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Re: Expanding my corporation - best financial strategies

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Message 11 of 36

Hey @HICAREBROKER :

 

Congratulations on your real estate success.  It sounds like you are making a difference for a large number of families and I am happy to hear that you are ready to expand and create even more new jobs.  Well Done, and keep up the good work.

 

As you probably already know, the S Corporation entity form is a pass through entity form, so the corporation itself will not pay any federal income tax.  Instead, the income from the S Corp passes through to your personal income tax return.   So the S Corp concept is NOT a tax savings idea, and the overall federal income tax that you pay will be about the same.   However, one benefit of the S Corp form or organization is that some of that income from the S Corp can potentially pass through to your personal income tax return as “unearned income” and therefore is NOT subject to FICA and Medicare. 

 

The hard part here is that since you are providing services to the S Corp and certainly some of the earnings from the S Corp are indeed due to your personal efforts, you DO need to pay yourself a reasonable salary for those services.  Those wages will be subject to FICA and Medicare.   But the trick is once you have determined that reasonable salary, any amount of income over that amount is NOT subject to FICA and Medicare tax.  

 

For example, If a sole proprietor real estate agent earned $120,000 of net income from self-employment, they would pay approximately $15,000 in SE tax (which is the same as FICA and Medicare).  But if that same real estate agent were operating as an S Corp, and determined that a reasonable salary were, say, $80,000, then the extra $40,000 would still be taxable income but would not be subject to SE tax or to FICA and Medicare tax.   That could be a savings of about $6,000 just in SE tax.   Keep in mind that you CAN’T just arbitrarily set your salary at $80,000 or some random percentage of the S Corp income.   The salary must be reasonable.   For an S Corp that only has ONE employee, YOU, and the type of income that is based on personal services, like real estate sales, it is difficult to make a case that any of the income from the S Corp is derived from any other source than YOUR personal efforts.  So taking this stance when it is JUST you is a bit aggressive, and a stance that I would NOT recommend.

 

However, now that you will have multiple operations and multiple locations and other people generating income for the S Corp, the concept of some of your income characterized as unearned income makes TOTAL sense.   When setting your “reasonable salary” try and find as much third party support as you can…how much to other people working for real estate companies make.   The more independent third party support for the salary, the better. 

 

The most common benefit of the corporation form of operation is to provide some legal differentiation for the owners from the business.  The primary benefit here is limited liability for the owners.    In order to secure this benefit, make sure that you treat the business like a business.   Make sure all of your personal stuff is separated from the corporation business.   Make sure you have separate bank accounts, and record keeping.  Don’t pay personal stuff out of the business account.   Always keep it clean and neat.  If something bad happens, the attorney types are gonna try and show that this isn’t a “real” company, but just as extension of your personal activity.   Hopefully, that never comes up, but if it does you will be glad you paid attention to the detail. 

 

Let me know if you have other questions about your S Corp or other things that I might be able to help with. 

 

Again, keep up the good work,

Keith

 

@HICAREBROKER wrote:

Hi Keith,

 

Although I've been selling real estate in California since 1999 and was a top producer, I formed my own company in 2008 (s corp) but never hired anyone as I was happy being a small independent.

I want to begin expanding, working with the next generation and need to know how to strategically and financially utilize being a corporation.  I plan to operate brokerages out of California and Hawaii (last year obtained my Hawaii broker's license).

 

Thanks!


 

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Re: Want to take your business to the next level? Ask a Business Coach!

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Message 12 of 36

Hey @JanA818181 

 

Thanks for your question and always remember that most great small business ventures start with an idea.   So you are right on tract.   First key point, is ABSOLUTELY YES, there can be a financial reward and a level of satisfaction just from the idea even if you are not involved in the production or marketing.  As you would probably guess, the level of the potential reward as well as the level of risk will be much lower if you are only marketing your idea…but it is certainly possible. 

 

If you have decide that is the path you wish to take, then I think your original instincts are correct in that you should invest some time and money in securing patents or trademarks for your ideas.  It would be a great idea to sit down with an attorney in your state who specializes in that type of legal practice just to make sure your ducks are in a row.  I hate that my first thought is the worry that someone who do something less than ethical in dealing with another small business but I have heard way too many horror stories over the years. 

 

During that process, it will also be beneficial to visit with the attorneys that you interview about options for taking your idea to “market”.   Most of them will have experience in going from patent to production to market and may be able to get you in contact with another of their clients who has done the same thing.  In addition to that, there are many companies who specialize in helping with that process.  Again, before contacting any of those guys, I would sit down with the attorney just to make sure everything is in order.  

