Class 113 -
This week in class we discussed the pros and cons of the different legal structures in setting up your business, licensing, insurance & permit requirements. These are all important considerations in deciding where and when you will be opening your door.
More discussion was on picking the location of your business (Stand alone, strip mall, central city) and the internal layout that will best fit your needs.
The assignment due next week is to write the general business description and operating plan narrative that you will include in your business plan. You can find some guidance as to what you should include in the syllabus as well as the class power point. It is also time to open the financial template in excel. You should start with pages 3,4,5. Keep in mind that what your write in your narrative will have costs associated and you will need to include these costs in the excel template. The banker will be looking for this specifically. Please share your narrative with your team for feedback.
A useful tool in developing this section is to use a SWOT analysis.
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. S & W are internal, O & T are external. This analysis ia also useful when you are setting your goals for your first year of business ans remember - goals need to be quantative, measureable, with the end result in mind.
"Even" Teams comment by August 8th.
This week topic to comment on is:
· what are your top three considerations in regard to picking a location for your office
· how and where did you gather the data needed to write general business description
· compare and contrast a LLC and Subchapter S Corp
Have a great week. Alexis
I feel like the amount of traffic that flows through the location or near the location matters. Another important point would be what surrounding businesses are present. Also important would be the demographics of the area and what kind of population you are marketing and want to work with.
ReplyDeleteFor the general business description, I'd probably use the internet to gather all the data and information. The locusmap website is a good play to start. In terms of legal structures, buy/rent, and location, the internet will be the main source of information.
In general, ownership between an LLC and a subchapter S corp work differently. An LLC is composed of "members" that own a portion of the company. In an S corp, you have shareholders that hold a proportion of the company depending on the amount of stock they own. Higher level of management is selected for a few and the others in general are not much involved in decision making. Neither types will need to pay income tax on its earnings. It becomes part of personal tax forms. S corp is subject to additional taxes. An LLC is required to just pay a state tax. An S corp is basically a separate entity from its owner and is treated as such. The corporation is thus given similar legal status as a person. An LLC exists only as long as its members participate. It is dissolved as soon as one member files for bankruptcy or passes away. Owners of both these types of company are not at risk of losing personal assets. They may lose their investments. Basically, a corporation can live forever but an LLC can't. An S Corp may be a hassle because of minutes that they are required to be involved in.
Andrea-
ReplyDelete1) office location in regards to downtown
2) visibility of office
3) parking lot access and amount of spots
I am gathering info for my business plan from citydata.com.
Ed L-
1) The amount of Taxes a location has to pay (Illinois has 33% income tax, Colorado has 4%).
2) Population per capita
3) Population demographics (mean house cost, mean home income, etc.)
I’m gathering my info from: www.locusmap.com
Alissa-
1) traffic pattern
2) success of nearby businesses
3) population demographics (type of practice being opened--% of children or geriatrics, % married)
I am gathering information from zipskinny.com.
Eddie K-
1) Office location. Being slightly off a main street will give you good access, but save on rent cost
2) The population/chiropractor ratio in the area
3) population demographics (mean home income, leading industry in area)
I am gathering information from www.locusmap.com
Limited liability company is a flexible blend of a partnership and a corporate structure. It is an unincorporated association with limited liability that is suitable for single owners and allows for profit taxation at the personal level. This type of company does not need to be organized for profit. This type of business also has less administrative paperwork and record keeping than a corporation. Advantages of this type of company is pass through taxation which entails profits being taxed at the personal level and not at the business level which allows for no double taxation. The company can determine whether they want to be taxed as a sole proprietor partnership or corporation. The owners of the business are also protected from liability and debts of the company. There is also much less administrative paperwork and record keeping. There is no requirement meeting for share holders and no loss of power to a board unless specified in the operating agreement. Limited liability company treated like a partnership must have at least two members and can not take advantage of incentive stock options and tax free re-organization.
In order to become an S Corporation there are a set of requirements that need to be met. These requirements include being a domestic corporation or limited liability company which has elected to be taxed as a corporation, must have only one class of stock, must have at least 100 shareholders that are US citizens or residents, and profits and losses must be allocated to shareholders in proportion to their investment in the corporation. S corporations themselves do not pay any federal income taxes, instead share holders receive income or losses that are required to be reported on their individual income tax returns which eliminates the double taxation of C corporations. S corporations give shareholder owners limited liability protection from creditors with the benefits of partnership taxation. S corporations are not entitled to deductions for dividends received. S corporations are also not subject to the 10% taxable income limitation for charitable contribution deduction.
Group #2 (Joel Myers, David Johnson, Isaac Linstad, Bryan Bittner, Kyle Bergbower submits:
ReplyDeleteIt is difficult to answer two of these questions because they depend on the actual circumstances.
#1 We believe that traffic, access/visibility and demographics are all important, but have to be weighed carefully against dollar/square, whether ownership or lease and existing practice or start-up in which case everything could change.
