You probably thought that working from home would be a breeze. Maybe you had visions of yourself enjoying a coffee in your pajamas on your back deck while typing away on that financial report. The idea of working from home calls to mind the ultimate freedom at work. However, if you didn’t use a little foresight to plan out your home office, you might be more chained to it more than you were to your company office.

Mobile technologies enable remote workers to carry out all of their day-to-day tasks with ease—and you don’t even need to be physically in your home office either. As long as you keep the lines of communication open with the physical office (meaning your manager and coworkers) you can work anywhere including a coffee shop, hotel room, train, plane, bus, or even from the deck at the cottage.

Remote technology requirements are pretty simple, and really there are just five basic tools you need to have in place for a successful mobile work setup—regardless of the type of work you do.

If you work in an information-based industry, you can work remotely and unchain yourself from your home office thanks to the following technologies:

1. Internet

The first thing you’ll require for your home office set up (even when you’re on the road) is fast and reliable Internet access. This can be a wireless internet set up so you can work in multiple rooms within your home—including by the pool. Or if you’re mobile work set up is more advantageous, it could mean a MIFI connection that gives you internet access simply by plugging the device into your laptop or tablet, giving you internet access from virtually anywhere in the world.

2. Email access

Ability to access company email is essential when you’re on the go. It gives you the freedom to check in with clients and business partners en route, and employees the sense of security that they can contact you in a pinch if you’re away from the physical office. And the good news is that most modern mobile devices—such as smart phones, tablets, ultrabooks, and laptops—are designed with email in mind. For instance, as long as your smart phone has internet access and your email app within, you can check and send emails from any location.

3. Remote VPN access

Imagine working from home, but having the ability to access company files securely from a virtual private network (or VPN). Well your dreams are reality, setting up a VPN enables you and your employees the opportunity to access your small business network remotely.

So, for instance, if you’re at a conference and get a call from your technical support that your website is down at 2am, a VPN will give you remote access to your company resources from any location. It also allows you the freedom to be in the office less often, adding to your day-to-day productivity gains because you suddenly have the freedom to get work done from wherever you are, using the tools you’re familiar with.

4. Cloud-based Storage

When it comes to protecting your small business assets, cloud storage is essential. Not only do cloud-storage tools manage the risk of data loss—especially when you’re on the go constantly and a tablet or laptop can be stolen—it provides a safety net should one piece of equipment malfunction, for instance a desktop computer crash, a flood, fire, or drop down some stairs. Backing up your files via cloud storage means that you can use multiple devices to work. For instance, you can start a report on your tablet while waiting for an appointment, then open it up and continue working on it when you get home on your laptop. All data will be securely backed-up within the cloud, so you can access it from any device, work on it, and save changes from absolutely any location.

Plus, cloud computing means you won’t be bogging down your business hard drive space to store your vital assets. And a particular bonus for business owners who collaborate with clients and partners frequently—cloud storage enables employees and clients to access, review, and edit files (with your permission) from any location and from any device, so multiple shareholders can collaborate on documents, spreadsheets, or presentations, even if they are physically apart.

5. A portable computer

A computing device is essential for carrying out your office duties. However, keep in mind that there are other devices, alternatives to desktop computers (like tablet computers) that you can use to access the Internet and still get your work done remotely. If you limit yourself to a desktop computer, you are still chaining yourself to a physical location, in this case your home office. Web-based applications have made it possible for professionals to work online with the ultimate freedom.

Think laptop, ultrabook, tablet, or smartphone—all of these devices—with the right applications—make it possible for you to work practically anywhere! Plus, an ultrabook, tablet, or smartphone offers a powerful, ultra-light device that you can take anywhere to work on the go and still enjoy the benefits of things like email, instant messaging, video conferencing, and video and image capture.

SOME OF THE ADVANTAGES OF A LIMITED LIABILITY COMPANY:

1. Pass-through taxation – Profits taxed at the member level, not at the LLC level.

2. An LLC can elect to be taxed as a sole proprietor, partnership, S-Corporation or C Corporation, providing much flexibility.

3. There is no requirement of an annual general meeting for shareholders in most states.

4. There’s no board of directors. An operating agreement is established to provide a centralization of management.

5. An LLC is an enduring entity which survives the deaths of the owners which avoids problems developing from the owners death or incapacitation.

6. Less record keeping and paperwork.

7. Membership interests can be assigned.

SOME OF THE DISADVANTAGES OF A LIMITED LIABILITY COMPANY:

1. Earnings of most members of an LLC are generally subject to self-employment tax. With an S Corporation earnings, after paying a reasonable salary to the shareholders working in the business, can be passed through as distributions of profits and are not subject to self-employment taxes.

