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Equity Financing

In equity financing, you give up a piece of your business (equity) in return for an investment of capital. Equity investors may be private investors, venture capital companies, or even your friends and family.

Angel investors are the most realistic source of investment capital for most small business owners. Angels are private investors; some invest individually, while others form angel groups to pool their money. Generally, angels are experienced business people, former business owners, or professionals. In addition to the capital they can provide, they can also offer much-needed business guidance and expertise.

If your small business has strong growth potential in an industry such as technology or healthcare, you may be able to get venture capital. Venture capital firms tend to focus on businesses with a track record of success and the potential for rapid growth with a high return on investment. They make large investments, but in return, they will want to have a strong say in your business and possibly even take over management.

If you plan to seek capital from investors, it’s important to make sure the business structure you chose will allow what you want to do. For example, if you operate as a sole proprietor, you won’t be able to take on equity investors, since there is no separate “company” to invest in.

A General Partnership, C Corporation, or Limited Liability Company (LLC) all enable you to sell shares in your business. However, if you have an S Corporation, the number of shareholders you can have is limited to 100, which could be a problem. In addition, the S Corporation form limits what type of person or entity can be a shareholder or owner, which could cause problems either in raising capital or transferring ownership of shares down the line.

While taking on investors may seem like an easy solution to getting the money you need, you should think carefully before giving away equity in your business. Depending on the amount of equity they control, investors can make it more difficult for you to make decisions about your business without their input. Your relationships with investors, even those you are currently close to, may change in the future, leading to unforeseen difficulties. If you give up too large a stake in your business, you may eventually lose control of it altogether.

Debt Financing

As the name implies, debt financing means taking on debt that you need to repay at some point. Typically, this means a bank loan. However, debt financing can also take the form of loans from friends and family, credit unions, alternative financing sources, or even taking credit card advances.

Business loans can be secured or unsecured. Secured loans require you to put up some collateral, such as business equipment or your house, to obtain the loan. Unsecured loans don’t require collateral but are often more difficult to get and have higher interest rates and fees.

If you’re seeking a bank loan, the best place to start is with a bank that makes Small Business Administration (SBA) loans. SBA loans are partly guaranteed by the SBA, which makes banks more willing to lend to small businesses they otherwise might consider risky borrowers.

Other sources of debt financing include:

• Equipment financing – If you are purchasing business equipment, the company that makes the equipment may have financing options available.
• Invoice financing – Invoice financing companies advance you money based on the number of your outstanding invoices.
• Factoring companies – Similar to invoice financing, factors purchase your outstanding invoices for a percentage of their value and then take over collecting the unpaid invoices for you.
• Merchant cash advances – If your business makes most of its sales via credit cards, such as an e-commerce business or retail business, you may be able to get a merchant advance based on the number of your average credit sales.

Make the Right Choice

To make sure you’ve selected the right form of business for your financing needs, it’s best to discuss it with your attorney and accountant before making any decisions. If you need to make changes to your business structure before seeking financing, start now so you’ll be ready to go after the capital you want in 2023.

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Let’s take a look at 10 ideas entrepreneurs might consider as they strive to put their businesses on a growth trajectory. As you read through these thoughts, keep in mind that there are no “one-size-fits-all” growth solutions. What might benefit your business may be different than for someone else’s.

1. Make Customer Service a Top Priority

First and foremost, excellent customer service requires a deep understanding of your customers. Your products and services must satisfy their current needs, but needs evolve and change over time.

Tip: Take a survey or dig into online reviews to shed some light on what your business is doing well and what you need to improve upon.

Besides fine-tuning the quality of your offerings, look for ways to improve how quickly, thoroughly, and professionally your company’s customer service team responds to questions and issues. We live in an era of instant gratification. For example, according to the 2020 Sprout Social Index, 79% of consumers expect brands to respond to them within 24 hours of when they reached out to them on social media and 40% expect a reply within the first hour!

However, the speed of responding alone cannot create a stellar customer service experience. Customer care team members must be empowered through training to understand your company’s offerings and how to build rapport with your customers.

2. Diversify Your Offering and Delivery

It’s also critical for business owners to look for ways to expand their offerings and ways of delivering them. The available options for growing your business will depend on the industry, the location, the customer base, and other factors.

