Class 2 Flashcards
Choosing a business name:
Your name is your brand and how people will remember you.
Your business name should be bigger than your product, avoid limiting your future brand recognition to one product.
Your business name does not have to be your legal name.
Search for similar business names to ensure differentiation.
Consider how stakeholders will think about business name:
Is it simple, is it meaningful, is it easy to spell, is it easy to remember, is it difficult to make derogatory, is it easy for competitors to spoof.
Can you obtain the name in all electronic forms, websites, emails, social media, patents trademarks copyrights.
Importance of branding:
Branding is the process of creating a name, term, design, symbol, or any other feature that identifies a product or service and differentiates it from others.
Effective brand strategies answer the following–what is the primary goal of the company, what are the best features/benefits, what do your customers say about your product, what qualities do you want customers to remember about your business.
Building your brand:
Choose a name that is easy to remember/spell, design a logo that is simple/clean/effective, make sure it looks good in multiple media formats.
Spread the word, market through social media, listen to customers, engage with customers and reward loyalty.
Get to know customer, who are, what they love.
Building your brand cont.:
Become your brand, integrate it into everything. Write a tagline/slogan. Always deliver on brand promise. Be consistent with your brand.
Determining the correct legal structure:
Choosing the right legal structure can affect—who has legal liability, how many people can be owners, how ownership can be distributed, how ownership can be transferred upon exit, how the company can be taxed, how scalable the business can be.
Sole proprietorship:
Starting your business with personal finances and doing business under your name.
Pros– no legal entity, less paperwork, taxes paid annually as income tax, good for service based business with low liability.
Cons– personally liable for any risks and losses within the business.
General partnership:
Two or more people co own and run business together.
Pros—no separate legal entity, taxes paid on income tax, share profits and losses.
Cons—both personally liable for risks and losses, partner can expose excess liability.
LLC:
Benefits of corporation with less taxation and no personal liability.
Pros—simple legal structure, no personal liability, pass through taxation, only taxed on money you take as income.
Cons—investors want different legal entity, need to develop ownership agreements, must avoid conflating personal finances, limits on how people can be owners.
Limited partnership/ LLP:
Limited liability version of a general partnership.
Pros—No personal taxation of owners, pass through taxation (only taxed on money you take as income), allows avoiding labeling partners as employees and following standard employee law.
Cons—general partners can be liable for limited partners actions, limited partners cannot be managers.
C corporation:
Taxable entity with unlimited number of shareholders.
Pros—unlimited owners, easily transferrable ownership through sale of shares, organization is liable no liability for shareholders.
Cons—double taxation (corporate tax and individual income tax on dividends), requires board of directors.
S corporation:
Form of corporation that receives more tax benefits.
Pros—pass through taxation, losses are not taxed as income, can be transitioned to a C corp as the firm grows.
Cons—limited number of owners (100), potentially harder to scale business with ownership limits, if income is not passed to shareholders, requires board of directions.
Benefit corporation:
Form of corporation that allows organizations to make decisions without profit maximization mandates.
Pros—allows making business decisions in alignment with social objectives, may be a socially oriented C corp or S corp.
Cons—may tie the organization to a specific social objective.
Not-for-profit and non-governmental organizations:
One of the previously mentioned business entities that has qualified for special tax benefits.
Pros—exempt from income tax, allows taxable donations, less regulatory oversight.
Cons—may tie organization to a specific social objective, may be donor-dependent, commercial aspects may be subject to income tax, cannot have shareholders.
Registering your business:
Registered at a state level, through secretary of state office.
Business name may be used in another state, each state has different tax and operating policies.
Must have physical mailbox within state, legal filing fees may differ by state and legal business form.
