BUSINESS STRUCTURE COMPARISON . Limited Liability Company Sole Proprietorship Partnership (LLP) SCorp CCorp (LLC) Involves more paperwork to Start Up Easiest to start Easy to start Easy to start Most complicated to start start File & pay fee to the File with county of deeds; File & pay fee to the Secretary File & pay fee to the Secretary File & pay fee to the Secretary of State; cost Filing & Cost cost from of State; cost approximately of State; cost approximately Secretary of State; cost approximately · $18-$30 $150 $150 approximately $200-500 $200.500 Shareholders elect Managing member & members Shareholders elect directors Control Owner has full control Partners share control directors who manage determine amount of control who manage business business Members enjoy limited Partners enjoy limited Owner is personally liable Shareholders not typically Shareholders not typically ,. Liability protection from personal protection from personal for business debt liable - corporation Is liable liable - corporation is liable liability liability Owner includes Members include their share of Partners include their share of Shareholders include their Corporation must file and Taxes income/loss on personal income/loss on personal tax income/loss on personal tax share of income/loss on pay taxes on income as - ' tax return return return personal tax return --~ ., separate entity Can have a perpetual Can have a perpetual Ends upon death of Ceases if a member leaves or Ends if either partner wishes business life unless business life unless Termination owner or owner stops dies unless operating agreement to leave business unless paperwork is filed to cease paperwork is filed to cease doing business provides provisions partners elect other options operations operations Possibly, if outlined in operating Possibly, if partners have Yes, but subject to IRS Shares of stock easily Transferable No agreement agreement regulations transferable Capital Owner provides capital Members provide capital Partners provide capital Sell stock to raise capital Sell stock to raise capital VBOC recommends you seek professional legal and accounting advice in selecting which form will best serve and protect your assets ---- VBOC ----- VETERANS BUSINESS OUTREACH CENTER WWW.VB0C.0RG Insurance Basics for Small Businesses 1. Commercial General Liability Insurance (CGL) a. Provides coverage for bodily injury, including death, and property damage. b. Provides coverage for libel (written defamation) and slander (oral defamation) claims. Called “personal injury”. c. Provides legal defense of a claim. 2. Automobile/Rental Equipment (AUTO) a. Provides coverage for bodily injury, including death, and property damage. b. Provides legal defense of a claim. 3. Workers Compensation (WC, or Workers Comp) a. Statutory coverage in all States for injuries to employees, and certain diseases arising out of the employee’s workplace. Some Common Insurance Terms 1. Named Insured – the owner of the insurance policy and one who pays the policy’s premium. 2. Deductible – the amount the owner of the insurance policy pays first in a claim. 3. Evidence of Insurance, or Certificate of Insurance – a form provided to the client evidencing the insurance a small business has in place; it is not proof of insurance. THINK OF INSURANCE AS AN ASSET OF YOUR BUSINESS! File: c:/SCORE/Insurance_Basis_for_Small_Businesses_BtoB.doc Introduction to Business Ownership FOR VETERANS AND MILITARY SERVICE MEMBERS Introduction to Business Ownership FOR VETERANS AND MILITARY SERVICE MEMBERS AUTHORS: Mr. Larry Broughton, Mr. Phil Dyer, CFP®, RLP®, CPCC Dr. J. Michael Haynie, Ph.D. Mr. Gary Shaheen, M.P.A. and Mr. Mirza Tihic, M.B.A. Copyright © Institute for Veterans and Military Families, Syracuse University 700 University Avenue Suite 303 Syracuse, New York 13244-2530 ISBN 978-0-9855197-0-4 Introduction to Business Ownership: For Veterans and Military Service Members is a publication of the Institute for Veterans and Military Families at Syracuse University. “in service to those who have served” CONTENTS Chapter 1 Business Ownership as a Bridge 13 to Civilian Life • Moment of truth: What is entrepreneurship, who are entrepreneurs? • Entrepreneurship as a vocation for veterans • The entrepreneurial nature of veterans • Leveraging personal strengths and social capital to start a business Chapter 2 Relating Military Skills and Service 25 to Business Ownership • How military skills and service translate into business ownership • Developing a customized “battle plan” for your entrepreneurial endeavor • VICTORY: Seven strategies for veteran business ownership • Regroup, reassess, analyze, plan, implement, and grow Chapter 3 Finding and Acting on the “Right” 59 Opportunity • Ideas and opportunities: Is every