The internet has many inspirational stories about entrepreneurs who have prevailed through the pandemic by pivoting their businesses. Story after story shows heroes emerge as they put creativity into serving their customers. And it’s just the beginning. Businesses are still adapting and growing because of it.

3. Establish Company Core Values

Core values express how a company aspires to achieve its mission. They set the foundation for how leadership and employees treat each other, customers, and the community. Core values serve as the glue that helps ensure everyone (from the business owner to managers to customer service and more) shares a common purpose and strives for the same level of excellence.

Developing core values isn’t enough. You must also communicate them to your team and demonstrate your own commitment to following them.

4. Listen to Employee Input

The “Great Resignation” taught us the importance of employee communication and that communication does both ways. Employees need to know their thoughts and ideas matter. They are the people who represent your brand and see your strengths and weaknesses firsthand.

Tip: Create a clear way for employees to communicate their thoughts. Better yet, make it a formal program with positive feedback for great ideas!

Listen to their observations and concerns, then ask them about ways they think your business can improve issues and leverage opportunities. This is a great way to demonstrate your respect for your team members and recognize practical changes that can benefit your business.

5. Take a Deep Dive into Your Competition

Whether your primary competitors are near or far, it’s crucial to know what they’re doing to attract and retain customers. Fortunately, thanks to the internet, you can find a wealth of information about competitors’ products, services, and marketing tactics via Google searches.

Take some time to look at their website and social media accounts to research their offerings, pricing, promotions, special deals, and marketing messaging. How does their approach differ from yours? What strategies appear to be working well for them that you might consider incorporating into your customer service, product, and marketing strategies?

Check out their website and dig into their traffic to see what content is working at driving new traffic and revenue. You’ll find a lot of data readily available for you if you look in the right places.

Tip: Use a tool like SEMrush to view your competitor’s top website pages and traffic from Google. 

6. Create a Customer Loyalty Program

Marketing researchers have found that it costs approximately five times more to attract a new customer than to keep an existing one. Moreover, existing customers are 50% more likely to try new products, and they spend 31% more than new customers.

That’s a powerful incentive to put effort into retaining customers, isn’t it? Loyalty programs are one way to keep existing customers and get them to buy more. By rewarding loyal customers for their continued support, companies can facilitate more sales and get an edge over the competition.

Tip: Lots of software solutions offer functionality to build automated loyalty programs. Look into your ERP or POS software’s feature list to see if this capability is already there waiting for you.

7. Create Content That Matters

Craft blog, email, and social media content that will help prospects and customers solve a problem or achieve a goal. The more relevant your content, the more interest it will generate, and the more it will get shared.

Consistency also plays a role in content marketing success. Posting regularly helps ensure that you don’t lose momentum in the online following you’re building.

Tip: Tools like Hootsuite, Loomly, SproutSocial, Buffer, and others enable business owners to schedule social media posts in advance. Several of them also make it easier to monitor engagement and interact with followers who leave comments and share your posts.

Sticking to a consistent blog and email schedule is essential, too. If you don’t have a strong writer on your team or someone familiar with SEO and the ins and outs of your website’s content management system, you might consider outsourcing all or some of your blogging and website updating tasks.

Also, consider building an email list so that you have people opted into receiving periodic email messages from you with tips, announcements, new products, special deals, and other information. Sources vary in what they say is the average ROI, but most estimate it’s in the neighborhood of $40 in sales for each dollar spent on an email marketing campaign.

8. Seek Funding to Fuel Growth

Sometimes growth requires more than the financial resources a business has readily available. Fortunately, there are programs and services geared toward helping small businesses fuel their ability to expand. The U.S. Small Business Administration (SBA) offers helpful information about getting business loans, seeking venture capital, crowdfunding, and other funding options.

9. Get Guidance from a Mentor

For example, SCORE, a national nonprofit, provides free, unlimited mentoring to small businesses everywhere in the United States. All mentors are volunteers with valuable business experience and expertise to share with entrepreneurs looking for guidance as they start or grow their companies.

10. Keep Up With Business Compliance

To grow a business, you need to stay in business! That’s why companies must keep up with their business compliance responsibilities.

Paying taxes, submitting state filings, maintaining required licenses, and performing other formalities correctly and on time must not be ignored or overlooked. Businesses that don’t pay attention to their compliance requirements risk fines, extra fees, penalties, and even possible suspension. Business owners also risk losing liability protection (in the case of LLCs and corporations) if they don’t fulfill their obligations.