2. If an LLC is established as  a partnership for Federal income tax purposes, and if 50% or more of the capital and profit interests are sold or exchanged within a 12-month period, the LLC will terminate for federal tax purposes.

3. If more than 35% of losses can be allocated to nonmanagers, the limited liability company can lose its ability to use the cash method of accounting.

4. There is a lack of uniformity among limited liability company state statutes. If a business operates in more than one state it may not receive consistent treatment.

5. In order to be treated as a partnership, an LLC must have at least two members. An S Corporation can have one shareholder. Although all states allow single member LLCs, the business is not permitted to elect partnership classification for federal tax purposes. The business files Schedule C as a sole proprietor unless it elects to file as a corporation.

Many self-employed people use vehicles in the operation of their business. As most people know, the expenses connected with this use is a deductible business expense. There are some strict guidelines which one must follow to substantiate this deduction if required. Most importantly, it is an absolute must that you follow specific recordkeeping requirements.

You must keep track of the total miles driven each year as well as how many of those miles were business. In addition, you must keep track of the date of the business mileage, the actual mileage and the purpose of the trip. We recommend that our clients record the beginning and ending odometer readings of the trip. We also suggest that clients have their oil changed at least in the beginning of the year and at the end of the year. When you have your oil changed at most places they record the odometer reading.

There are two methods used to deduct your vehicle expenses. You can take the standard mileage allowance or you can use actual expenses. Obviously you would use the one with the largest deduction. With the standard mileage allowance you don’t have to worry about keeping gas, oil, insurance, maintenance & repairs, registration fees receipts or about depreciation. You will want to keep records of tolls and parking as you can take them with the standard mileage allowance. With the actual expense method  you can deduct all out of pocket costs of operating your vehicle for business purposes which include gas, insurance, garage rent, depreciation, registrations, license, maintenance and repair fees and loan interest.

Of course, in order to use the best method you’ll need to keep records and receipts. There are a number of recordkeeping systems available to you for this purpose. While it may seem like a difficult process, I guarantee you will be glad you did it if audited.

Keep in mind this is only a brief description of deductions available for vehicles used in business. I strongly suggest you do thorough research or speak with a qualified professional.

Whenever a corporation or limited liability company is formed in any state, one of the requirements is to designate a registered  agent. Most people have no idea what a registered agent is. Simply put, a registered agent is a person designated to officially receive and send legal papers on behalf of a business entity, a limited liability company or a corporation. The registered agent is registered with the state in which the business entity was formed. The registered agent can be an individual or there are services which provide registered agent services.

While a business entity can use a post office box, a registered agent must have an actual physical address. The registered agent is specified in the articles of organization of an LLC or in the articles of incorporation for a corporation. Since the purpose of the registered agent is to receive official notifications, including notice of lawsuits and state taxes due, the requirement of a physical address is quite obvious. A lot of business entities use post office boxes which would make it rather difficult when serving legal documents.

One thing you might have noticed during your entity formation process, is that there are a lot of companies out there which offer registered agent services, including ours. Does your business require a registered agent service? In most cases you can designate yourself or another individual as registered agent as long as they have a physical address in the state of formation.

Costs of registered agent services can vary from as little as $ 49.00 per year to as much as $ 299.00 per year. There are some entities which need a registered agent service such as entities which are formed in a state other then the state they do business in. The many reasons for such won’t be discussed here.

If you’ve formed your limited liability company or corporation in the state your doing business in, save yourself some money and make yourself the registered agent. Quite frankly, all a registered agent service is going to do is forward anything they get for your entity in the mail, to you. Do your research and if need be, seek the help of a qualified professional.

Over the years I have been working with a wide variety of businesses, the one thing I’ve noticed that always seems to make or break a business is budgeting. Every one that starts their own enterprise strives to be profitable. Basically, a budget is developed to make an estimation of possible expenditures and income for a specific period of time be it a month, quarter or year. While these are estimates, you can develop a more accurate budget with experience.

Even if it’s a new business, logic goes that you have some experience in the enterprise or at least have done thorough research in the area. Many companies develop long and short term budgets to assist them in marketing strategies and projections as to how many employees will be needed or the inventory level needed. A budget can be a tool to accurately develop a financial forecast used to assist with economic decisions in a best case or worst case scenario. 