 

As you might also have guessed, doing everything you can to win this contest and get one of those spots with Daymond John would be awesome!!!

 

I hope this helps and gives you an option for moving forward.   If you need more detail or would just like to visit further, just let me know.

 

All the best,
Keith

@JanA818181 wrote:

 Thank you so much Coach Keith Hall for joining and offering great sound advice.  So I do not have a business as of yet but I have some really phenomoenal business ideas or inventions.  I don't have a clue on how to get started.  I would like to either get them trademark or a patent on the idea.  I don't necessarily want to develop the idea but want to get paid of the royalties of the idea, etc.  I just don't how to get started.  Is there any way you can tell me how I should get started and is there any reward for just the idea?? If not then what do suggest I do to get it promoted or investors to invest to create it and make it happen?  A lot of questions I do apologize but need to now how to get started.

 

Thank you for your advice and suggestions.


 

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Re: Want to take your business to the next level? Ask a Business Coach!

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Message 13 of 36

Hey @CynthiaW254296 

I am embarrassed to say that my first thought is that I am really hungry now.   As soon as we get your production process underway, I need to try them.   Yum!!!

 

I wish I had an easy answer to your dilemma, but it sounds like you have spent a large amount of time searching the “normal avenues” for a production partner.   I am surprised that you haven’t found someone that you can work with….Is it your understanding that the potential partners are uninterested due to expected volume?  Or perhaps competing products?  It would most likely be useful to spend some time trying to figure out why they are not interested in working out a deal for at least a short period of time. 

 

I am totally guessing here and I certainly don’t know who or how many potential partners you have talked to, but finding out the issues they have could be very useful in finding your partner.  Volume?  Price?  Timing?  Costs of production?   If we could figure out why they seem to have little interest that would be very useful.

 

As an alternative, looking in new places…finding other small businesses that are just starting out would be a great idea.  Networking through websites centered on cooking or baking or food prep, concentrating on other maybe “work from home” new small businesses would be a good place to get started.  Networking through your local Chamber of Commerce or your local Small Business Development Center could help you find other small businesses who are trying to get started just like you.   Likewise, association of small business owners like the NASE as well as the National Small Business Association (NSBA), and the National Association of Women Business Owners (NAWBO) are all great places to find other small businesses looking to grow.   Those small businesses may not be listed on the State’s registers and such.   Most likely those new small businesses will be more “hungry” (sorry for the pun) for new business and to “give you a try”. 

 

I hope this helps and gives you an option for moving forward.   If you need more detail or would just like to visit further, just let me know.

 

All the best,
Keith

@CynthiaW254296 wrote:

Hi Keith, 

I make dessert spring rolls. My dilemma is finding a co-packer that can manufacture them for me. I have potential clients, but I currently cannot meet the demand, as I make them myself. I have contacted all listed co-packers (lists from various states), no success. How can I get over this hurdle?


 

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Message 14 of 36

Hey @gr9810 :

 

I am sorry to hear of your issues within the board room.  I guess my first comment is that you are certainly not alone....I hear this same concern from a number of entities all around the country.  

 

As unpopular as this may sound, I am NOT a big fan of getting a book to read and expecting that to be the main answer.  Even if you can get every single member of the board to read the same book, it will still lead to, most likely, at least 21 different opinions as to what it means.  

 

I would recommend two different approaches, to be done at the same time.  First, at your next full board meeting, consider having a full agenda item with significant time allotted to review your entities overall governance policy.  If you don't have a governance, then this is a great time to introduce that concept.  Within that policy, the board should include a formal recognition of job responsibilities, conflict disclosures, reporting processes, etc.  In reviewing those governance policies you should be able to communicate lines of communication.  And even more importantly, when issues arise, you will now have a Board approved document to call upon in resolving issues without it feeling like a confrontation but solely compliance with a written board policy.  Obviously, it would be a great idea to have another member of the board propose and promote the governance policy and its implementation rather than it coming from a member of management.

 

Second, I would schedule a full day board meeting around a team building and communication seminar type project.  Bringing in a professional such as a business psychologist or team building professional would be critical.   In my opinion, this is similar to getting the book that you originally mentioned but is like having the author of the book actually read it to the group.  

 

The bottom line here is that the only real solution to this issue is improving the overall communication among the group .  There is no doubt in my mind that you have done your best to facilitate that very thing, and now it is time to bring in a professional to help. 

I hope this helps and gives you an option for moving forward.   If you need more detail or would just like to visit further, just let me know.