Business owners should research the requirements that apply to them by checking with their state and local agencies and asking their attorneys and tax advisors for guidance.

Tip: Check up on your compliance health by reviewing our business compliance checklist. 

CorpNet is Here to Help as You Launch, Build, and Grow Your Business

You can count on CorpNet’s team to assist you with all of the crucial filings for registering your business with the state, obtaining your EIN, applying for business licenses and permits, and much more. And we’re here to handle the ongoing filings required to keep your company in compliance year after year.

No matter what stage your business is in, CorpNet is here to help you on your journey to growth and success.

Contact us for a free business consultation today!

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 1. Understand the basics of a small business brand

To craft your brand message, start by asking yourself (and answering) these questions:

• What does your company do? Can you distill that down to a few sentences or bullet points?
• Why does your company do what it does? The “why” is the passion for your company that you want your brand to convey.
• What’s your unique selling proposition (USP)? Your brand should convey what your business does and how you do it differently than anyone else.
• Who is your target market? What are their interests, passions, characteristics, and needs?
• How would you describe your product or service? List the features in order of importance.
• How does your offering solve your customers’ problems?
• What are the benefits of your product or service? What needs does it fulfill for consumers?
• What is the “personality” of your business?
• What values are important to your small business?

Take lots of time to explore these questions and their answers. These answers will form the foundation of your brand.

2. Choose a domain name to enhance your brand

Your business’s name should express the value and uniqueness of your product or service. Equally important to branding is getting the right domain name (the address of your company’s website).

When purchasing a domain name, consider these tips:

• You want it to be closely tied to the company name or flagship product/service.
• You want your domain name to be easy to remember.
• While there are plenty of new and trendy domain extensions, stick with a traditional .com so it is easy for people to understand, remember, and use.
• Keep the domain name as short as possible. Longer domains are harder to remember and difficult to type.
• Make sure the domain is easy to spell. A cute spelling will lead to missing website traffic and sales.
• Say the new domain name out loud so you hear how it sounds. If it sounds corny, goofy, or silly keep brainstorming.
• Don’t rely on domain registrars to provide you with the best domain options. Brainstorm and create a great list, so you are in control of your future brand.
• If you find a domain that works and it is a premium domain (aka higher pricing), don’t wait too long before pulling that purchase trigger or you might lose it.

3. Tap into emotional branding

Feeling an emotional attachment to a brand can motivate customers to purchase. A recent survey showed that 48% of millennials are more likely to buy from a brand if they know the people behind it.

When you’re starting a small business, use your entrepreneurial story to give your brand an edge, meaning, and purpose. Include an About Us or Our Story page on your website to share your passion for your business, the story of how you started, and the people behind your business.

4. Focus your brand by choosing a business niche

Sometimes when entrepreneurs are looking for businesses to start, they try to be all things to all people, which can lead to branding and execution problems down the road. The more narrowly you can define your niche, the more specific and memorable your business’s brand will be.

Dig into your market research to find the best niche. You may want to concentrate on customers in a specific geographic region, a particular age group, or hyper-focus on a specific problem that needs to be solved. Or, in your research, you might discover a niche you had not even considered.

If you need some inspiration, look at your competitors’ target market and choose a market they’ve failed to serve.

5. Brand your small business on social media

Social media is so important to a growing small business, that it’s difficult to digest down how much it will influence your brand.

Here are some core elements to remember when building your brand on social media:

• Maintain a consistent brand message across all your social media platforms.
• Try and establish social media URLs (or names) that are uniform across networks.
• Focus on the social media channels that your customers use. Not all age groups, genders, or industries do well across all networks, so it’s important to know where your customers live online.
• Seek out social media influencers to help spread the word. An influencer is someone on social media who has established credibility in a specific industry, has access to a large audience, and has extensive persuasive reach. Search hashtags and keywords relevant to your business or industry to find influencers; use a service like Buzzsumo to quantify social influence.
• Acknowledge and reward customers who act as brand advocates, and reach out to influencers in your industry to let them know about your brand.