#2 The internet is more than adequate for the data needed eg. city-data, locusmap and state licensing board.
#3 Also difficult question without knowing the situation. There are dozens of scenarios that would change what I would choose. Without going into too much detail, the things to keep in mind are: Are you solo, IC or joining a practice. Example: if you are starting a practice with someone I would set up the front end as an LLC and each doc on the back end as either an S-Corp or LLC individually (ask a tax attorney why) Keep in mind that an LLC cannot become a member of S-Corp, but and S-Corp can. Technically you lose nothing really as an individual chiropractor by setting up an LLC. It is easy to set up, you don't have to have annual meetings, officers or have minutes and tax preparation is cheaper (unless you file as an S-Corp). If you start making enough money that you want to start avoiding some payroll tax and can afford to increase your filing charges, then have your accountant start filing your LLC as an S-Corp and thus you can start taking dividends and avoid a few % of payroll taxes (ask your accountant how and what amount). Key point to this exercise needs to be: 1)that you must talk to an CPA and/or tax attorney about the best set up for your situation and 2)one of the two is needed to protect you from personal liability.
Group 20: (Kacey Dupre, Lindsey Reitzner, Luke James, Andrew Dion, and John Rasmussen)
ReplyDeleteOur group discussed the three things that we feel should be considered first when deciding on a location. The cost to buy or lease the property in terms of price per square foot and how the price varies from the different locations you are looking at. Making sure that the property is accessible and well visualized from the road. (I went to an office this past week to shadow and spent 10 mins even with the GPS trying to find it. It is connected to the end of a gym and was not visible from the road. There was no signage that pointed you to the parking lot...) Our third consideration is what other businesses are in the general vicinity. We think that other health related businesses would be positive ie: gym, spa or other health care professional. Being next to a liquor store, second hand store or restaurant would not be favorable.
To gather information we would use the vast avenues that the internet has to offer. Palmer offers great info to use and we think that www.city-data.com is a good place to start your search and from there you can get more specific depending on what you are looking into.
Adding to what Joel and Will wrote regarding LLC vs. S-Corp. An LLC is simple to set up and maybe the best choice for a soon to be graduate to consider when starting their own personal business. An S-corp may offer better tax incentives but would require significantly more time and resources to get through the red-tape.. therefore spending/paying for more time with your CPA/attorney (which can add up). Regardless, I would recommend seeking the advice of both an attorney and CPA before making these important decisions.
Group #8: (Jacob Pudenz, Jason Pudenz, Magalie Lefevre, Burdoc Nisson, John Chapman)
ReplyDeleteConsiderations for location:
The #1 consideration is the general locale. I know that I would like to live in a place where it doesn't snow; that eliminates a majority of places right away. I know that if the doctor is happy living in a particular place, it will show in the day to day workings of the business. Group members mentioned:
1. Convenient access and parking.
2. Correct zoning for multi-use property.
3. Neighborhood that is relatively free of crime.
4. Short commute time.
5. Favorable demographics.
6. "The right price" in regards to rent.
How and where did you gather the data needed to write the general business description?
city-data.com
zipskinny.com
quickfacts.census.gov (people, business, and geography)
sampleplan.com
endlesspatientreferrals.com
Compare/contrast an LC to a subchapter S corp.
In the "E-myth" book, we learned that a creating and growing a business is a lot like raising a child. It takes a lot of time and attention, and at first you don't really know in which direction your business will take off. An LC gives one the opportunity to 'change directions' a bit during the growth of the business. There is greater flexibility as to who can be a member, with unlimited member potential. P&L to the members can be devised in a way to favor each member's taxes. A member cannot sell their own interests to another unless there is agreement on who it is sold to. If a member runs into financial trouble in their personal life, a creditor cannot take assets from the LC, but could from a subchapter S.
Group 12 (Chelsi Waddell, Cody Scharf, Joshua Jones, Zach Wilson, Clyde Johnson)
ReplyDelete-Our group has decided that the three most important things about choosing you location are... #1. Determining the size of the demograpic that believe in holistic healthcare in a certain area. #2. Determining the property values and business taxes in a certain area. #3. Ease of getting into the office from the street.
-We will get the majority of the general business description from the chamber of commerce. We will also utilize the internet in forming our general business description.
-Similarities: They both are registarted and chartered by the state, both are flow-through entities, and both are legal entities which are separate from the owners.
-Differences: LLC's have more liberal tax basis. The owners are not considered employees. Owners are known as members. Also, two or more member
LLC's can file either an 1120S or a 1065. Single member LLC's file 1040C.
Sub S corporation owners are called shareholders and function as employees of the corporation. Sub S corporations pay payroll taxes (workers comp, social security, etc.) Sub S corporations must file a 1120S.
GROUP #10 (Preben Haugen, Magnus Soland, Fredrik Balsnes, Gunnstein Steinarsson, Mads Omberg)
ReplyDelete1. We believe that when picking a location for your office it is important to be located in a place where there is allot of activity and business. Mostly important, is there allot of people passing through the area either by car or on foot.
