrepreneurship. Do your part to foster that innovation.

And when your kids are ready to start that business, we at CorpNet would be honored to help them incorporate or form an LLC.

The post How to Encourage Your Kids to Grow Up to Be Entrepreneurs appeared first on CorpNet.

Take Sue as an example. She recently called into the office with no fewer than five ventures. She has been selling children’s clothing, handbags, and craft supplies on Etsy. After a few solid years on Etsy, Sue was now ready to take the next step and launch her own websites outside of Etsy, as well as expand into handmade paper goods and home décor.

She wondered about the proper way to structure these businesses, and here’s where it gets interesting since there are both marketing and legal factors to take into account. And often, they’re at odds with one another.

Consider your markets, marketing strategy, and target customers for each venture. Are they synergistic? Are they relevant and will they appeal to the same customer? If so, it makes sense to market them under a shared brand. In other cases, your businesses might target different customer types and your branding should reflect each unique market.

In Sue’s case, she preferred to keep each of her five businesses separate — different websites, business names, and branding. She wondered about the proper way to structure these businesses. Do I have to incorporate each business? Do I need to file separate tax statements for each business, or keep separate bookkeeping?

Technically, it’s possible to create a separate business entity for each venture. However, this can result in excess paperwork and legal filings. And in many cases, each business may not be earning a significant amount of revenue individually, making the paperwork seem especially tedious.

To save some headaches and paperwork, here are some steps to consider when dealing with multiple businesses:

1. Establish one main company (i.e. Big Enterprises) as an LLC or corporation within the state where your business will be actually physically located.
2. Once the main company has been established, it files multiple fictitious business names (or DBA, doing business as, registrations) for each of the ventures within the same state/county. This way each of the smaller companies can reflect the branding and presence best for their specific markets, yet still enjoy the legal protection of the main holding company (i.e. Big Enterprises).
3. When filing your DBAs, it’s a good idea to also consider if you will be doing business under any other names as well— for example, Sue’s Stationery and SuesStationery.com are technically two different names, and hence should each be listed within the DBA registration form when filing the DBA. This extra step is relatively easy and ensures you have all your legal ducks in a row.
4. When it comes time for taxes, you can take the income earned from each DBA and report this in a single tax filing under the main LLC or corporation. As always, situations vary and you should always consider consulting with an attorney or tax advisor for individual advice regarding your particular situation.

You’re not legally required to disclose the parent company, meaning the website for Sue’s Stationery does not need to mention that it is part of Big Enterprises. However, as a general rule of thumb, this kind of public disclosure can enhance a small business’ legitimacy in the consumer’s eyes.

Taking the time to incorporate or form an LLC will save you more time and money than you know in the future. You’ll have great peace of mind knowing that your assets are protected and your business is a solid legal entity. And for those entrepreneurs with multiple talents and businesses, you’re able to reduce your paperwork and bookkeeping requirements by legally structuring your company as one single entity, with multiple brands as DBAs operating underneath it.

CorpNet’s professional staff is here to assist you every step of the way and we can take care of the details for you! If you have specific legal questions or concerns, you should consult an attorney for sound advice. After all, your business is worth it.

I wish you the best of luck in all of your business endeavors!

The post Multiple Ventures? How to Best Structure Your Multi-Brand Business appeared first on CorpNet.

If You Seek Funding From Investors

1. Know What Investors Want – If you’ve ever watched Shark Tank, you know a lot of startup founders come unprepared for what the Sharks want to know. It should be common sense that you have the numbers the investors will want, but still so many walk away empty-handed, even if they have killer ideas. Make sure you know your company’s valuation, past sales, and any major contracts you’ve secured before pitching an investor.
2. Have the Right Business Structure – Creating an S Corporation is the best way to ensure your startup is attractive to VCs. They don’t want their own personal assets at risk, which is why they prefer to invest in S Corporations.
3. Know Your Audience – If you don’t know who you’re selling to, how can you sell investors on the idea? Come armed with market research so you can identify your ideal customer down to that freckle on her nose.

If You Take Out a Loan

4. Be Careful About Home Equity Loans – A lot of startup founders think home equity loans are an easy way to fund their startups, but think twice before you go this route. You’ll have to pay on that loan every month, whether your startup is making money or not, and that might be on top of your first mortgage. Can you afford it? Do you want to put your home at risk for the sake of your business?
5. Make Sure Your Personal Finances Are in Order – If you plan to take out a small business loan and don’t have any business history to do so under your business’s name, bankers will look at your own credit profile, since you’ll ultimately be responsible for the loan personally. If you’ve filed bankruptcy in the past several years or have less-than-stellar credit, you might be denied.
6. Handle Any Outstanding Business Dissolution Issues – If you have a past business that failed, make sure your business dissolution is handled before applying for a business loan. A business not properly dissolved still owes taxes and is a liability the bank won’t like.

If You Create a Crowdfunding Campaign

7. Be Aware of What You Promise to Investors – If you opt for crowdfunding, be aware that the people who invest will be keeping their eye out for the pre-launch version of the product you promised them. If you can’t meet your promised deadline, you risk an outroar that won’t do your brand any good.
8. Know That Marketing Your Campaign is Everything – People won’t magically find your crowdfunding campaign and donate thousands to it. You need an established marketing strategy for your campaign so that you spread the word among all your online and offline followers. You’ll need to communicate regularly on the crowdfunding page to keep people in the loop and encourage them to tell others.

If You Use Savings

9. Get a Plan to Pay it Back – Your rainy day nest egg or retirement fund shouldn’t be in jeopardy just because you want to launch a startup. Pay yourself back just like you would an investor.
10. Slow Your Roll Before Quitting Your Job – If your own savings is how you’ll bankroll your startup, you might not want to quit your day job yet. You need confidence that you have enough to not only cover your launching expenses, but also your monthly personal expenses, and you might be surprised how long it takes to reach profitability. Consider launching slowly while you continue to work.
11. Each of these tips ensures that you position your business strategically to get the funds you need to launch and grow your startup.

CorpNet can help with #2 on this list! Creating an S Corporation is easy and stress-free when you let CorpNet handle it for you. Get started today!

The post 10 Tips to Making Startup Funding Work for You appeared first on CorpNet.

​Download a Free Guide

CorpNet has the ultimate guide to starting, protecting, and operating a business in Wyoming. Topics include trending industries, tips for protecting personal assets (personal vs. business debt), and a review of business structure options.

Download the Guide

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It’s important to note that you don’t have to have just one advisor for your business. You can build an advisory panel, which would give you access to talented people in all the areas of your business.

1. Identify Your Areas of Weakness

The key to success is knowing what you’re not good at. You can’t be an expert at everything in your business, so pick the areas you are weakest in, or seek the most help in. These will be the ones you start recruiting advisors to help with.

Maybe you really want to make a splash on social media but aren’t doing it with your current efforts. Then you can find a rock star social media influencer to guide you to success in that area.

Start with 1-3 areas where you think having an advisor will help.

2. Look at Who You Know

Maybe you’ve always admired a savvy accountant you met at a networking event. She might be a good person to approach about joining your advisory panel if accounting is a weakness. Look to others you’ve done business with, people you’ve networked with, or even a friend of a friend to start your search.

If you can’t find who you’re looking for, expand the search. Turn to your social networks, friends, and family. Just have a clear idea of what an advisor will look like, and be sure to avoid people that won’t add value to your advisory panel.