6. Use the power of color psychology

Choose the right color scheme to use in all your branding materials. Consider the following items when selecting colors for your brand:

• Colors bring forth emotions when viewed, so select colors that align with the psychology of your brand.
• Bright, vibrant colors can cause headaches. Use these shades sparingly and combine them with neutrals.
• High-contrast colors are easy to see from a distance, so use them in your store signage, outdoor advertising, and presentations to large groups.
• If you’re not sure what color combinations work well together, look at color schemes used by other businesses. Search online for websites you like and note what colors get your attention.
• Hire a professional designer who will take time to understand your brand, its values, and your offering before they create a logo or color scheme.

7. Put your product in the perfect packaging

If you start an online business, your packaging needs to stand out online, whether on a computer, tablet, or smartphone. If you are packaging a product for sale in brick-and-mortar retail stores, it needs to attract attention on a shelf full of competitors. Make it appealing to pick up and touch.

Get ideas by looking at your competitors’ packaging and assessing what you like and don’t like about it. The more competitors you have, the more distinctive your brand must be.

8. Know the difference between B2B and B2C

While B2B purchases are motivated mostly by facts, statistics, and numbers, B2C purchases are motivated primarily by emotion.

For B2B buyers, the emotional factor is a fear of making a poor decision. You’ll need to sell your expertise and experience to overcome this fear. Because B2B buyers are typically driven by the need to solve a problem or do something better, try presenting your product or service as a problem solver.

B2C customers may also be driven by need, but just as often, they’re motivated by wants or impulses. To craft effective B2C branding, learn what motivates your target customer, such as the desire to appear younger, more successful, have more fun, save time or save money, and incorporate that motivation into your brand message.

9. Use employees to convey your brand message

From their words and their appearance to their actions, employees embody your brand to your customers. Educate employees about your brand and set standards for how you expect them to convey it. You may have them follow specific procedures on the job, use certain words when talking to customers, or even dress a certain way, such as wearing a uniform or a business suit.

10. Protect your brand

Once you’ve created your small business brand, do everything you can to protect it (including incorporating your business). And don’t forget a registered trademark is the only way to truly protect your brand name, your logo, and your business’s slogan across all states. You can search for existing trademarks and you can get acquainted with the trademark process at the United States Patent and Trademark Office (USPTO) website. This website site guides you through all the details of applying for trademark protection. Once you have your trademark and are using it, make sure to maintain and renew it as necessary.

Our company’s brand has evolved over time. From changes to our colors to full website redesigns, we’ve tried to make sure our brand has matured alongside our company’s growth. Know that your small business brand will evolve with you too.

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How Do I Get Certified as a Woman-Owned Business?

There are two types of women-owned business certifications: Women’s Business Enterprise (WBE) and Women-Owned Small Business (WOSB).

Women’s Business Enterprise (WBE)

Women’s Business Enterprise (WBE) is a designation used by state and local governments, plus many private sector organizations committed to offering opportunities to women-owned companies. Previously, you could self-certify your business; however, you must now go through one of the Small Business Administration’s (SBA) approved third-party organizations:

• National Women Business Owners Corporation (NWBOC)
• S. Women’s Chamber of Commerce
• Women’s Business Enterprise National Council (WBENC)

You can also look for WBE certification through one of the State Offices for Minority and Women Business Enterprises or through your local government office—although the certification may only be suitable for doing business with that particular government.

While each organization has its own process, requirements, and eligibility guidelines, in general, WBE certification requires applicants must:

• Be a for-profit business located in the United States
• Have 51% ownership by a woman, or a group of women
• (When applicable) have a woman-controlled governing board
• Have a woman as its top executive officer who is responsible for daily operations and has experience in the company’s primary business activity

In addition, applicants for WBE status must be U.S. citizens or legal residents.

Women-Owned Small Business (WOSB)

Women-Owned Small Business (WOSB) is a designation used by agencies of the federal government committed to offering contracts to women-owned companies. In fact, the federal government’s goal is to award at least 25% of federal contracts to small businesses in general and 5% specifically to female business owners. In addition, qualified business owners can apply to have an Economically Disadvantaged Women-Owned Small Business (EDWOSB) designation, a subcategory of the WOSB for economically-disadvantaged entrepreneurs.

