When you’re setting up a new business, you should do everything possible to put your business structure on a sound footing so that it will last long into the future, rather than to be blown away at the first sign of any trouble. Here are some tips on things you can do to establish your business in the most advantageous manner for the long haul.
Avoid Sole Proprietorships
When you set your business up as a sole proprietorship, you’re exposed to all the worst things that can happen in business. You’ll have the worst tax rates, the most vulnerable legal liability, and chances are you’ll never be able to sell the business. You’ll be much better off starting out your new business structure as a corporation or a limited liability corporation.
Establish a Trust for Your Business
When you set up a trust for your business, it provides a buffer between yourself and the new business, so that your personal situation is not impacted if the business suffers. A well-structured trust can separate your personal assets from business assets, so you don’t lose everything if the business fails.
Set Up a Business 401(k)
There is a special type of retirement savings account called a self-directed 401(k) which is only available to small businesses. With this kind of account, you can save up to $50,000 per year and earn huge tax deductions. In addition to this, there are very few legal situations which could arise that can touch your 401(k).
Name Your Business Wisely
It will be a smart move for you to name your business structure so that it appeals to banks and other lenders, just as it’s important to avoid naming your business in a way that discourages them. Banks greatly prefer lending money to marketing companies and management companies, and they tend to avoid working with real estate companies because they perceive real estate to be a much higher risk. Name your business so that it appeals to lenders, and you’ll have greater likelihood of getting a loan when you really need it.
Need capital for your new business?
If your new business is in need of working capital, we may be able to provide financial assistance. Contact us at Safe Harbor Commercial Capital, so we can discuss some options which might work for you.