3. Decide What You Want from Them

Naturally, you want advice. But how regularly will you want your panel to meet? Do they all need to meet together, or can you work with them individually, based on the area you need help with? Do meetings need to be in person, or does virtual also work?

Knowing what you want from them will help you pitch potential advisors. They’ll want to know what’s required of them to determine whether they have the bandwidth to help you.

If you get turned down, keep looking. One advisor may be able to recommend another. Before long, you’ll have a stellar team of people who will help you take your business to the next level!

The post Three Tips for Choosing an Advisor for Your Startup appeared first on CorpNet.

​CorpNet Can Help You Create Your New LLC

If you’ve determined forming an LLC is right for your real estate business, we can help! From serving as your registered agent to filing your Articles of Organization to obtaining your EIN, and keeping you in compliance, we make the process simple and ensure your paperwork is completed accurately and promptly.

Get Started

The post Does a Real Estate Agent Need an LLC? appeared first on CorpNet.

Before starting a daycare, I recommend that you seek resources—such as an attorney, tax advisor, accountant, and business consultant—who can help with your legal, accounting, and industry-specific questions and decisions. In the meantime, I’ve created this step by step guide that provides key considerations and action steps for starting your own daycare business.

This guide for starting a daycare business will cover:

• What is a daycare?
• Components of a daycare business plan
  • Is it better to buy a franchise or start your own?
  • What equipment and supplies will your daycare need?
  • Do you need to set up an LLC or other business entity for a daycare?
  • What business licenses and permits might you need?
  • Are there special COVID-19 requirements you must follow?
  • What staff positions will you need to fill?
  • Does your daycare need business insurance?
  • What taxes does a daycare pay?
  • How much does it cost to start a daycare?
  • How will you fund your daycare?
• Steps for starting a daycare business
  • Choosing a business name (and a domain name)
  • Designating a registered agent
  • Registering your business with the state
  • Obtaining an EIN
  • Opening a business bank account
  • Preparing your daycare location
  • Getting the required daycare permits and licenses
  • Creating a contract for clients
  • Hiring employees
  • Registering for payroll taxes
  • Promoting and advertising your daycare
  • Keeping your daycare legally compliant
• Business resources for daycare providers
• How CorpNet can help

What I share here is not meant as legal or accounting guidance but rather to give you a general idea of what you may need to consider when opening a daycare center.

What is a Daycare?

What is considered a daycare? A daycare is a licensed or certified business that offers services to take care of children not related to the business owner. Different states have different classifications for daycares according to the number of children they enroll.

Generally, there are “family child care” and “child care” providers.

• Family Child Care – These providers often run their businesses from their private homes and care for mixed-age groups of children. States require them to register and meet specific rules, including limiting the number of children that they care for.
• Child Care – These centers offer care for larger groups of children at a commercial location rather than in a private home. Usually, these businesses divide children into different groups according to age. Child care centers must comply with all state regulations.

Some states, like Pennsylvania for example, have other categories of child care centers, too.

In Pennsylvania, the Department of Human Services (DHS) oversees the following types of child care facilities in the state.

• Child Care Centers – Facilities that care for seven or more children unrelated to the operator.
• Group Child Care Homes – Facilities that care for seven to 12 children unrelated to the operator.
• Family Child Care Homes – Facilities that care for four to six children unrelated to the operator.

For each of these types of daycare facilities, there are staff member to child ratios to be met (according to the ages of the children) and maximum group sizes allowed.

Similarly, California recognizes the following categories of child care centers. The Child Care Licensing Program of the Department of Social Services oversees daycare licensing in California.

• Small Family Child Care Homes – A private home providing care for up to six children (up to eight children if specific criteria are met).
• Large Family Child Care Homes – A private home that provides family child care for up to 12 children (up to 14 children if specific criteria are met).
• Child Care Centers – Child care facilities of any capacity, other than a family child care home, in which less than 24-hour per day nonmedical care and supervision are provided to children in a group setting.

There are staff-to-child ratios that must be maintained for each of these categories.

For a list of all of the states’ definitions of licensed daycares, visit the website daycare.com

Components of a Daycare Business Plan

Your business plan will be the roadmap for outlining your daycare business goals and what will be involved in achieving them. It will also help you get a handle on the costs, revenue, and profitability you might expect—which is especially critical if you intend to seek outside funding for your business. The elements included in a business plan can vary depending on the type of business, location, size, and other factors. Generally, most business plans include the following sections, which might be called different things or organized differently, depending on the business owners’ or stakeholders’ preferences.

• Executive Summary – Company mission and objectives
• Company Overview – Startup requirements, funding requirements, company ownership
• Products and Services – Description of what you’ll provide to your customers
• Market Analysis – Target market, industry outlook, competitor analysis
• Execution – Sales strategy, sales forecasts
• Management – Leadership, hiring plan, staffing requirements
• Financials Projections – Break-even analysis, cash flow statement, balance sheet, income—Profit and Loss— statement
• Appendix – Containing supporting details and assumptions

This is not an all-encompassing list of the possible items your business plan might include, but it will serve as a good starting point as you begin to work on yours.

Things to think about as you write your business plan include:

Should You Buy a Daycare Franchise or Start Your Own Daycare?

Whether you’ll purchase a franchise, an existing independent daycare, or start your own will affect what you need to do to open your daycare and how much it will cost. Primarily, you have the following three options:

• Buy a daycare franchise.
• Buy an existing daycare center.
• Start your own daycare business.

Option 1. Buy a Daycare Franchise

Buying a franchise can eliminate a lot of research, planning, and time involved in starting a daycare business. With a daycare franchise, much of the infrastructure, operational guidelines, marketing assets, and brand reputation are already developed. Of course, you will pay (pretty handsomely) for those advantages, and the costs might be prohibitive. Franchisors usually charge an initial franchise fee and other fees (such as training, background checks, furnishings, website, marketing materials, software, security, and more). There will also be some ongoing charges (royalty fees and possibly other recurring costs, such as a monthly advertising fee). Buying a daycare franchise could cost in the hundreds of thousands to several million dollars.

Option 2. Buy an Existing Daycare Center

Is an existing daycare facility for sale in your area? This can save some of the steps and time required to get into business. It’s important to weigh the pros and cons carefully. This scenario’s potential advantages include having a location ready to go, qualified staff in place, and an existing clientele. On the flip side, if the current business has a poor reputation, it could prove challenging to turn that image around and gain prospective clients’ trust.

Option 3. Start Your Own Daycare Business

Throughout this article, I will focus on the scenario of starting your own daycare business from scratch. Business owners who go this route have many tasks and responsibilities to fulfill to launch a daycare center. Although there is much work involved, there are some significant advantages:

• You start from a clean slate and have the freedom to create the business you’ve dreamed of.
• You do not have a negative brand reputation lurking in the shadows that could derail your efforts.

When starting your own daycare, you’ll need to consider the type of daycare facility you will open. As I mentioned before, states recognize different categories of daycare operations based on where they are based and the number and ages of children in their care.

If you’re planning to open a daycare in your home, consider what additional space and amenities you’ll need to operate your business according to the state and local requirements for child care businesses. Also, make sure that no zoning ordinances exist to prevent opening a daycare facility where you live. Entrepreneurs who intend to operate their daycare from home also should check with their homeowners’ association (HOA), if they have one. In most states, HOAs may not forbid running a daycare (although this can happen if their governing documents do not allow in-home businesses on residential premises), there may be restrictions on enrollment numbers.