 

All the best,
Keith

 

@gr9810 wrote:

I'm the CEO of a 501c6 based in the US but International in membership (over 35 countries). I have over 20 members on the Board of Directors, representing a dozen or more different countries. They cannot seem to agree with each other on anything important, but all seem to feel that we should be getting more "work" accomplished from the Association's office staff (a relatively small office). On that, they all agree - let's blame the office for the lack of progress.

 

It seems that when I give them the long list of projects we have succesfully completed and are working on, the incredible progress we have made, they seem to never be impressed or satisfied. It's what I see represented by their common question, "Yes, but why haven't you finished ....?" 

 

After every board meeting, we try to ignore the disrespect for the office, we pat ourselves on the back because no one else will, and we end up taking our frustrations back to the office. 

 

Is there a good book I should read on how to get the Board to work for the Association instead of them trying to micromanage the office?

 


 

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Re: Want to take your business to the next level? Ask a Business Coach!

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Message 15 of 36

Hey @rb44895526 :

 

Thanks for your question and congratulations on your success with Reliv International.  I agree that this industry, although the concept is not new, is in its infancy.   There are certainly more regulations and shake ups to come, but those companies who set the standard and clear all those hurdles that are sure to come will be in line for significant success.  I can tell you believe Reliv is that leader so maybe you are in exactly the right spot.  

 

I also believe that you have answered your own question within your question.   You mentioned that Reliv is "a great opportunity for a lot of people to make some really good money working from home" and "my happiest customers become the best distributors".  Those two statements (both of which I agree with) would indicate WHERE you should look for your best business builders.  Stereotypical advertising may not be the best approach.  I would recommend concentrating on social media, blog posts, and other places that are visited by stay at home parents, fitness buffs, nutrition sites, where you can raise awareness but at the same time promote your business plan.  Detailing the process,how much time is involved, the up front investment, average success of a new associate, etc. should all be part of your outreach.  Remembering that your best business bulider will always be that individual that believes in the product the way that you do. 

 

Overcoming the potential stigma of CBD in some circles will be a challenge but this is certainly something that has been in the news and most are aware that it will become mainstream at some point.  Concentrating on your personal contacts, referrals from existing assoicates, telling your story will always the best approach in building your personal network back to where it should be.  I don't believe general broad advertising will fit your needs, but one on one posting, responses, reaching out through sites dedicated to small business income growth is the way to go. 

 

I hope this helps and let me know if you need more detail or if you would like to discuss further. 

 

All the best, 

Keith

@rb44895526 wrote:

I just entered the contest.  I am an independent distributor for a great company called Reliv International.  It is a food science company with amazing supplements and recently started selling CBD products a few weeks ago.  I believe our company will shine when people choose to use CBD as we have a great reputation for using the highest quality ingredients and we also do a lot of research.  Once the CBD is regulated, many of the other companies will be shut down.  I have been with the company for 16 years and at one tme, I was making $12000 profit a month.  The economy took a dive and many people dropped off and I have not been able to build my business back up to what my potential is.  My goal is to make $50,000 a month within 2-3 years. I want to do advertising, but I do not have a lot of funds to do that at this time.  I do attend networking meetings weekly and pick up new customers weekly.  I just read the article written by Daymond John and found it very informative.  I would like advice on how I can recruit business builders.  Most of the time, my happiest customers become the best distributors, but I was thinking with the announcement of the new CBD products, this would be a great opportunity for a lot of people to make some really good money working from home. I just earned my 50th all expense paid trip and I am going to Maui in October.   


 

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Re: Want to take your business to the next level? Ask a Business Coach!

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Message 16 of 36

Hey @fredbganita :

 

Your question is a very good one and one that includes a level of faith in creating new jobs to help your business grow when you budget is tight.   First of all, congratulations on your plans for growth and always remember that you are not alone.  

 

Hiring family employees, as you mentioned, is a great place to start.  They can provide flexibility and generally be less expensive and less likely to generate "employee Issues" down the road.   I am certainly NOT recommending that you hire family members soley because they are family members, but if their skill set meets the needs you have, it is a great idea. 

 

With a tight budget it is also a good idea to consider part time employees and mabye even better to consider independent contractors that can provide the same services.   The best part about independent contractors is that you can hire them for specific projects or time frames without a longer term committement.  When the budget gets a little more healthy then you can always go to a full time employee if you need more control over the work product.  

 

Finding a good source for independent contractors is easier now thane ever before thanks in part to tecnhology.   Sites like CrowdSource.com, UpWork.com, PeoplePerHour, and many others can provide an almost unlimited pool of talent for almost any task that you have.  

