Articles Posted in Start-Ups

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Start the year strong – ensure your business is legally compliant.  California corporation law requires all corporations and limited liability companies to comply with certain requirements to remain legally complaint.  Forgetting a deadline or missing a filing will prevent your company from legally operating.   To ensure your business stays compliant, take steps now by creating a log of all compliance dates and actions that need to be taken.  Your log should include:

  1. Annual Meetings and Minutes: Your By-Laws and California law requires all corporations to hold an annual Shareholders and Board of Directors Meeting.  These meetings should include a discussion on the condition of the company and a ratification of actions taken.  Shareholders are required to annually appoint the Board of Directors and the Board of Directors elect the officers for the next year.  Ensure that the minutes from these meetings are in writing and added to your corporate records.
  2. Update By-Laws or Operating Agreement. Each business should review its By-Laws or Operating Agreement.  Laws sometimes change and business operations evolve with the growth of the business.  Your By-Laws or Operating Agreement should remain compliant with current law and your business operations.
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Filing the initial and the biennial (every two years) Statement of Information recently became much easier for California limited liability companies (LLCs).  California LLCs can now file their Statements of Information online.  When filing a California limited liability company Statement of Information (SOI) on-line, filers can receive a free PDF copy of the filed SOI.

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Every state wants to attract businesses. Whether it is an existing business, or a brand new startup, politicians are always courting business people to move to their jurisdiction. While there are usually many states (or cities within states) vying for a new business, it used to be uncommon for states to directly attack one another in these quests. However, that is all starting to change, as evidenced by a current battle between Texas and California.

Battle Starts With Texas Poaching California Businesses

The Los Angeles Times recently reported on the ongoing battle between California and Texas over businesses. This battle has been going on, in a one-sided fashion, for more than a decade. It began with recently-indicted Texas Governor Rick Perry publicly pushing California businesses to move to Texas. And, his public statements along with pro-business government programs have been effective. One out of five businesses that relocated to Texas in 2011 and 2012 were previously California Businesses.

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Starting a new business requires a substantial investment of both time and financial resources. While some entrepreneurs have enough financial resources to do this on their own, most new business people need to seek out others who are willing to invest in their business. From purchasing or leasing real estate, hiring a staff, or purchasing raw materials and equipment, the front end costs of a business can be huge and it can take a while before you start to see a profit.

To help business people who are just starting out, Forbes recently created a list of common mistakes small businesses make when seeking out investors. We have included some of Forbes‘ tips below, as well as some tips from the U.S. Small Business Administration (SBA).

SBA Tips for Securing Investors

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In some ways, the internet has made the world a lot easier for new small businesses. Ordering your own supplies, allowing customers to place orders or make reservations, advertising your goods and services, payroll, and taxes all take on a different and sometimes much easier face with the World Wide Web. Even finding the right real estate for your new business or expansion can be done in large part online, at least in the shopping stage. But the online demands of business have created a serious concern that business men and women of earlier generations did not have to confront: online security.

While businesses have always had to consider surveillance equipment and alarm systems to keep local predators at bay, security threats online can come from the other side of the globe. Fortunately there are things you can do to protect your business and your customers. CIO, a media outlet specializing in information for people in the information technology industry, recently reported on this issue. In the report they looked at four real life scenarios faced by specific small businesses, and then provided types small business owners can follow to be more secured.

How Small Businesses Can Increase Online Security

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Starting a new business can be difficult. Deciding exactly what you want your business to do, where you want it to be located, and how you want it to be organized all take a lot of planning. But even once you purchase or lease a location and open up your doors, the hard work is not done. You still need to figure out a way to get the word out about your new business, and convince potential customers that they should give your company a shot. While it used to be as easy as taking out an advertisement in the phone book, things have changed in the internet age.

It’s Time to Turn to the Internet

One way of getting the word out is social media. Whether your business is a food truck that posts its daily location on Twitter, or a retail establishment that offers special deals to your dedicated customers on Facebook, many small businesses are already pretty savvy when it comes to using free social media. But social media has another side to it that small businesses have to consider: the advertising side.