If you plan to rent, lease, or purchase a commercial property for a daycare, realize there may be zoning restrictions about the types of businesses that may operate in the area. It’s critical to ask the local municipality about any rules that may prevent a daycare from opening there. Also, research the state and local regulations that apply to daycare businesses. It’s essential to know what building amenities a property must have in place before opening a child care center.

What Equipment and Supplies Will You Need for Your Daycare?

The equipment, furnishings, and supplies you’ll need to purchase for your daycare center will depend on your business’s size, the ages of children you’ll care for, and other factors. Below, I’ve listed some of the possible necessities:

• Tables and chairs
• Gliders or rocking chairs
• Cribs
• Infant seats
• Changing tables
• Room dividers
• Floor mats
• Strollers
• Sheets and blankets
• Diaper disposal solutions
• Trash cans
• Learning materials
• Arts and crafts supplies
• Toys and games
• Activity tables
• Book display rack
• Playground equipment
• Towels
• Kitchen supplies
• Cleaning supplies
• Bathroom supplies
• First aid kits
• Smoke and carbon monoxide detectors
• Fire extinguishers
• Audiovisual equipment
• Dry-erase boards, markers, bulletin boards
• Computers
• Daycare management software solution
• Accounting software
• Shelving, cubbies, hooks for children’s clothing and supplies
• Storage tubs and totes for toys

Other expenses to consider include:

• Utilities – heating, cooling, electric, gas, internet access
• Marketing – website development and maintenance, signage, business cards
• Professional support – attorney and accountant fees, building maintenance

Does Your Daycare Need an LLC?

Check with your state or talk with an attorney to determine which business entity types are options for your daycare. The business structure you choose will affect your tax obligations, your personal liability related to business legal and debt issues, growth potential, and the ongoing compliance requirements you will need to fulfill to maintain the business entity. The LLC (Limited Liability Company) entity is one that many small business owners choose due to the personal liability protection it provides, tax flexibility it offers, and minimal ongoing compliance requirements.

I’ve listed other popular business entity types below. You can find more about each by visiting the links I’ve provided.

• Sole Proprietorship
• Partnership
• C Corporation
• S Corporation (S Corp)

Note that while Sole Proprietorships and Partnership require less (or no) business registration paperwork and ongoing formalities, they do not offer business owners liability protection. Carefully weigh the pros and cons of each entity type before deciding on how to structure your daycare.

What Business Licenses and Permits Does a Daycare Need?

Each state has its own rules and regulations for daycares that operate in their jurisdiction. Examples of state agencies that oversee daycares are the Department of Children and Family Services, Department of Public Welfare, or similar department. In some states, there may be local agencies that also regulate and monitor daycares. Business owners should check with the appropriate agency to find out what’s required to start their daycare.

A helpful resource to determine the licensing requirements in a state is the daycare.com website. It has a PDF, “Licensing Threshold for Family Child Care Homes Caring for Unrelated Children,” which contains a state-by-state list of the criteria for when a daycare must get licensed or registered.

To get a daycare license, the provider must meet all of the state and local government agencies’ requirements governing child care facilities.

Requirements might include:

• Certificate of Registration or Certificate of Compliance from the state
• Zoning approval
• An approved plan of operation
• Outdoor fencing around playground areas
• Completion of food safety courses
• CPR training and certification
• Clean driving record (no violations) for staff that will operate daycare vehicles
• Criminal and child abuse background checks
• Site inspection (to ensure the building complies with code and safety standards)
• Staff education or training
• Proper signage on the building

To retain a daycare license, daycare providers must:

• Maintain staff-to-child ratios and group sizes set forth by the state or local agency that oversees them.
• Follow an approved plan of operation.
• Follow cleaning and disinfecting guidelines, using approved cleaners and disinfectants.
• Maintain a health record of children’s immunizations.
• Submit reports to government agencies as required.
• Ensure staff members meet the state’s qualification requirements.
• Conduct required safety drills.
• Provide required documentation to parents (for example, a “Notification of Parents’ Rights”).

There may be other requirements, as well.

What COVID-19-related Requirements Must Daycares Follow?

The state child care licensing agency and state and local health departments are good resources for learning about COVID-19 requirements and advisories.

You will also find information about operating a daycare program during the pandemic on the following websites:

• American Academy of Pediatrics
• Centers for Disease Control and Prevention (CDC)
• SCORE.org (The Action Plan for Child Daycare Services)
• The U.S. Department of Health and Human Services Office of Child Care

Although not explicitly COVID-19-focused, the National Health and Safety Performance Standards through Caring for Our Children (CFOC) provides a strong foundation for child care practices.

What Staff Will You Need to Hire?

Your staffing needs will depend on the category of daycare you operate and your state’s rules for the ratio of caregivers to children that must be maintained. In addition to wages and salaries, a daycare may also incur costs for providing company benefits and training.

According to the U.S. Bureau of Labor Statistics, the median pay for childcare workers in 2019 was $24,230 per year ($11.65 per hour). Of course, this might be higher or lower for each staff member depending on their position, level of education, professional credentials, and experience in the field.

Examples of the types of positions in a daycare center are below.

• Director – A person to oversee the daycare’s programs and supervise other staff members
• Preschool Teacher – An individual responsible for teaching children the basics of reading, writing, and other subjects to prepare them for Kindergarten
• Infant Teacher – An individual that provides care and enrichment for babies
• Toddler Teacher – An individual that provides care and enrichment for toddlers
• Teacher Aide or Assistant – An individual who assists teachers in creating and executing lesson plans and activities
• Administrative Assistant – Someone who helps the owner or director with clerical duties, such as answering phones, handling paperwork, scheduling appointments, etc.

If you research the roles in daycares, you’ll find other position names, as well.

• Group supervisor
• Assistant group supervisor
• After-school assistant
• Infant child care worker
• Classroom aide
• Classroom assistant
• Child care worker

Regardless of what a daycare entrepreneur chooses to call staff member positions, it’s critical to find responsible, skilled, trustworthy candidates who meet all of the criteria required by law to serve in those positions.

What Education and Experience Do Daycare Owners and Staff Need?

The states’ rules vary regarding what experience and education daycare staff members need to be qualified for their positions.

The names of roles that states mention in their regulations vary.

• Director
• Group leader
• Child care supervisor
• Group teacher
• Lead caregiver
• Caregiver
• Assistant group supervisor
• Staff

The above are just a few examples of the wording states might use.

States describe what responsibilities those roles entail. Daycare owners must ensure that the staff members at their facility in those roles (even if they’re called something else) have the necessary qualifications required by the state.

Qualifications requirements may include:

• Minimum age requirements
• High school diploma (or equivalent)
• Early childhood education degree
• Previous experience working with children
• Orientation training
• Ongoing education training
• Health and safety training
• Health assessment
• Background checks (criminal and child abuse)

Some states require daycare workers to have a nationally recognized credential, such as the Child Development Associate (CDA) Credential™ through the Council for Professional Recognition. Once obtained, the CDA credential must be renewed every three years. Other optional accreditation is available through other organizations, including The National Association for Family Child Care (NAFCC™).

It’s critical to review the requirements and get hiring and training policies in place before hiring staff.