To be eligible for the WOSB Federal Contracting program, a business must:

• Be a small business according to SBA size standards
• Be at least 51% owned and controlled by women who are U.S. citizens
• Have women manage day-to-day operations and make the long-term decisions

To qualify as an EDWOSB, a business must:

• Meet all the requirements of the WOSB Federal Contracting program
• Be owned and controlled by one or more women, each with a personal net worth of less than $750,000
• Be owned and controlled by one or more women, each with $350,000 or less in adjusted gross income averaged over the previous three years
• Be owned and controlled by one or more women, each with $6 million or less in personal assets

To apply for certification, women business owners should start at the SBA’s certification website and answer eligibility questions. Once the application deems you eligible, you will be guided to use the SBA to get certified or be given a list of the approved third-party certifiers.

To help you navigate through the process, the SBA offers application checklists and a list of required documents. Next, you are guided to obtain a DUNS number (required), register for SAM (System for Award Management), where you’ll find contracting opportunities, and create your SBA account.

The application requires some or all of the following information and documentation (depending on your business type and ownership):

• Company name and fictitious business name (“Doing Business As” DBA)
• Owners’ names, addresses, and company website
• The company’s legal structure
• Incorporation date
• A list of each proprietor, partner, shareholder, or member within the 12 months preceding the date of the application
• DUNS number (from Dun & Bradstreet)
• Any affiliate relationships
• Contact information for regular clients
• Business and/or personal loans
• Employee information
• Birth certificate, current passport, or naturalization papers
• Driver’s licenses of all owners
• EIN (Federal Tax ID)
• Resumes of all owners, directors, partners, officers, and key personnel
• Current bank statements for all deposit accounts and loan statements
• Financial institution signature cards
• Documentation of how the company was capitalized
• Financial statements for three years, including balance sheet, profit & loss statement
• Tax returns for the past three years
• Assumed/fictitious name certificate
• Authority to conduct business in the state and/or certificate of good standing issued by Secretary of State
• Articles of incorporation and articles of amendments filed with Secretary of State
• Bylaws and amendments
• Statement of information filed with Secretary of State listing officers, directors, managers, members, or general partners
• For LLCs, articles of organization and operating agreements
• Copies of all corporate stock certificates
• Minutes of corporate shareholders and directors’ meetings
• Shareholder agreements
• Partnership agreements
• Professional, industry, and/or business licenses
• Copy of lease or deed for business location

Then, once a year, businesses need to update their certification information through both the Dynamic Small Business Search database and beta.certify.sba.gov.

How Do I Get Certified as a Minority-Owned Business?

Another critical certification is the minority-owned business certification. Like WBE and WOSB, federal, state, local, and large businesses reserve a percentage of their contracts exclusively for minority-owned businesses (MBEs).

The National Minority Supplier Development Council (NMSDC) is a membership association with 23 regional affiliate councils nationwide, plus 1,450 corporate members representing public and privately-owned large corporations. NMSDC promotes supplier diversity through education and networking opportunities and offers an official certification process for minority-owned businesses.

Qualifications for certification include:

• The business owners must be U.S. citizens
• The business must be at least 51% minority-owned, operated, and controlled. (Per the NMSDC, a minority must be at least 25% Asian, Black, Hispanic, or Native American. Also, minority eligibility is established through screenings, interviews, and site visits. For publicly-owned businesses, at least 51% of the stock must be owned by one or more minority group members.)
• The business must be for-profit and physically located in the U. S. or its territories.
• The minority owners must also participate in the daily management and operations of the business.

To start the certification process, fill out the online application on the website of the regional NMSDC affiliate located closest to your business. The documentation required varies by business type, but you can prepare by gathering information on:

• The history of your business
• Certificate of incorporation
• Articles of incorporation
• Stock certificates and stock ledger
• Minutes of the board of director’s and shareholder meetings
• Corporation bylaws and amendments
• Any agreements and documents regarding ownership, operation, and control of the business
• Identification documents for all principals including business cards, resumes, driver’s licenses, and proof of U.S. citizenship (birth certificates or U.S. passports only)
• Corporate bank resolution agreements and bank signature cards
• Business lease agreements/security deeds
• Proof of general liability insurance and bonding if applicable
• Copies of the business’s canceled checks

Once you get approved, you’ll receive notification via e-mail and postal mail. To find federal and state contracting opportunities, start with the Small Business Administration’s (SBA) contracting website, where you will find helpful links to procurement opportunities and useful guides on how to bid. Also, check with your local affiliate to attend business opportunity fairs, training, and networking events. You must be re-certified annually by providing current tax forms and contact information changes.

What is an SBE Certification?