idea a great opportunity? • Sources of opportunities and where to find them • Market feasibility, research and analysis • Sources for raising capital NTENTS Chapter 4 Navigating Different Paths 87 to Business Ownership • The five paths to business ownership • Pros and cons of starting your own business • Purchasing a franchise or existing business • Inheriting a business or joining a start-up O Chapter 5 Services Supporting Veteran 107 Business Ownership • Resources for “Vetrepreneurs” • Entrepreneurship-related benefits • Tools for successful business ownership • State-based resources and links C Introduction to Business Ownership Welcome eterans and military personnel returning from active duty are over-represented in entrepreneurship. One in seven veterans is Vself-employed or is a small business owner, and about one quar- ter of veterans are interested in starting or buying their own business. At the U.S. Small Business Administration (SBA), one of our most im- portant roles is supporting those men and women who have returned home from active duty and are looking to start a small business, and we offer a variety of programs and services specifically designed to do just that. If you are a veteran who… • Is establishing or expanding a small business, we offer a range of financing opportunities, including microloans and the Patriot Ex- press Loan Program. • Needs counseling, training, or one-on-one mentoring, we have Veteran Business Outreach Centers, Small Business Development Centers, Women’s Business Centers and SCORE chapters to provide these services. Find the Resource Partner nearest you at www.sba.gov/direct. • Is interested in competing for federal contracts, we can help you register your business, increasing your chances of success. This year we also created the Mentor-Protégé Program for Service-Disabled Veteran Owned Small Businesses to help these entrepreneurs learn how to do business with the federal government. We also chair the Interagency Task Force on Veterans Small Business Development which improves and expands opportunities for veteran business owners. We also offer three additional programs through our partnership with Syracuse University. The Entrepreneurship Bootcamp for Veterans with Disabilities delivers entrepreneurship training for service-disabled veterans of the wars in Iraq and Afghanistan who want to start or grow small businesses. Operation Endure & Grow provides high quality online training, net- working, and mentoring to support National Guard and Reservists and military family members. And Veterans as Women Igniting the Spirit of Entrepreneurship de- livers high quality training, networking, and mentoring in locations across the U.S. to women veterans from any branch/era of service. Even though we have worked hard to support and assist veteran busi- ness owners, we believe we can do even more. And that is why we teamed with our Resource Partners and the Institute for Veterans and Military Families at Syracuse University to create the Operation Boots to Business program. The leadership and management skills veterans learned during their service have positioned them become successful entrepreneurs. SBA and our partners deliver an effective introduction to entrepreneurship, educating returning service men and women about the opportunities and realities of entrepreneurship so they can plan effectively for them- selves and their families. For all of those who choose to become entre- preneurs, we’ll be there for them throughout the life of their businesses with the resources they need to grow, succeed, and create jobs. With warmest regards, Karen G. Mills Administrator U.S. Small Business Administration Introduction ntrepreneurship is commonly described as the act of pursuing the opportunity to generate economic value through the creation and Ecultivation of new businesses, positioned to satisfy a market-based need or demand. Entrepreneurship has been demonstrated to be impor- tant for economic development, national and individual wealth creation, productivity, and new job creation. It is important to note that throughout history, business ownership has been a means through which military veterans have engaged the economic engine of their communities, and ultimately, our nation. Con- sider that prior military service is one of the strongest predicators of who in this country is likely to start a business. Military veterans represent ap- proximately 6% of the U.S. population, while veterans account for almost 15% of all business owners. In 1985, the Mid-Atlantic Research Company conducted a survey on behalf of the U.S. Veterans Administration and the U.S. Small Business Administration (SBA), demonstrating that historically 41.5% of those who served in the military have been self-employed,