What Kind of Insurance Does a Child Care Center Need?

Entrepreneurs need to protect themselves and their business legally and financially. I recommend talking with a trustworthy, experienced insurance agent who can advise on a business owner policy that will meet your needs. States may require daycares to buy certain types of coverage before they’re allowed to operate there.

Various types of coverage that a daycare operator might need or consider include:

• Commercial General Liability Insurance – Helps protect the business if someone sues the daycare, claiming negligence or harm caused to them physically or to their personal property.
• Professional Liability Insurance – Helps protect the business if it is sued because a member of its staff has shown negligence in caring for children enrolled.
• Abuse and Molestation Liability Insurance – Helps protect the business if it is sued due to a claim against an employee that sexually or otherwise abuses a child.
• Commercial Property Insurance – Helps to protect the property (building and its contents) the daycare owns.
• Workers’ Compensation – This mandatory insurance paid by employers covers employees’ medical expenses, lost wages, funeral costs, etc. in the event of work-related accidents and illnesses. Laws and requirements for workers’ compensation vary by state.
• Unemployment Insurance – Unemployment insurance, a federally mandated program, temporarily replaces some of the wages that workers have lost if they were laid off or let go through no fault of their own. The program is funded by employers who must pay into FUTA (Federal Unemployment Insurance Act) as part of their payroll taxes. The FUTA tax paid corresponds to an employee’s wages and is not deducted from the employee’s paycheck. In most states, there is also SUI (State Unemployment Insurance)—or SUTA (State Unemployment Tax Act)—tax. I’ll provide more detail about this in the soon-to-follow payroll section.
• Business Interruption Insurance – If a disaster forces a daycare to close temporarily, this type of policy helps pay for expenses and compensate for lost revenue. Review policies carefully to understand what they do and do not cover. Unfortunately, during the coronavirus crisis, many entrepreneurs discovered that their policies don’t cover pandemics.

What Taxes Does a Daycare Have to Pay?

Tax obligations vary by state. Below are several types of tax that can impact a daycare’s bottom line:

• Federal income tax
• State income tax
• FUTA tax (federal unemployment)
• SUI tax (state unemployment)
• FICA (Social Security and Medicare) taxes – FICA tax is paid by both the employee and employer. 7.65 percent of an employee’s wages must be withheld from each paycheck, and then the employer must pay a matching 7.65 percent.
• Self-Employment taxes – If a daycare owner operates as a sole proprietor, Limited Liability Company, or S Corporation, the owner must pay self-employment taxes (Social Security and Medicare taxes). Sole proprietors and LLC owners must pay self-employment taxes on all net earnings received. S Corporation business owners pay self-employment taxes on only the wages and salaries they receive from the company.

There may be other state and local taxes and fees depending on where a daycare is located.

Generally, daycare services are not subject to sales tax. However, there may be exceptions. Ask a trusted tax expert for guidance or reach out to the state and local tax authorities to learn what they require.

Entrepreneurs that seek to set up their daycare as a nonprofit may have an exemption from certain taxes. Many stipulations must be met to qualify for nonprofit status.

How Much Does It Cost to Open a Daycare?

This is something you will be getting a feel for as you research what your daycare will need and decide how you will operate your business. As you may have guessed, the costs can vary immensely. SBDCNet, in a recent blog post, shared that sources estimate startup costs might average anywhere from $10,000 to over $95,000. The costs could likely be more if building renovations are required or the entrepreneur must make other significant purchases.

How Will You Fund Your Daycare – What If You Have No Money?

If you do not have the finances necessary for starting your daycare, you will need to seek funding from other sources. Business registration costs, property and building expenses, equipment needs, staffing requirements, license and insurance costs, marketing expenses, and other factors will affect how much you’ll need to start a daycare. It’s also crucial to have some funds on hand to cover ongoing operating expenses and unexpected expenses as your business ramps up.

Possible sources of funds when starting your own daycare business:

• Your personal assets
• Friends and family members who want to invest in your venture
• Business or partners (one or more people who will share ownership with you)
• Banks or credit unions
• Local, state, and federal government programs and grants (The SBA and Small Business Development Centers are useful resources for finding these opportunities.)

Steps for Starting a Daycare Business

OK, so now that you’ve begun to gain an understanding of the many considerations involved in opening a daycare, let’s take a look at some of the steps you may need to take to launch your business.

1. Choose a Daycare Business Name

A daycare’s business name will arguably be its most powerful branding tool. Given that customers will be putting their child’s well-being in your business’s hands, consider what your business name communicates to potential clients.

• Does the name instill trust?
• Does the name give a sense of positivity and goodwill?
• Does the name give the impression that you’re providing a capable yet fun experience?
• Does the name sound official? (i.e., Some people may feel more confident entrusting a business with “LLC” or “Inc.” behind the name. To use those abbreviations, business owners must formally register their daycare as the appropriate entity type.)

Before using a business name, it’s critical to make sure that another similar business has not already claimed it. Infringing on a name that’s already in use could create legal problems for your company.

Domain Name Search

As you think of business names, it’s also beneficial to check if the corresponding domain name is available. Having a website URL that will match your daycare name can help people find you online. For example, suppose you want to call your business, “Above and Beyond Child Care Center.” You could use one of the below sites to verify if “aboveandbeyondchildcare.com” or “aboveandbeyondchildcarecenter.com” are available to use as your website URL.

• Whois.net
• Doming.com
• GoDaddy
• Nameboy

Business Name Search

CorpNet has a free business name search tool that can help you identify if a business name is available. Also, an attorney can help check and confirm a business name’s availability.

When a business forms an LLC or C Corporation, the business name will automatically be registered at the same time. However, Sole Proprietorships and Partnerships that want to use a name that does not include the owner’s legal name must file a DBA (fictitious name) to use their desired name.

2. Designate a Registered Agent

Businesses that form an LLC or incorporate must designate a registered agent in the state(s) in which they operate. What is a registered agent? It is a company or individual authorized to accept “service of process (official government notices and legal paperwork) on the daycare’s behalf.“ A registered agent must maintain office hours Monday through Friday from 8 a.m. to 5 p.m. and meet whatever other criteria the state requires. In some states, business owners may serve as their own registered agent. However, for privacy reasons and to ensure important documents don’t get lost in the shuffle with other mail, it can be beneficial to use a third-party registered agent. Some registered agents, like CorpNet, offer services in all 50 states, which simplifies matters if entrepreneurs want to expand their daycare into other states.

3. Register Your Daycare Business with the State

A daycare that will operate as an LLC or a Corporation must file registration paperwork with the state.

• LLC – Articles of Organization
• Corporation – Articles of Incorporation

A business might also have to complete other Secretary of State filings or reports, such as an initial report.

LLCs and Corporations that want to be treated as an S Corp for tax purposes must also submit IRS Form 2553.

An attorney can assist daycare owners in completing and submitting their business formation paperwork. Consider asking an online business document filing service, like CorpNet, to reduce legal fees for assistance with your business registration and compliance filings.

4. Obtain an EIN

Many banks will require that companies have an EIN (Employer Identification Number) to open a business bank account. An EIN, which the IRS issues at no charge, is a unique I.D. number (similar to a Social Security Number). You’ve probably heard EINs referred to also as “Federal Tax ID Numbers.”

Any company that will hire employees (or registered as an LLC or Corporation) must obtain an EIN.