Granted, there are a number of unknowns such as supply shortages, decreases in demand or even some type of government regulatory changes. Developing and following a budget can assist in making the unknowns less threatening. There are basically two important functions of budgeting, planning and control. With any new business there are always a number of questions such as utility costs, telephone costs, rent and supplies among the many. Doing your homework prior to developing a budget can help to develop a budget that is realistic, enabling you to forecast what you’re going to need and when.

There are a number of different types of budgets which can be developed such as a fixed budget or a variable budget. Of course many of us think that ” I’m just a small Mom and POP operation” and that developing a budget isn’t needed. This couldn’t be further from the truth. While budgeting can be a complex procedure, many new small businesses can get by with a simple budget. Microsoft has many free excel budgeting templates that can do the job.

As with anything that you do, poor planning almost always means failure. If you’re not sure or don’t understand something, seek the help of a qualified professional. It’s money well spent.

Many entities at formation are unaware of the fact that many states have a minimum tax on the entity regardless of whether there is a profit or a loss. While each state has its own terminology, the common name is a franchise tax.

A franchise tax is one that  imposes a tax on a domestic corporation or llc for the privilege of existing as a corporation or llc under the state law, and on a foreign corporation or llc for the privilege of having or exercising its charter in the state or doing business, employing or owning capital or property, maintaining an office, deriving receipts, or engaging in contracts in that state. The tax applies to all domestic corporations or llcs and all foreign corporations or llcs having a taxable status unless specifically exempt. Some states will charge as much as $800.00 annually while there are also states which do not charge anything unless a profit is reported.

In addition, while some states do not have state income taxes, they charge an annual report fee or require corporations or llcs to file information returns requiring a state fee. In New Jersey for example, the state will collect a tax of $500.00 on a corporation even if the corporation has a loss. In addition, New Jersey has an annual report fee of $50.00 for every llc or corporation. Should you not file this annual report in New Jersey for two years, your entity status will be revoked and it can cost as much as $295.00 along with the annual report fees to reinstate the entity.

While some states seem like the place to form your entity as they have no state income tax, you might be paying only in a different manner. In short, do your research or speak with a qualified professional. While states vary, most have a variety of fees associated with corporations and llcs in lieu of or in addition to state income tax.

A lot of people are not familiar with the term foreign corporations or foreign limited liability companies. Foreign, not in the sense of being outside of the United States but doing business as a corporation or limited liability company outside of the state your business entity was formed in. So if you formed your corporation or LLC in Delaware or Nevada, for example, and do business in a different state your business is “foreign” to the state in which you do business in. Each state has different criteria which determines this status. States consider physical presence in the state, employees in that state or whether you have customers in that state as some of the criteria to consider. This is definitely an area you want to sure about prior to forming a corporation or LLC in another state.

You will find that in all states if your corporation or LLC qualify as a foreign entity, you will be required to obtain a “Certificate of Authority” or form a foreign corporation in that state. Either requirement comes with state fees, tax responsibilities and other possible fees. There are some states which the certificate of authority or cost of forming a foreign corporation are more than simply forming a domestic entity, in the state you do business in. To boot, you will end up filing a tax return in both states or at least what some states call “information returns”. Information returns usually come with what they call franchise fees which in some states are as high as a minimum of $ 800.00 per year, whether you do business or not. Some companies are formed in other states, as the other state may not have an income tax. A lot of people are under the impression that if they form a corporation or LLC in one state,
while they do business in their home state, they are not required to file a tax return or information statement in their home state where they do business. This couldn’t be further from the truth. The states will get their due!

There are a number of legitimate reasons for forming your corporation or LLC in a different state which you do business in but trying to legally avoid paying state taxes is not one of them. Much needs to be considered when forming a corporation or limited liability company. Do thorough research or consult a professional.

So you decided this new or existing  business of yours is going to be a corporation. You’ve done all the research and feel a corporation is better for you than a limited liability company.  Next question you face is whether to be a C corporation or an S corporation. It’s extremely important that you weigh the positives and negatives of both before deciding. I’ve seen many businesses rush to a decision only to regret their choice down the line.

First line of thought has to be the tax implications of both. An S corporation is much like a partnership in that it is a pass- thru entity and is not taxed itself as a C corporation is. There are certain situations where an S corporations are subject to tax but we won’t discuss this here. The C corporation files a Form 1120 with the IRS and pays taxes on any profits. The S corporation files a Form 1120S with the IRS and any profits or losses are passed on to the shareholders using what’s called a K-1 form.  Keep in mind there are limitations depending on ownership percentages and  stock and loan basis.