Small Business Enterprise (SBE) Certification is a bit different from the other small business certifications described above in that it is not one designation from one source. Many organizations and local governments offer SBE certification, and each has its own set of guidelines and requirements. You might have to meet qualifications such as a maximum number of employees or sales numbers.

In addition, getting SBE certification from one entity does not necessarily qualify your business for SBE certification status elsewhere. For example, getting SBE certified for the City of Los Angeles may open your business to numerous contracts throughout Los Angeles but not anywhere else. But, getting SBE certification through several organizations and councils can only increase your opportunities to gain new business and widen your sales base.

Now That You’re Certified

Once you get a certification, it is crucial to stay involved and make the most of your designation. Put official logos on your website to spread the news and use the certificate in all your marketing materials and as part of your email signature.

Procurement opportunities are lucrative but take a lot of hard work to bid on and usually have a lengthy vetting process. When applying for state, local, and corporate projects, search state, city, or company websites for bidding opportunities. Finally, make sure you know the deadlines and requirements to stay compliant.

The post How to Get Certified as a Women or Minority-Owned Small Business appeared first on CorpNet.

There are some filing requirements to operate in other states legally and tax-related considerations that need attention. Of course, none of that should be taken lightly, so entrepreneurs should research the requirements of the state(s) where they want to conduct business. It’s also beneficial to consult an attorney and tax advisor or accountant for professional advice.

Operating a Business in Multiple States

Legally operating a business in multiple states generally won’t require starting an entirely new business entity in every state. Typically, limited liability companies (LLCs) and corporations will have to apply for foreign qualification instead.

Foreign qualification is the process of registering a company to conduct business in another state. Whether or not a business needs to register depends on several factors.

General Guide for When Foreign Qualification Is Required

Nexus (either a significant physical or economic connection to the state that requires a business to comply with that state’s tax laws) comes into play when determining if foreign qualifying is necessary. Different states have different definitions for what they consider doing enough business in the state to constitute nexus. Generally, nexus is established when:

• The business has a physical presence (e.g., office space, warehouse, or retail store) in the state.
• The business stores inventory in a state — such as merchandise owned by Fulfillment by Amazon (FBA) merchants and stored in a warehouse owned or operated by Amazon.
• The business conducts in-person meetings with clients or customers in the state.
• The business is structured as a limited liability company, C corporation, S corporation, or a limited partnership (LP).
• The business has employees living or working in the state.
• The business’s sales or revenue in the state have reached a specific threshold that the state considers having “economic nexus.”

Unfortunately, states aren’t always crystal clear about what specific activities constitute “doing business.” The mere activity of selling products or services in states beyond the LLCs or corporation’s home state doesn’t necessarily mean the company will be deemed conducting business in the other states. For example, suppose a business is a consultancy or the business owners are freelancers and conduct most of their work online. In those situations, foreign qualification usually isn’t required. E-commerce businesses are different because there are sales of products involved and possibly a warehouse with products located in the state.

Other business activities that typically do not constitute conducting business in a state:

• Defending or settling a lawsuit
• Dealing with internal LLC or corporate activities such as member meetings
• Having a bank account in the state
• Selling through independent contractors
• Securing or collecting debts
• Conducting an isolated transaction that is completed within 180 days and not repeated

How to Foreign Qualify to Expand a Small Business to Another State

1. Submit a Certificate of Authority

Most states have similar procedures to file a foreign qualification. It starts at the Secretary of State’s office in the state where the business will expand its operations. Companies need to submit a form, which is usually called a “Certificate of Authority,” and pay the required filing fees. The business owners may need to provide documentation (Certificate of Good Standing) that the business entity has paid its taxes and followed business compliance rules in its home state before the other state will approve foreign qualification.

2. Conduct a Business Name Search

Next, conduct a name search in each state to ensure the business name is legally available. If not, the business will need to use a “fictitious name” (also known as Doing Business As or DBA) in that state.

3. Designate a Registered Agent

Once the business has a foreign qualification, they need to appoint a registered agent. A registered agent (also known as a statutory agent or registered agent) is a person or company with the authority to accept service of process (legal documents and government notices) on behalf of a business.

A registered agent can handle in-state responsibilities such as:

• Official federal and state correspondence
• Subpoenas for information
• Tax notices from the IRS and local tax authorities
• Lawsuits
• Summonses to appear in court
• Corporate filing notifications

States often list authorized registered agents on their websites. It can be highly advantageous to use a reputable registered agent services company, like CorpNet, that can provide its services in all states. It simplifies things because there’s just one point of contact for all registered agent matters, and it may be more cost-effective, too.