5. Open a Dedicated Business Bank Account

After a daycare’s business entity is formed, it’s time to open a business bank account and credit accounts in the business name. Doing so will allow business expenses to be paid from the funds in those accounts, and revenue from customers can go to the appropriate place.

While it’s always ideal to keep business records and funds separate from entrepreneurs’ personal accounts, it’s mission-critical for businesses operating as LLCs or Corporations! With those entity types, business owners risk losing the personal liability protection that insulates them from the business’s legal and financial troubles if they mix their personal and business finances. That could put daycare owners at risk of having their homes, savings accounts, vehicles, and other assets used to pay damages in lawsuits or other business debt.

6. Get Your Daycare Location Ready

Before you can pass inspections and obtain the necessary licenses and permits for your daycare, you’ll need to prepare your location to meet all rules and regulations. Hopefully, you have done all the research required as you developed your business plan. Whether you need plumbing amenities, updated electrical infrastructure, remodeling or new construction, get qualified professionals and tradespeople to help you complete the work correctly.

7. Get the Required Licenses and Permits

I discussed some of the possible licensing considerations for daycares earlier in this article. Business owners should contact their state and local government offices to determine the requirements specific to their type of child care facility and the location at which it will operate. You can save some time identifying the necessary licenses and permits by using CorpNet’s Business License Service Packages. We can even prepare and submit your applications for you!

8. Create a Daycare Client Contract

It’s essential to formalize the details of what your daycare will provide and set other expectations with your clients, as well. A daycare contract is a legally binding document that protects the business, parents or legal guardians, and children. An attorney can help create a contract with the necessary details and terms and conditions that are fair to all parties involved.

Some components that a daycare agreement might include are listed below. Note that this is not an all-inclusive list, and the elements may vary depending on the type of child care facility and other factors.

• Parties involved
• Names and ages of the children to be enrolled
• Parent or guardian contact information
• Medication policy
• Emergency contact information
• Services and supplies provided
• Parent and guardian responsibilities (information they must provide and supplies they must bring)
• Fees and payment schedule
• Hours of operation (time that parents may drop off their children and when they need to be picked up)
• Late pick-up policy and associated fees
• Sick child policy
• Late payment policy
• Vacation policy (will the daycare charge families even if children do not attend)
• Discipline policy
• Inclement weather policy
• Abuse and neglect reporting policy
• Termination procedures
• Confidentiality
• Signatures

You can find several online resources to help you write your own child care contracts. Alternatively, a childcare attorney can advise you on the elements of your contract. A daycare’s client agreement should be completed and reviewed by legal counsel before the business seeks clients.

Often, daycares must have clients sign other forms, too. For example:

• Permission to administer OTC medications (such as acetaminophen or an antihistamine), sunscreen, insect repellent, etc.
• Medical history and emergency medical care form
• Sign-in and Sign-out sheets
• Accident and injury report form
• Field trip release form
• Photo release form (if taking photos that the business will use for marketing purposes)

9. Hire Employees

When hiring staff for your daycare, it’s critical to understand all of the laws that employers must abide by. An H.R. consultant can help ensure you conduct the hiring process correctly and comply with requirements after bringing staff on the payroll.

Job applications, job interviews, background checks, and all other elements must follow all applicable hiring and anti-discrimination, minimum wage, and child labor laws. Employment laws exist at the federal and state levels, so it’s essential to research what you may and may not do when hiring and retaining a workforce. Also, have a training plan to onboard new employees so that they understand all business rules, policies, and procedures.

10. Register for Payroll Taxes

Daycares with employees must also register for state payroll tax accounts before they open. Employers must pay some payroll-related taxes, such as FUTA. And some taxes, such as State Unemployment Insurance Tax (SUI) and State Income Tax (SIT), must be withheld from employees’ paychecks. Usually, the employer must pay SUI (rates vary by state), but SUI is also withheld from the worker’s pay in some states. Employers must also withhold federal income tax from workers’ pay. As I mentioned earlier, business owners must withhold half of FICA taxes (Social Security and Medicare) from employees’ wages, too.

Daycare owners must report and remit payroll taxes to the appropriate tax agencies.

11. Market Your Daycare Business

Until you have earned a reputation that generates word of mouth and brings clients your way, you will need to put effort into marketing your daycare. Some branding and marketing assets include:

• Company logo
• Signage outside your building
• Business cards
• Website
• Google My Business and Bing Local profiles
• Social media
• Email marketing

Remember that the quality of all of the above will impact your brand reputation, so it may be worth getting professionals’ assistance to handle the design, writing, and photography for your marketing assets.

12. Keep your Daycare Legally Compliant

Daycares must remain up to date on the compliance requirements that apply to them. I’ve listed some examples below:

• State and local government reports
• Tax filings
• Licenses and permits
• Retaining a registered agent
• Industry certifications (if required)

A business may need to tend to other compliance formalities, as well, to stay in good standing with the IRS and state and local governments. Attorneys and tax professionals offer guidance on what your daycare must do and the deadlines for completing compliance tasks. A resource for tracking upcoming business entity reporting and filing deadlines is the CorpNet Compliance Portal.

Resources for Daycare Providers

As you can see, there is a lot to think about when starting a daycare. The following resources provide helpful information about the child care industry and what entrepreneurs must do to operate a safe, legal, and successful daycare facility.

• Association for Early Learning Leaders
• Childhood Education International
• Council for Professional Recognition
• Child Care Services Association
• Daycare.com
• Division for Early Childhood
• National Association for Family Child Care
• National Association for the Education of Young Children
• National Child Care Association
• National Head Start Association
• National Resource Center on Health and Safety in Child Care
• Office of Child Care (U.S. Department of Health and Human Services, Administration for Children & Families)
• U.S. Environmental Protection Agency (EPA)
• SCORE.org
• Zero to Three

Get Started With CorpNet’s Help!

CorpNet is here to help demystify all of the forms and filings involved in starting your daycare business. Our team of experts will ensure all of your state business registration, registered agent services, business license applications, and other filing needs are prepared accurately and submitted promptly. You can count on us to save you time and give you peace of mind—for less money than you would pay an attorney to handle the paperwork for you.

Contact us today to get started!

Sources and References:

“About the Child Development Associate (CDA) Credential™. Council for Professional Recognition. https://www.cdacouncil.org/about/cda-credential.
Accessed August 11, 2020.

Castleberry, Emma. “How to Start a Daycare Business.” Bplans. https://articles.bplans.com/how-to-start-a-daycare-business.
Accessed August 7, 2020.

“Child Care Workforce Qualifications, Training, Professional Development.” U.S. Department of Health and Human Services (HHS). https://childcareta.acf.hhs.gov/sites/default/files/public/rg3e_childcareworkforce_508_0.pdf.
Accessed August 11, 2020

“Daycare Business” (2020, June 8). SBDCNet. https://www.sbdcnet.org/small-business-research-reports/daycare-business.
Accessed August 13, 2020.

Flavin, Brianna (2017, October 30). “Your Step-by-Step Guide to Opening a Daycare.” Rasmussen College. https://www.rasmussen.edu/degrees/education/blog/how-to-open-a-daycare.
Accessed August 4, 2020.

Hamill, Virginia (2020, August 7). “Daycare Insurance: Coverage, Top Providers & Costs.” Fit Small Business. https://fitsmallbusiness.com/daycare-insurance-cost-coverage/#:~:text=Most%20daycares%20need%20more%20than,policy%20for%20a%20reduced%20rate.
Accessed August 12, 2020.