Another concern is a concept called “double taxation”. A C corporation is taxed, unlike the S corporation, on its profits itself. Any dividends passed thru to the shareholder are then taxed again. The S corporation eliminates double taxation. Another requirement of the S corporation is that corporate officers are considered employees and must be treated as such in regard to pay, withholding, and other terms of employment. Salaries corporate officers receive must be reasonable in respect to the industry and the services performed. Of course any other distributions are not subject to self-employment tax.

There are many factors which need to be considered when selecting the type of corporation you wish to be. There are numerous regulations within the tax code to be considered and one must not forget the state they are incorporated in. Each state, for the most part follow IRS regulations, but many also add in their own twists.  Again, we have only touched on some things that need to be considered. If you’re not sure, we encourage you to consult a professional.

Essential to every limited liability company is the operating agreement. While the articles of formation or organization establish the LLC within the state of formation, the operating agreement spells out the specifics of the LLC such as the members, their contributions, percentage owned and items of this nature. The operating agreement also specifies rules and guidelines of the LLC. Most formation services will provide a generic operating agreement or you can purchase a generic agreement at any office supply store. It is recommended though, that you have a professional review the agreement and possibly have them draft one for you.

The operating agreement can be any number of pages but should be all-inclusive containing details about how the LLC is operated and each members responsibilities. I cannot stress enough the importance of the operating agreement, as a properly drafted agreement can prevent headaches down the line. I have seen a number of limited liability companies start with all the members in complete agreement only to end up out of business because of disagreements.

Your typical operating agreement will contain the following:

• Name of company, formation date and state of formation.
• Registered Agent and principal  office address.
• Nature of the business.
• Members names and addresses, initial capital contributions and percentage owned.
• Title to assets.
• Guidelines regarding additional contributions of capital.
• Guidelines regarding capital accounts.
• Allocation of profits and losses.
• Guidelines regarding distributions to members.
• Administration of company business and the addition/withdrawal of members.
• Various other provisions.

Another area the operating agreement provides is the day-to-day management of the company. Some LLC’s have managers run the daily operations making management decisions while others have the members managing the company. This, of course, needs to be spelled out in the operating agreement to avoid confusion. Other important matters spelled out in the operating agreement include the scheduling of annual meetings, quorum requirements, powers and limits of managers, procedures for amending the operating agreement, record keeping requirements and transfer of ownership interests.

It is crucial for LLC members to spend considerable time when drafting the operating agreement and to seek professional help if needed. The operating can make or break your business so spend the time at formation and avoid problems down the line.

Almost all businesses have a time when cash flow isn’t what you anticipated because your account receivables are a little slow or expenses are higher than planned for at that period of time. You could also start planning on expanding your business and need new equipment or need to develop an advertising campaign for a new product or service. As with most new  businesses and existing ones, the issue of where to get the funds takes center stage.

At first thought, the easiest answer would be for the LLC members to make additional capital contributions for  the needed funds. Of course, as with most businesses, the members have already contributed significant amounts or  simply don’t have the funds to contribute. This is the point where the LLC has to explore the option of borrowing money. We are briefly going to discuss some of the options and stress that this is not a complete guide but just some things to think about when borrowing money for your LLC.

The first thing to be considered is where you wish to borrow the money from. You can choose from banks, credit unions, savings and loans, private individuals or even from members themselves. Of particular importance is the use of resolutions when borrowing money. Many banks require a resolution by the LLC when they are lending money to an LLC. When borrowing money it is important to have all LLC members involved as the funds borrowed are the responsibility of the LLC and thus directly affect the LLC members. Affect them, not particularly in regards to personal liability, although some lending institutions can require a personal guarantee from members, but can create such a liability for the business that failure is inevitable.

The resolution that is drafted can impose limitations such as, the maximum amount that will be borrowed, interest rates and terms of payment or how the loan is secured. If the LLC is applying for a line of credit it is important that the resolution places a limit on the amount used without approval from all LLC members. Limits could include the  amount that could be used per transaction, a particular period or the number of transactions. In regards to loans from LLC members, resolutions are unequivocally necessary. Along with the resolution, a promissory note outlining the terms of the loans.

Loans or lines of credits from a bank are not considered income to the LLC. Any interest or finance charges paid by the LLC is a deductible expense. With loans from LLC members it is important that the terms of the loan include a rate of interest and the length of the loan. The loan must be reasonable as well. If not the IRS could rule the loan as additional capital contributions. Do your research and if need be, consult a qualified professional.