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What Is The Best Small Business

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And so maybe you've been wondering, "When is the best time to incorporate?"

From a legal standpoint, any time is the best time. The sooner you incorporate, the sooner you make the move from the world of unlimited liability to the world of limited liability.

From a tax savings standpoint, any time is the best time. The sooner you incorporate, the sooner you will start putting more money in your own pocket and less in Uncle Sam's.

But from a **tax reporting** standpoint, there is one time of year that stands out as best: January 1st.

Why is that?

Assuming you have a sole proprietorship (or other entity, such as a partnership) that is up and running as of January 1, and assuming you then incorporate that existing entity on any date other than January 1, you face the possibility of filing not one but two business income tax returns for that year.

Here's an example to clarify this important point .. .

Let's say you've been operating your sole proprietorship for a few years, and in early 2006 you decide to incorporate. In January you get around to starting the paperwork, but life gets in the way and you finally get it done in late February. By the time your state processes the Articles of Incorporation, the start date of your new corporation is March 1.

For 2006, you must file a Schedule C for the period of January 1 through February 28, when your business was still a Sole Proprietorship. And you must also file a corporate income tax return for March 1 through December 31.

Maybe that's no big deal. Maybe you enjoy filing one business income tax return so much, filing a second one doesn't bother you. And it may be that the inconvenience of filing two tax returns in 2006 is far outweighed by the legal and tax advantages of incorporating.

Keep in mind, too, that 2006 will be the only year you have to do this "double duty". In 2007 you will only have to file the corporate income tax return.

But if you are thinking about incorporating, the best time to do it, from a tax paperwork standpoint, is as of January 1. Only then do you have a "clean break" from the old sole proprietorship to the new corporation.

This timing issue can also be relevant if you decide to make the switch late in the year. If the effective date of the incorporation is November 15, you will have to file a Schedule C for January 1 through November 14, and a corporate return for November 15 through December 31. In that scenario, you should ask yourself, "Do the benefits of incorporating outweigh the convenience of waiting until January 1?"

So before you decide when to incorporate, take a moment to reflect on the tax reporting consequences of incorporating on January 1 vs. any other date.

Sometimes it may make sense to wait a few weeks (as in the second example), and sometimes it makes sense to "do it now", especially when January 1 is nearby.

What Is The Best Small Business

Avoid the Top Five Mistakes in Business Plan Making

Presenting your business plan to the loan committee or potential investors, make sure it is the perfect plan that would catch their interest. Remember the risk of trusting huge amount of money to your hand, reversing the table; you would surely be very hesitant. If your business plan does not meet with standard business scheme presentation, then you are doomed to receive rejection. Being rejected after all the hard work and careful planning on your part leaves you dejected and discouraged. You start to wonder whether it is just plain bad luck or it is just that they do not like to invest in you.

Examine your business plan; maybe you have committed one of the top five mistakes during your business plan making. Presented below are the topmost mistakes, which cause rejection when you apply for capital loan or submit business proposals.

Top 5 Mistakes in Business Plan Making

1.Presenting an awful Financial Profile

Personal financial management is very important in that it reflects your financial skills when you start to run a business. Before you present your business financial profile, examine your own financial report. Ask yourself whether it is the ideal type or else try to mend your ways. Personal handling will affect your future business running. When you are likely to mess your financial management, then a number of people will suffer. This aspect of the business gives red signal for financial lenders and business investors.

2.Lack of Solid or Liquid Asset to Pose as Security

Business plan ought to be backed up with a solid or liquid asset in case the business will fail. New business venture is a risky investment no lenders will likely be lenient enough to release capital without any assets to pose as Security. Before you start to formulate your business, try to accumulate assets first.

3.Incompetent Market Research

Competent and well-researched marketing information will always manifest itself in the form of data's gathered. Business experts can detect when a research is done with care and thoroughly. If you do your market research, make sure you have exhausted all avenues of possible marketing help. A specific business plan with meticulous outline will tell investors how you are very precise in your marketing research. This is will give an idea of how serious you are in your business quest.

4.Unclear and Inconsistent Data

Any form of cheating will show no matter how carefully you schemed your way through it. Inconsistent data and doctored information or entries will eventually surface with careful questioning and interrogation by business experts. If you vie for investors trust, you are likely to fail in this aspect. Business people are crude in that they are very critical in their question even to the point of pointblank grilling. Business plan must consist of clear and honest information that could satisfy your audience, come presentation time.

5.Giving and Receiving of Critical Opinion

In the business world, there are different business strategies that work and there are those that are not that effective at all. If you think yours is somewhat lacking, try to be open with other techniques. Solicit opinion and try to apply it in your business; in this way, investors will know that you are a broad-minded person. People who know how to listen have a wide room for progress. The same applies with business, when you can learn to adapt to other strategies for the good of the business, then you are likely to impress your future business associates.

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Both Wayne M. Davies & David1 Scott1 are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

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