National Association for Family Child Care. https://www.nafcc.org. Accessed August 11, 2020.

“Occupational Outlook Handbook: Childcare Workers.” U.S. Bureau of Labor Statistics. https://www.bls.gov/ooh/personal-care-and-service/childcare-workers.htm.
Accessed August 11, 2020.

State Definition of Licensed Family Child-Care Homes. Daycare.com. https://www.daycare.com/news/states_family.html.
Accessed August 4, 2020.

“What to Do When a Day Care Pops up in Your HOA.” HOAleader.com. August 2014.  https://www.hoaleader.com/public/What-Do-When-Day-Care-Pops-up-in-Your-HOA.cfm
Accessed August 7, 2020

CorpNet.com is a document filing service and CANNOT provide you with legal, tax, or financial advice. The information provided is for general educational and informational purposes only. It should not be considered legal, financial, or tax advice. Please consult a licensed attorney, accountant, or tax advisor to address your specific legal, tax, and accounting questions or concerns.

The post How to Start a Daycare Business appeared first on CorpNet.

Limited Liability Companies

When it comes to investing in real estate, most investors choose to create a separate legal entity to purchase a property. The reason? To protect personal assets from liabilities associated with real estate transactions. Moreover, the Limited Liability Company (LLC) business structure has become a preferred entity of real estate investors for some very good reasons.

The LLC business structure offers many benefits:

• Limits personal liability
• Provides tax treatment flexibility
• Is relatively simple to establish and maintain
• Costs less to set up and maintain
• Offers more flexibility in how you distribute profits
• Makes it easier to give real estate investments
• Can be owned by a non-U.S. individual or company
• Is preferred by hard money lenders

Hard Money Loans

What is a hard money loan? A hard money loan is a type of loan primarily used for real estate. The lender is not a traditional bank, but rather an individual or another business. Because hard money loans usually use property as collateral, are used to raise money quickly and have an inherently higher risk, they usually cost the borrower more money.

Hard money lenders are set up as business investors and terms for the loan depend on the value of the property being used as collateral. Therefore, borrowers are not as much evaluated on creditworthiness, as they would be if they had gone to a bank. For example, borrowers looking to flip a property (buy, renovate and resell) would seek a hard money loan because even though the loan is costly, the borrower plans to repay the loan quickly (from one to three years).

Hard money loans may also be sought when borrowers need a quick infusion of cash. The approval process is usually much quicker than applying for a traditional loan and lenders are not as concerned about repayment because they can always sell the property used for collateral if the borrower defaults on the loan.

Finally, hard money lenders do not make consumer loans, so to make sure the lender knows the loan is a business investment, you should set up the real estate under an LLC.

Benefits of Real Estate LLCs

In addition to making the process easier for hard money lenders to approve, setting up your property purchases under a real estate LLC offers you many benefits, also.

An LLC limits personal liability

As a property owner, any casualties occurring on your property are your responsibility and could put you at risk for lawsuits. If the property is owned by a company, such as an LLC, it is a separate entity and the responsibility belongs to the entity. Therefore, your personal assets would be protected, and only the LLC’s assets would be exposed in the lawsuit.

An LLC offers tax advantages

LLCs offer the option of pass-through taxation of profits and losses, whether they have a single owner or multiple owners. When it comes to tax filing for an LLC, the IRS considers a real estate holding company with one owner a sole proprietor for tax purposes. Income and profit or loss of the LLC pass through directly to the owner’s personal tax return and must be reported on a Schedule C.

With no income tax for the LLC to pay, the owner avoids double taxation (i.e., she only pays tax at her personal tax rate for the rental income and appreciation in property value). Another benefit is that the owner of a single-member LLC can use mortgage interest as a tax deduction.

Multi-member LLCs are typically taxed like a partnership. A multi-member LLC needs to file an informational tax return but will not pay taxes as a company. The LLC’s members (owners) will report and pay income tax on their individual tax returns via a Schedule C or K (with Form 1065).

An LLC requires fewer compliance obligations

An LLC is not required to have officers and directors to oversee the business as you would in a C Corp. LLC owners can manage the business, or you can assign third-party managers to do the job.

An LLC allows you to pass the real estate to your heirs

With an LLC, you can gift your real estate holdings to your heirs each year. Therefore, over time you can pass your owned properties through an LLC without being required to execute, record new deeds and pay the state’s transfer and recording taxes and fees.

We’re Here to Help

Be sure to talk with your attorney and accountant before you decide to form an LLC for real estate investments. And when you’re ready to take the next step, CorpNet is here to help you handle all of your business registration and compliance filings. Contact us today to get started.

The post Do You Need an LLC for a Hard Money Loan? appeared first on CorpNet.

Steps to Starting a Small Bookkeeping Business

For those of you who have been wondering about how to start a virtual bookkeeping business, I’ve listed many of the details you’ll need to address. This information is intended to give you a general sense of what’s involved and is not a substitute for professional legal, accounting, and tax advice.

1. Learn the Ropes if You’re New to the Industry

Building your knowledge and skills by working for an accounting or bookkeeping firm can prepare you to branch out on your own. This step is critical in learning how to start a virtual bookkeeping business. It’s especially useful to become proficient with accounting and bookkeeping basics such as double-entry accounting, general ledger preparation, and how to classify and record financial transactions. Getting experience will also help you become more familiar with bookkeeping software, the types of clients you will enjoy working with most, what services you want to provide when you launch your business and the rates that customers are willing to pay.

Look for opportunities for education and skills development, too. Many community colleges offer continuing education courses in professional bookkeeping, and there are a variety of online bookkeeping programs online.

Also, consider joining a bookkeeping group or association that offers information and support from peers in the industry. Online communities, such as groups on Facebook and LinkedIn, can be helpful outlets for bouncing ideas and asking questions.

A few that you might find value in include:

• Bookkeepers Corner Group (Facebook)
• Bookkeepers Resource Group (Facebook)
• Successful QuickBooks Consultants Q.B.O. Q.B. Power Hour Cloud Connect Accountant C.P.A. (LinkedIn)
• Bookkeeping Online (LinkedIn)
• A Bookkeeper’s Corner (LinkedIn)

2. Decide What Bookkeeping Services to Offer

Some examples of what bookkeepers do for clients include:

• Preparation of basic financial statements (balance sheet, income statement, cash flow statement)
• Accounts payable management
• Accounts receivable management
• Invoice preparation
• Payroll services
• Tracking long-term assets (e.g., equipment, machinery)

3.  Consider Getting Certified in Bookkeeping

Because bookkeepers handle confidential information and financial data, clients will want to be sure they choose a professional who is knowledgeable, reliable, and trustworthy. Usually, bookkeepers in the United States do not have to be licensed or certified. However, becoming licensed or having a certification behind your name can instill customer trust and confidence in your abilities. 

Below are several certifications that can give you credibility and possibly a competitive edge:

• Certified Public Bookkeeper (C.P.B.) via the National Association of Certified Public Bookkeepers (NACPB)
• Certified Bookkeeper (C.B.) via the American Institute of Professional Bookkeepers
• College bookkeeping program
• Accounting software certification via the software provider such as QuickBooks ProAdvisor, Zoho Books Advisor, or Xero Advisor

4. Tackle the Legal Aspects of Starting a Bookkeeping Business

Starting a bookkeeping business requires paying attention to some essential legal and tax matters. To ensure you have accurate information, know what you’re responsible for, and understand how your decisions will affect you, seek professional advice from an attorney, accountant, and tax advisor.