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Starting a new business requires help from a lot of sources. You need excellent employees, the advice of an experienced and licensed Sacramento small business attorney, and investors. Throughout the down economy, that third requirement was sometimes hard to meet for small business people. Fortunately, those times are changing.

Easier to Find Bank Loans

The New York Times reports that small businesses are finding bank loans easier to come by. Its report tells the story of Jake Fitzsimmons, the owner of a burger joint. Mr. Fitzsimmons opened his bar and restaurant in 2010, immediately after the recession. Thinking getting a loan would be impossible in the financial climate, Fitzsimmons wound up borrowing the money he could not save from his father. He did the same again when he opened his second restaurant in 2012. But now that he is opening a third location, things are different. He had banks bid on the opportunity to finance his expansion; and it worked. As banks become more eager to lend to the right borrowers, they are willing to compete with one another, resulting in better terms for the borrower than Fitzsimmons could have imagined back in 2010.

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Starting a business in California can be complicated. You have to figure out a business plan, find investors, find real estate, and depending on the business, maybe even find employees. On top of all of that, you also have to figure out what kind of business entity you want to set up for your business. The decision to go with a corporation, an LLC, or a partnership will affect your business for years to come. Ultimately it’s a decision that should be made with an experienced business attorney at your side.

New Rules Regarding LLCs in California

With that being said, we would like to provide you with a little information about a change in California law regarding LLCs, or limited liability companies. This information is important both for those considering forming LLCs and for those who have already formed them. On January 1, 2014, a new law called the California Revised Uniform Limited Liability Company Act (RULLCA) went into effect. The law it replaces can be found here. The new law will affect any operating agreements that are entered into after its effective date. However, it will also affect any act taken by an LLC or its members after January 1, 2014, even if the LLC was formed before that date. There are five main changes to the law.

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Small business owners have really struggled for a few years, and things are starting to finally turn around. The improved economic climate has allowed existing small business owners to expand, and has allowed new entrepreneurs to fulfill lifelong dreams by bringing their new startups to life. In an effort to continue this economic turnaround, the House approved a tax law aimed at helping small business owners.

The Wall Street Journal reports that the House voted on June 12 to make permanent a tax break that allows small businesses to write off up to $500,000 in new equipment purchases. Dozens of Democrats joined republicans to make this bipartisan effort possible. The stated reason for making what has been a temporary tax break permanent is to provide both business and government budget writers with some level of certainty going forward. The $500,000 break has existed since 2010, but it would drop to $25,000 this year if Congress fails to act.

USA Today explained in an article exactly what this tax break does for small business owners. It helps them in two ways. First, it allows business owners to write off the costs of computers, machinery, and other equipment sooner than they would otherwise be allowed to under the tax code. It also allows business owners to write off the costs of improving retail property in a similar expedited fashion. The tax break expired at the beginning of this year.

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Right now may seem like a tough time to start or own a small business. With concerns about the Affordable Care Act (Obamacare) and talk of raising the minimum wage, some people may wonder if this is the right time to venture out and live a life-long dream of owning their own company. However, so long as you seek out the advice of a knowledgeable and licensed attorney, now can be a great time to take that leap. And new surveys show that those who have done it are more optimistic than they have been in years.

Nationwide Small Business Owners Feel Circumstances Have Improved

The Central Valley Business Times reports that small business owners nationwide have an improved outlook according to the U.S. Bank Annual Small Business Survey. The survey measures the opinions of thousands of small business owners, and has done so for the past five years. Those surveyed are truly small business owners by any standard, as they all report less than $10 million in annual revenue. Half of the businesses have under $200,000 in annual revenue. This is the first time it has shown that the majority of small business owners are optimistic about the economy, saying it is in a state of recovery or expansion. This compares to the 2010 survey where nine out of ten small business owners classified the economy as being in a recession.