Write on Time: Tips for Small Business Success

by Adrienne Tange
EBSTC President-Elect candidate

Adrienne Tange is the co-founder of Write on Time Solutions, LLC , a technical writing company that creates clear, concise and accurate technical documentation or Web content-always on time and on budget.

In her free time, she enjoys riding and showing her Arab horse.

Have you ever dreamed of being your own boss and starting a business? Some have attempted this and find their businesses thrive, whereas others are not so lucky. What is the key to success for profitable entrepreneurs? According to the Small Business Association (SBA), careful planning and research increases your odds of maintaining and growing your business.

Last year, Melody Brumis and I decided to start a writing business. In the past, we had worked on projects together and found that we made a good team. In addition, we both possessed strong writing and editing skills and had gained experience in various industries. If we pooled our skills together, we knew that we would make a great team.

Choosing a Business Structure  

What should we do first? That question, among many others, is the reason we started this Tips for Small Business Success. We want to share what we learned about starting a business.

When we first began thinking about establishing a business, the first question we had to address was the type of business structure that we should establish. The Internal Revenue Service (IRS) lists five types of business structures:

• Sole Proprietorships
• Partnerships
• Limited Liability Company (LLC)
• Corporations
• S Corporations

A sole proprietorship is the least expensive and easiest business structure to create. The IRS defines a sole proprietorship as someone who owns an unincorporated business. If you decide to set up this type of business structure, you may have to pay fees for a fictitious business name and a business license.

If you plan to go into business with a partner, you might consider forming a partnership:

• A Limited Liability Company (LLC) offers the same liability protection as a corporation, but without the corporate tax and the required formalities, such as formal meeting and record keeping. In this structure, owners are called members, and they can pass profits and losses to themselves or elect to be taxed like a corporation.
  
  
• A Limited Liability Partnership (LLP) is a business structure for partners who want an equal voice in managing their business, but do not want equal share of liability.
  
  
• A Limited Partnership (LP) structure is for businesses that want to limit the liability and involvement of certain partners. This structure is popular with business owners who want to attract investment partners that want the profits of a business but not its risks.

The corporation or C Corporation is a complex business structure that is a legal entity separate from its owners, who own shares of stock. A corporation must pay corporate tax on profits and on dividends paid to shareholders, which means corporate income is taxed twice. In addition, a corporation must hold annual meetings, record the minutes of the meetings, elect directors or ratify the status of existing directors, and issue stock certificates. Setting up a corporation is costly, and you must work with a qualified attorney.

An S Corporation (Inc. or Ltd.) is identical to a C Corporation, but avoids double taxation. If a corporation qualifies for S status with the IRS, it is taxed like a partnership, not like a corporation. Income goes to shareholders, who must report the income on their individual tax returns.

After talking to our tax attorney, Melody and I thought an LLC was the best type of structure for our business.

Seeking Legal Advice

Before you start a business, we recommend that you talk to a knowledgeable tax attorney and visit such websites as the SBA (http://www.sba.gov/index.html) and the IRS (business section at http://www.irs.gov/index.html).

Melody Brumis and Adrienne Tange started their business, Write on Time Solutions, LLC, in 2007. Their technical writing company writes and maintains documents for businesses that do not have in-house publication resources.

Melody and I will be writing this column together to help you achieve small business success. If you have any questions for us, please email us at info@writeontimesolutions.com and we will address them in future columns.