Select a Business Name

As you think about what you’ll call your business, make sure you check to make sure no other companies have claimed it in your state. Use CorpNet’s free Corporate Name Search tool as a starting point for determining if your name is available. If you think you might want to expand your business to other states in the future, I recommend doing a trademark search, as well. If you find that your desired name is available, you may want to reserve it so that it’s yours when you’re ready to register your business entity. Most states allow name reservations and the United States Patent and Trademark Office allows businesses to reserve trademarks (for a maximum of three years) by submitting an “intent to use” application. In most states, registering your business entity will automatically protect your business name (provided the name is available if you haven’t reserved it) in the state. However, some states may require additional steps to protect your name within their borders. A federal trademark will protect your name in all 50 states. Note that bookkeepers that operate as sole proprietorships and opt to use their first and last names in the business name (e.g., Jane Sylva’s Bookkeeping Services) do not have to reserve or register their names. If they want to use a fictitious name (e.g., Precision Bookkeeping Services), however, they must file a DBA (Doing Business As) or equivalent application. Fictitious name registration does not protect a business name, but rather it gives the business owner authorization to operate the business under that name and informs the public of who owns the business.

Choose a Business Structure

The business entity type you select for your business will have legal and tax implications. Also, some structures are more complicated and costly to operate than others. While operating as a sole proprietorship offers simplicity, it doesn’t provide the business owner any protection of personal assets because the business and the owner are considered the same legal and tax-paying entity. Several structures that limit personal liability include Limited Liability Company, S Corporation, and C Corporation. CorpNet’s Business Structure Wizard can help you identify the business structures that might be a good fit, which can help you as you discuss the pros and cons of entity types with your attorney and tax advisor. The process for registering a business entity with the state involves filing the appropriate forms and paying the applicable fees. Requirements vary by state and type of business structure. To help you save on your legal costs and ensure your paperwork is completed accurately, CorpNet’s filing experts can handle your business formation filings for you.

Appoint a Registered Agent

When formally registering a business, you’ll need to designate a registered agent authorized in your state to accept service of process (official government documents, legal notices, etc.) on behalf of your business. CorpNet offers registered agent services in all 50 states, which makes it easy if bookkeepers decide to expand their services or relocate to another state.

Get an EIN

Even if you don’t have employees, you may need an E.I.N. Also known as a Federal Tax ID Number, an EIN is a unique nine-digit number used for identifying a business on tax forms and other documents. Most banks will require an EIN before it will open a bank account for a business. EINs are free and obtained through the I.R.S. If you don’t have the time or don’t want to handle the paperwork on your own, CorpNet can help you apply for your EIN.

Understand Your Tax Obligations

In addition to federal income tax (and self-employment taxes if the business is a pass-through entity), there may be other taxes at the state and local level. The taxes and fees a bookkeeping business must pay will depend on the business structure and where the company is located. Some of the possibilities include state and local income tax, gross receipts tax, franchise tax, and state and local sales tax.

Get the Required Business Licenses and Permits

Although no bookkeeper license is required, bookkeepers may have to obtain other licenses or permits to operate a business from their location. It’s essential to check with the state, county, and local authorities to find out if anything is required—such as a general business license, home occupation permit, or anything else—to run the business legally. CorpNet can also help you identify which licenses and permits you will need.

Determine What Contracts You’ll Need

As a self-employed business owner, it pays to make sure you protect yourself. Having the right agreements in place can help! A Bookkeeping Services Agreement signed by you and your clients can set forth the important details of your relationship. Examples of the information that goes into a services agreement include the bookkeeper’s and client’s names and addresses; start date and duration of the agreement; services the bookkeeper will and will not provide; how much the client will pay for services; billing terms; and dispute resolution. If confidentiality isn’t addressed in the services agreement, there might be a separate non-disclosure or confidentiality agreement, as well, to protect yours and your client’s private information. You can find various bookkeeping contract templates online to use as a starting point. An attorney can help you identify what contracts you need and ensure that the language within them covers all the bases.

Research Business Compliance Requirements

With any business, there is some level of ongoing compliance. From filing and paying taxes on time to submitting annual reports to renewing licenses and permits, and more, it’s critical to know what you must do and by when. Fortunately, CorpNet has you covered on business compliance requirements.

5. Open a Business Bank Account

Open a bank account and credit card exclusively for your bookkeeping business, and keep your personal and business finances separated. As a bookkeeper, you know how important that is for keeping accurate records. Mingling personal and business transactions (e.g., paying for personal purchases with a business check) could mean “piercing the corporate veil” and cause a bookkeeping business owner to lose the personal liability protection that they had through their LLC or corporation.

6. Obtain the Right Software Tools and Technology

A virtual bookkeeping business run out of a home has relatively few startup needs. Still, there are equipment and technology tools you’ll want to invest in so that you can work productively and provide exceptional service to your clients.

• Core accounting software – The bookkeeping software you need will depend on what you and your prospective clients prefer. QuickBooks Online a widely used cloud-based solution. Others options that you might explore depending on the types of clients you serve and the services you provide include FreshBooks, Zoho, Sage Intacct, and Xero.
• Document management software – You and your clients will exchange a lot of information. Consider what solution(s) will enable you to receive, share, and file documents and data effectively. Examples of tools that can help include Google Drive, G Suite, Hubdoc, Expensify, Wave, Shoeboxed, OneDrive, and Dropbox.
• Project management app – When managing work for multiple clients, it can be helpful to have a way to keep track of all deliverables. Project management software—such as Trello, Asana, Active Collab, and Slack—can help things from falling through the cracks.
• Computer – After you determine the software you’ll need, you’ll want to make sure that the computer you use is compatible with the desktop versions if you intend to use them. Also, take the necessary precautions (anti-virus software with malware protection) to prevent cybersecurity disasters.

7. Protect Yourself With Business Insurance

To protect yourself in the unlikely event of a legal claim against your business, consider getting the peace of mind through insurance policies. Types of insurance many bookkeepers secure include professional liability (sometimes called “errors and omissions”) and general liability. It would be helpful to check with a trusted insurance agent to get recommendations, and also with the state to see if any type of insurance is required for your bookkeeping business.

8. Prepare to Market Your Virtual Bookkeeping Services

Consider both traditional and online marketing tactics to help you get the word out about your business. If you join local networking groups, business cards and brochures can provide a tangible way to make yourself memorable when meeting new connections face to face. Online marketing can be especially impactful and allow you to reach prospective customers everywhere across the United States. Make sure that your website and LinkedIn profile showcase your education, credentials, and services. And please, upload a professional-looking headshot on LinkedIn. Clients will be far less likely to dig deeper into your profile if you use the shadowy default image as your profile picture. If you’ve created a Facebook business page, which I recommend highly, targeted ads and promoted posts provide a cost-effective way to expand awareness of your bookkeeping services.

Ready, Set, Launch Your Virtual Bookkeeping Business

Now that you know how to start a virtual bookkeeping business, what’s stopping you? CorpNet is here to help you reserve your business name, file all of your business registration forms, obtain your E.I.N., apply for licenses, and more. Contact us today to talk with one of our filing experts. We guarantee you’ll be satisfied with our exceptional, affordable service!