 

I hope this gives you a few ideas for taking that next step.  Keep up the good work and congratulations on creating new jobs!!!

 

All the best,

Keith

@fredbganita wrote:

I am a small business woman who wears too many hats.  I don't have a large budget, what's the best way to gain staff?  I have hired my part-time nephew to help with the instagram, facebook, marketing.


 

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Re: Stage play and guitar robot

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Message 17 of 36

Hey @EugeneS485292 :

 

Sounds like two very interesting ideas.  This may sound like a shameless plug for this program, but having an opportunity to sit down with Daymond John and discuss the marketing implications of each of your ideas would be a home run.   I would strongly encourage you to do your best to win this contest!!!

 

Having said that, technology has put us in a better position to find potential partners than ever before.  I know it sounds trite at this point, but networking your ideas through social media, on-line chat boards, blogs, and via group contact sites like FaceBook and Linked In can help you find anyone anywhere in the world.   Typical places for talent in these fields (music and entertainment) can be found in Nashville, Los Angeles, Austin, Boulder and other places as well.   Concentrating on those physical locations would be a plus.  I wish we had a list of professionals that you are looking for to "hook you up", but unfortunately we don't have that at this point.   Again, I wish this was a better answer for you, but the best advice is to commit your time to posting on line, searching chat rooms, and letting your requests be clear and concise in as many locations as possible.  

 

If you haven't completed a formal business plan that would be a great first step.  There are literally thousands and thousands of great ideas out there, but very few have completed their "plan" and are prepared to share that plan with potential partners.  Once you find an interested party, you may just have one shot at getting them interested for good.  So make sure you have your "pitch" down to less than a minute, which can be difficult.  If your interests include sharing an equity position with you new partners, make sure that is clear in that first sentence.  In other words, let your posts and your outreach include the basics of the "deal".  For most people, the interest will be higher if they are part of the deal as opposed to just being paid for services.  I would also encourage you to separate the two ideas.  Don't pitch them together as a "pick one" concept, but pursue key partners for each one separately. 

 

I hope this helps even if if wasn't the answer you were looking for.   Keep up the good work and let me know if you need more detail or if I can help again. 

 

All the best, 

Keith

@EugeneS485292 wrote:
  1. Who's-done-it software driven stage play where the conclusion, being driven by the software, is always different. Audience plug their guesses, and their bets, into their iPhones before the final act. I have no luck finding a playwright who'd work with me on this stage play.
  2. http://GuitarInstructorPro.com
    Guitar players teach the guitar robot how to play their songs, and users - students - learn how to play them. They can select regions of their choice to loop them and to slow them down for better learning experience. How do I find someone who'd go with marketing that idea and handling financial its aspects.

Thank you,

Eugene


 

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Message 18 of 36

 Thank you so much Coach Keith Hall for joining and offering great sound advice.  So I do not have a business as of yet but I have some really phenomoenal business ideas or inventions.  I don't have a clue on how to get started.  I would like to either get them trademark or a patent on the idea.  I don't necessarily want to develop the idea but want to get paid of the royalties of the idea, etc.  I just don't how to get started.  Is there any way you can tell me how I should get started and is there any reward for just the idea?? If not then what do suggest I do to get it promoted or investors to invest to create it and make it happen?  A lot of questions I do apologize but need to now how to get started.

 

Thank you for your advice and suggestions.

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Re: Want to take your business to the next level? Ask a Business Coach!

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Message 19 of 36

Hi Keith, 

I make dessert spring rolls. My dilemma is finding a co-packer that can manufacture them for me. I have potential clients, but I currently cannot meet the demand, as I make them myself. I have contacted all listed co-packers (lists from various states), no success. How can I get over this hurdle?

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Re: Want to take your business to the next level? Ask a Career Coach!

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Message 20 of 36

I'm the CEO of a 501c6 based in the US but International in membership (over 35 countries). I have over 20 members on the Board of Directors, representing a dozen or more different countries. They cannot seem to agree with each other on anything important, but all seem to feel that we should be getting more "work" accomplished from the Association's office staff (a relatively small office). On that, they all agree - let's blame the office for the lack of progress.

 

It seems that when I give them the long list of projects we have succesfully completed and are working on, the incredible progress we have made, they seem to never be impressed or satisfied. It's what I see represented by their common question, "Yes, but why haven't you finished ....?" 

 

After every board meeting, we try to ignore the disrespect for the office, we pat ourselves on the back because no one else will, and we end up taking our frustrations back to the office. 

 

Is there a good book I should read on how to get the Board to work for the Association instead of them trying to micromanage the office?

 

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