Competition, are there other chiropractors in this area? What is the number of people per chiropractor?
Accessibility, we would pick a location with ground level entrance and easy parking so the clinic is accessible. Ground level entrance is important for people in wheel chairs as well as people having problems with stairs or issues with elevators.
If we were to choose between a Limited liability company and an S coproation we would definitely seek advice from an attorney and CPA.
The first thing to do, would be to figure out if you are practicing alone, with someone ells, associating etc.
The LLC seems like an easier rout to go when first starting off considering it is easier to set up, there is less paperwork and there are allot less requirements needed to be met, to set one up.
The S-Corp gives more flexibility and may give better tax benefits but would require allot more management.
Group 16: Kyle Bloch, Justin Bohn, Siri Leech, Carolyn Kusek, Jake Matrille
ReplyDelete•Considerations for office location
1.Location
a. City
b. Intersections
c. Walking traffic
d. Parking allocations
2.Population
a. Target market location
b. Potential to increase or expand
target market
3.Costs
a. Cost / sqft
b. Downtown vs suburbs
c. Build out vs newly remodeled
•How and where did you gather the data needed to a general business description
1.City-data.com
a. Gives us our demographics
i. Median income
ii. Median age
iii. Number of males /females
iv. Number of married couples
(straight / gay)
2.Loopnet.com
a. Gives us our location and approximate
costs for the area
3.Locusmap.com
a. Gives us an idea of the number of
chiropractors in the area as well as
some demographic information
• As far as starting up an LLC vs an S-Corp I do not have very much background in that aspect. I do like what Joel says about it being easier and and the fact that you dont have to have annual meeting though also I feel that there would be no point in having a shares to stock unless your business grew large enough where you were employing more than 20 individuals. I feel that as chiropractors most of us will be in solo practice or maybe have an associate. It would seem to make sense to have the easiest possible business plan which seems like an LLC would be.
Group #18 (Chase L'heureux, Kevin Stanek, Maurice Woods, Kiley Zimmerman, and Krysty Benhart-Martel)
ReplyDeleteThe top three things to consider for a location would be 1. Somewhere that would be easy to locate, and is not too far for people to get to from work or home 2. In an area that has successful businesses and a decent amount of foot traffic 3. And a place that has an affordable price, decent size and a convenient layout that wouldn't take much time and money to turn into an office building.
The majority of the data gathered is from the internet, zipskinny and city-data are great places to start and then expand in the areas according to what you want personally.
Benefits to an LLC are that there is limited debt liability for the owners, they are cheaper and easier to set up than a corporation, there is less required paperwork and record keeping, there is no required annual meeting for shareholders, it can be set up with just one person, and pass-through taxation. The major disadvantage is that investors are typically more comfortable investing in corporations rather than LLC's, so if you plan to grow and accumulate new investors it would be easier to do as a corporation. An S corp is more costly to start up, requires more bookkeeping, and taxes are more complicated to file; but if you already have someone doing your taxes and accounting from the start then you don't have to find someone to start doing it once your business grows.
Group 14 (Alyssa Sollenberger, Sydney Johnson, Randy Belrichard, Christina Hall, Brandon Evans)
ReplyDeleteTop 3 Considerations for location:
Traffic, Accessibility, Competition
General business description:
Just the internet with like city-data, locusmap, and other websites like that
LLC or S corp: I also do not have much experience with these different business models but I would have to agree with Kyle in the fact that most of us are not going to be in extremely large practices so it would probably be most time effective and cost effective to stick with an LLC even though you lose some of the tax incentives. Ultimately I would recommend working with an attorney and CPA when setting up a business model.
1) As far as choosing a location, in the broad scope, I once heard the words of wisdom of, “work where you want to play.” So if you are still deciding on which city, state or country, make sure its somewhere that you want to live, not just somewhere you can be successful. Once you have narrowed down the town, now the aspect of finding that perfect spot to call your own. At the “Starting into Practice” seminar, they made a point to highlight that there are such things as professional complexes, which would only be rented to professionals of some sort (i.e. dentists, CPAs, attorneys, etc.). This would be good for avoiding being sandwiched between the liquor store and second hand shop as Lindsey said. Another thing to consider is being near a landmark of some sort so when giving directions to your clinic you can say, “Do you know where the high school is? Ok, well we are just around the corner on Main St.” And lastly, it may seem like a small detail, but consider the parking situation around your clinic. If parking is easy, then seeing you is less of a hassle.
ReplyDelete2) As far as getting the information on the area, like my fellow classmates have said, the Internet is an amazing resource. The 2010 census data is up from the census bureau.
3) Comparing an LLC and a S-Corp, I found many of the same things that Joel, Will and Lindsey already touched on. Both structures will protect the doctor from personal liability, and an LLC seems to be the easier structure to set-up, but lacks the tax incentives of an S-Corp. In any instance, I would consult your lawyer and CPA for the best structure for you individual goals of your business.
Team #6