Evaluate Your Business And Get It All Done
Evaluate Your Business.
Do you feel like your business has gotten away from you?
Are you in danger of being swept away in a torrent of confusion, work, deadlines and technology, all jostling like boulders in the rapids of your personal life?
(You know The one you don’t seem to have, right now.)
You’re racing to keep up with your business and everything else in your life, caught like a paper boat in a whirlpool.
Or you’re left in the wake, trying to catch up; no time or energy for anything else.
If this describes you—if you are in a constant state of overwhelm and it’s hard to keep track of what you’re doing—what follows next might be for you.
I'll list ten practical steps how to evaluate your business, get rid of anything that isn’t working for you and streamline your systems.
Saving time and getting rid of clutter in every area of your work-life will energize and revitalize you.
You’ll end up with a clearer vision of where you are now—and where you want to go.
Step One: Evaluating Your Business Structure
This doesn’t mean evaluating in the way you would when you set up a business plan: It’s much simpler than that… yet it’s a step many home business sole proprietors never get around to taking.
Evaluate your business to see if your current status—sole proprietorship—is still the best structure; and how close you are to making the switch to LLC or corporation more advantageous or even mandatory.
Your best bet is to speak to your accountant, but you can determine if that’s necessary right now by checking out the basic definitions of the different business structures.
- Sole Proprietorship
In a sole proprietorship, you are both the owner and the business.
- Low startup costs, and minimal (if any) fees to pay to local authorities or the government.
- You can also get away without consulting a business lawyer, though if you can afford it, running your business plan by a small business lawyer is always a sound investment.
- You can operate your sole proprietorship through your personal bank account
- You can operate under either your name or your trade name (what people call your business)
- If you don’t pay your business bills or you accidentally blow up a client’s house while decorating, you personally can be sued and your assets—house, car, equipment, investments—can be seized.
- You can operate under your trade name, but you cannot have a bank account in that name or sign checks in that name. If your clients or customers pay by check, you will need to specify that all payables are made out to your personal name; not your trade name.
- May limit your ability to transfer ownership or get a business loan
- LLC (Limited Liability Corporation)
Your business becomes a legal entity.
- If your business goes belly-up, only your business assets can be seized; not your house, your car or other personal assets.
- Bigger tax breaks (sometimes)
- You are legally obliged to file annual reports with the state
- You must pay annual fees to keep your LLC in legal operation
- More mandatory fees and higher fees than a sole proprietorship
This is the simplified version: If you are seriously considering changing your business status, do consult a small business lawyer and/or your CPA.
What it boils down to is this: If you are making a modest income operating under your own name and you do not see your business ever expanding, you can keep operating it as a sole proprietorship.
If your business plans include getting business loans, selling your business name or involving other people, and you are going to be expanding significantly, at some point you will have to switch your business to an LLC.
And if you have a business partner or want to transfer ownership, it is in your best interests to also incorporate your LLC.
We spent time on the issue of your business structure because it’s a topic many people remain hazy about and end up never tackling.
The important takeaway is to know where your business is going: Do you plan to expand it within the comfortable limits of a sole proprietorship or do you have big plans for attracting investors or partners, securing loans and/or ultimately selling it as a company—a complete business entity?
Determine that now and you will be able to fit the LLC structure and incorporation (with all their fees and financial responsibilities) into your business plan