4. Obtain Required Licenses and Permits

State and local governments may require certain business licenses and permits for a company to operate in their jurisdictions. Even foreign qualified companies must follow those rules, so it’s essential for business owners to research the requirements.

One significant point to consider is if the business must collect and remit sales tax in the state. Whether or not a company has a physical presence, such as a warehouse in another state, having an out-of-state employee may signify enough presence to require the business to collect and pay sales tax in that state. Once it’s determined a business has sales tax nexus in a state, it is required to apply for a sales tax permit to collect sales tax for all taxable transactions made in the state and pay those monies to the state’s Department of Revenue.

5. Register for Payroll Taxes

If the business has employees in the new state, it must register for payroll taxes with the state tax agency. It will need to obtain a state income tax withholding number (and unemployment insurance number) and withhold state income taxes from employees’ pay. Even if the state does not have an income tax, businesses must still withhold and pay federal income tax.

The business must also register with the state’s Department of Labor and be compliant with the Department’s rules for employees in the state.

• Minimum wage
• Labor laws
• State disability insurance
• Worker’s compensation

There may be other requirements as well. It can be helpful to use an experienced payroll services company that is familiar with handling multi-state workforces and knows the regulations in each state.

Consequences of Not Filing for Foreign Qualification

Neglecting to foreign qualify when required can cause significant issues for a business and its owners.

Possible Penalties for Failing to File for Foreign Qualification

• Fines and interest for the time the company was conducting business in the state and was not foreign qualified
• Payment for missing filing fees the company should have paid
• Payment of back taxes for the time the company was doing business without being foreign qualified
• Ineligibility to enforce contracts in the state
• Ineligibility to sue in the state, because an entity can’t bring suit in a state where it isn’t registered
• Loss of the business owners’ personal liability protection in the state – By not complying with the state’s laws, a court might rule the corporate veil shielding business owners from responsibility for the business’s debts has been pierced. That puts the owners’ personal assets at risk.

CorpNet Can Help You Set Up Your Corporation or LLC for Doing Business in Multiple States

Simplify the process by asking CorpNet to help you! If you would like to expand your business into another state, CorpNet can help you with your foreign qualifications filings, registered agent needs, business license applications, payroll registration, and more. We’re just a phone call or email away.

Contact us today to get discuss ways you can expand your small business!

The post Expanding a Small Business to Another State: What You Need to Know appeared first on CorpNet.

This year, we’re back to hosting a holiday party. Our company has employees and freelancers located all over the country, and we’re going to bring them here to Westlake Village to get to know one another and celebrate a great year.

While it’s essential to treat your employees well all year long, after the challenging time we’ve all been through, it’s more important than ever to get in the holiday spirit and start spreading the joy.

Here are some ways to do that.

If your company is still operating virtually, that doesn’t mean you can’t celebrate. Host a party via video chat. Arrange a gift exchange ahead of time and unwrap the presents online. Hold some contests and give out prizes. Ideas include an ugliest holiday sweater contest or trivia competition. If your staff isn’t shy, you could even host a virtual karaoke holiday song competition.

For companies that have returned to work in person, be sure to decorate your offices. Just seeing the festive décor will be a morale booster. If you’re nervous about hosting a holiday party indoors, take advantage of the fact we live in southern California and hold a holiday picnic at a local park or even head to the beach. Or you can stay on-premises and hire a food truck to come by feed your team.

More important than parties, however, is sharing with your team how key they were to all you achieved this year and how much you’re counting on them to take your company into the future. Salute employees who went above and beyond. Verbal recognition in front of their peers makes people feel valued.

If you can afford cash bonuses, by all means, distribute them. If you can’t, that’s OK; perhaps you can give your team the gift of time—two or three extra days off—with pay. Thoughtful gifts work wonders too. Everyone appreciates a cozy blanket, throw, or holiday food basket.

Ideally, you should try to maintain that generous holiday spirit all year. That’s what we do at CorpNet—and I believe it’s what helped catapult our business this year.

While the holidays may seem like they are months away, this is not the case. They’re right around the corner. Now is the time to plan your celebration!

The post Get Your Office Into the Holiday Spirit appeared first on CorpNet.