Also, ask about how you can earn additional income by joining the CorpNet Partner Program. It’s free to join, and it allows you to expand your services and revenue potential through either reselling CorpNet services or referring customers to us.

The post How to Start a Virtual Bookkeeping Business appeared first on CorpNet.

Claiming close to 30% share of global consumer spending, the United States continues to be the largest consumer market in the world. It’s no wonder many foreign entrepreneurs dream about how to start a Business in the United States without living in the United States. Selling to the U.S. through a wholesaler or directly online is one way that foreign companies can target the U.S. market. However, many nonresidents set up business entities based in the United States to take advantage of the lower tax rates and protections that having a U.S. business offers.

Neither citizenship nor residency is required to start a small business in the U.S., so the process is very doable if you follow the right steps. Here’s how:

1. Choose Your Business Structure

As non-residents, foreign entrepreneurs have two primary choices of business structure for their U.S.-based business: the C Corporation and the Limited Liability Company (LLC). (Nonresidents are prohibited from forming an S Corp in the U.S. because each S Corp shareholder must be a U.S. Citizen or permanent resident alien.) Here’s the difference between the two:

• C Corporations are a separate legal entity from the owners/shareholders; therefore, the owners’ and shareholders’ personal assets are protected from the actions and debts of the company. Likewise, profits and losses are attributable to the corporation only. You can also sell an unlimited amount of stock or shares in the C Corp and even go public, if desired. Investors prefer the C Corp structure, which is good to know if you think you may plan to expand and need an injection of outside money. Caveats include the paperwork and deadlines required to stay in compliance as a C Corp, and the double taxation (the corporation pays taxes on its profits, and then the individual shareholders pay taxes on the dividend income they receive from the business, so the profits are effectively taxed twice). 
• LLCs are similar to the C Corp in terms of liability protection, but less strict when it comes to compliance requirements. Owners are called members and an LLC can choose whether it wants to be taxed as a C Corp or pass-through profits and losses to the owners.

In the U.S., compliance doesn’t end once you’ve started your business. You must file an annual report, whether you’ve formed a corporation or an LLC. This document keeps the information on file for your business current regarding your physical location, registered agent, and shareholders. You need to submit this form every year—even if there haven’t been any changes from the previous year.

Even as a non-resident business owner, you will be required by the U.S. Internal Revenue Service (IRS) to pay taxes on the income earned in the U.S. You may also be required to pay an annual fee to the state where your business is incorporated. Switching entities down the road is possible but may be cumbersome, as it could involve dissolving one corporation and forming a new one depending on the state where you locate your business.

2. Choose the State in Which to Start Your Business

Most U.S.-based entrepreneurs usually choose to locate their businesses in the states where they reside, but as a nonresident, you are free to file your business entity in any state. To make the decision, look at some key indicators such as the state’s business environment (i.e., regulations and restrictions), its access to resources such as materials and employees, and the costs of doing business there. Some states have high tax rates, for instance, while others offer tax incentives to attract new businesses. Do your homework to find your ideal location. According to WalletHub, Texas, Utah, and Georgia topped last year’s top states to start a business.

3. Get a Registered Agent

A registered agent sometimes referred to as a resident agent, is a person or company officially recognized by the state in which you incorporate. The registered agent resides within your state of incorporation and is designated by the corporation to accept service of process on behalf of the corporation. Because you do not reside in the U.S., it can be beneficial to have representation stateside to deal with legal paperwork such as service of process notices, correspondence from the Secretary of State, and other official government notifications. Your registered agent can also ensure that you obtain and renew business licenses and stay on top of compliance deadlines.

Requirements for registered agents vary by state, but generally, the agent must have a physical street address within the state, must be available at that address during normal business hours, and must be over 18 years of age. You can also hire a company that provides registered agent services. Check with the Secretary of State’s office in the state where you locate your U.S.-based business for a list of companies that provide registered agent services.

4. Obtain a Federal Employer Identification Number (EIN)

All U.S. businesses are required to have a Taxpayer Identification Number (TIN). The TIN is an identification number used by the IRS to administer tax laws. U.S. citizens are required to show their Social Security number to obtain a TIN. Since foreign entrepreneurs do not have Social Security numbers, you can apply for an Individual Taxpayer Identification Number (ITIN). To obtain an ITIN, you must complete IRS Form W-7, IRS Application for Individual Taxpayer Identification Number. The form requires documentation establishing your identity (such as a driver’s license or birth certificate) and your connection to a foreign country (such as a passport).

As of May 13, 2019, the IRS will only allow individuals with an SSN or ITIN to be the “responsible party” on EIN applications. Entities may not use their existing EINs to obtain additional EINs.

5. Set Up a U.S. Business Bank Account

To create an entity based in the U.S., you must open a bank account based in the U.S. Although the USA Patriot Act, passed after the terrorist attacks on 9/11, have made it more complicated for foreigners to open bank accounts in the U.S., it is still possible to do so by following the bank’s specific guidelines.

In general, you’ll need your official corporation documents (with your official U.S. address), an ITIN number and a passport. The preferred way to open a bank account in the U.S. is to visit the bank in person, but you can also see if there is a branch of the same bank in your own country that will allow you to set it up from overseas. If neither of these options is available, try contacting a few global banks to see if they have services to help you set up your account by going online.

6. Moving to the U.S.

What happens when you decide you need to move to the U.S. to properly run the business? The answer is a bit convoluted and under scrutiny at the moment, but here’s a brief explanation. Under the Obama administration, the International Entrepreneur Rule (IE Final Rule) was created to allow international entrepreneurs to temporarily stay in the United States for up to 30 months (potentially renewable for another 30 months) to enable them to grow their businesses here in the United States. Today, although President Trump’s administration has attempted to squash the rule and limit immigration approvals, the ruling still exists. In fact, there are new efforts by U.S. lawmakers to reintroduce a startup visa.  

In the meantime, there are still two visas available E-2 Visa or EB-5 Visa. The EB-5 is available to foreign entrepreneurs who invest at least $1 million (or $500,000 if the entity is in a targeted employment area) and create 10 new jobs. The E-2 Visa is available for foreign business owners from countries the U.S. has treaties with and has fewer requirements for job creation and investment. There are three basic requirements for the E-2 Visa:

• You must prove legitimate control and possession of the funds (such as U.S. tax returns) and the investment in the business must put you at personal risks such as credit card debt and business loans in your name—not in the name of the business.
• You must directly oversee and operate the business on a daily basis.
• Your investment must be substantial. Although there isn’t a set amount for an E-2 Visa, you must show you have enough that you’ll be able to provide for your family and eventually hire employees.

Because you’ve already started your business in the U.S. you should be able to show your commitment to contributing to the U.S. economy through investment and job creation. Contact an expert for help if you’re at all concerned about gaining Visa approval.

Starting a business in another country can seem like a daunting task, and as a non-resident, you will face some additional obstacles, but it’s far from impossible. If you find the varying tax laws and regulations hard to navigate, your best bet is to hire experts to help guide you through the processes. Partner with accountants and attorneys familiar with U.S. business practices.

Finally, get your new business started right by using a business filing company like CorpNet to help you form the best structure for your new U.S. based business.

The post How to Start a Business in the United States Without Living in the United States appeared first on CorpNet.