When is a business large enough to be a corporation?
What is your answer?
Conventional wisdom says : A business needs to get to a ‘certain’ size or a ‘specific number’ of employees.
Our answer is “size” is not the determining factor of whether you incorporate or not.
The media would have us believe that big corporations pay little or no taxes, why?
What is your answer?
BIG-TAX-advocates say: These large organizations are cheating and the government needs to do something about it.
Our answer is: Big corporations pay less in taxes because their structure allows them to owe less in taxes.
Why do corporate executives have large benefit packages?
What is your answer?
Typical business owners say: It takes an ‘army of attorneys and accountants’ to manage corporate benefits without running afoul of the law.
Our answer is: Let us help you become an executive and do it the right way. It’s easy when done correctly.
Most professional advisers (i.e. attorneys and accountants) grasp a few bits of knowledge about small business and new start-ups and make their recommendations based on this unique information-set that not everyone is aware of. The thing that professionals know is that in the first two years of a small business’s life– 84% will fail!
If you were a professional advice giver, you would want your advice to be right most of the time. And if a friend or acquaintance came to you about starting a new business, wouldn’t you be obligated to structure your advice knowing that your friend had less than a one-in-five chance of success?
Microsoft’s, GE’s and Bank of America’s advisers would not consider the 84% failure-rule in their advice, would they?
When you started your business, did you seek professional advice? And did you get some input from friends and family? Most people do. Most business owners, when they are starting up, are advised by the “professional” that corporations are bad. They are advised that there are other entity structures that are “much more suited” to a new business. And since around 1995, the LLCs, the Sub-S corporations, the partnerships and the sole-proprietorships are the most-often recommended models for failure.
All of these entities have a few things in common:
1. The entity pays no tax on its profits. The owner pays all of the taxes on the profits.
2. These entities are precluded by law from providing tax-free executive benefit plans.
3. The owners of these entities can be held personally liable for all the debts of the business. (and that includes the LLC structure)
4. These entities do provide the ability to write-off the cost involved in creating and running the business when the business fails.
When put in those terms, these entities don’t sound so good. But here is the good news about the LLC, S-corp, all the types of partnerships, and the sole proprietorship– at least from the perspective of the “professional-adviser”– when the business fails, these entities allow you to take all the costs and losses personally. In fact, this is the main reason for using one of these entities. These entities are the best model to choose if you are going to fail. And again, over four out of five new business start-ups fail within 2 years.
How would you have felt if you had known that funeral arrangements were being made for your business before you’ve even had a chance to get started?
As you will also see, these most-often-prescribed business entities do not reward business success the way large companies EXPECT and DO get rewarded.
Do you think Microsoft, General Electric, Bank of America or any other big successful company will be calling your attorney or accountant for advice? Please don’t be offended. But, reality is reality.
