Business Questions

There are many legal issues surrounding starting a business. Prior to investing, a good business plan or checklist should be faciliated. See Charts and Forms for sample checklist. Overall, there are generally four (4) essential legal issues that should be considered when starting a business. These issues include, but are not limited to, the following:

1. the type of legal entity
2. taxation
3. liability
4. duration of the business

The discussion in other questions will provide a summary of each. For an additional overview of these issues, See Charts and Forms.

The answer to this question depends on the type of business entity selected by the entrepreneur. If a sole proprietorship or general partnerships, the business should check with their local municipalities for business licenses requirements.It may be necessary to contact state agencies as a special license may be required. A limited partnership, limited liability company (LLC), and corporations require certain filings with the Secretary of State as well as local requirements. See Resources for links to California Secretary of State.

Corporations - For Profit. A California corporation for profit generally is a legal entity that exists separately from its owners. The owners are the shareholders and they have limited personal liability. There is also an elected board of directors who oversee the corporation and appoint executives and officers who carry out the daily business of the corporation. The sale of stocks or bonds generates capital but can impose tax consequences on both the corporation and the shareholders. Corporations can continue past the death of the owners.

Limited Liability Company (LLC). A California LLC offers liability protection similar to that of a corporation. The owners are referred to as members and each member owns an interest. The LLC is either manager-managed or member-managed. Federal taxation is determined by the members. The members can elect to be taxed as a partnership or as a corporation.

Limited Partnership. A California LP provides limited liability to the limited partner(s). There must be at least one general partner that acts as the controlling partner and one limited partner whose liability is normally limited as a capital investor. General partners of an LP have unlimited personal liability for the LP’s debts and obligation.

General Partnership. A California GP must have two or more persons engaged in a business for profit. Except as otherwise provided by law, all partners are liable jointly and severally for all obligations of the partnership unless agreed by the claimant. Profits are taxed as personal income for the partners.

Limited Liability Partnership (LLP). A California LLP is a partnership that participates in the practice of public accountancy, the practice of law, the practice of architecture, the practice of engineering or the practice of land surveying, or provides services or facilities to a California registered LLP that practices public accountancy or law, or to a foreign LLP. An LLP is required to maintain certain levels of insurance and licenses as required by law.

Sole Proprietorship. A sole proprietorship permits an individual to own and operate a business. A sole proprietor has complete control, receives all profits from and is responsible for taxes and liabilities of the business. A sole proprietorship should obtain insurance to limit its liability and seek local licenses to operate within a select local region.

The answer to this question depends on the type of business entity selected by the entrepreneur. If a sole proprietorship or general partnerships, the business should check with their local municipalities for business licenses requirements.It may be necessary to contact state agencies as a special license may be required. A limited partnership, limited liability company (LLC), and corporations require certain filings with the Secretary of State as well as local requirements. See Resources for links to California Secretary of State.

A Non-Profit is a type of business entity that has been given special tax status as a 501(3)(c) and with this tax status has the ability to receive certain benefits.

Due to nature of Non-Profit, how can they raise money?

 The below is summary of activities that can assist in funding a Non-Profit.

Raise Money Through Business or Sales Activity

• Know the tax rules for business activities
• Learn from other nonprofits experience
• Utilize licensing, sponsorship. and other relationships with existing businesses

Seek Grants from Foundations, Corporations, and Government

• Research grant prospects
• Understand the proposal process, from the query letter onward
• Follow up with the funder
• Apply for grant renewals

Design Your Website to Draw in Donors

• Provide interesting content
• Encourage donations
• Provide information on where the money goes
• Track users
• Help online users find your site (basic SEO)
• Mention funders and donors

Outreach Via Traditional Social Media

• Protect your non-profit in media interactions
• Pitch and place stories
• Know what makes a good story

Attract Individual Supporters

• Make your organization look support worthy
• Understand what motivates your supporters
• Bring in new supporters

Keep the Givers Giving

• Thank your supporters (and help them satisfy the IRS)
• Follow up communications
• Invite supporters to get more involved
• Analyze and segment your donor base
• Know when to call your supporters

Include Midscale and Major donors

• Get to know your existing supporters
• Annual renewals of support
• Hold lectures, small events, and parties for major supporters
• Have one-on-one meetings
• Set up a focused major gifts campaign

Collect Funds from Bequests and Legacy gifts

• Attract legacy gifts
• Handle simple inheritance gifts

Hold Special Events

• Choose the right event for your organization
• Keep it green
• Develop a realistic budget
• Plan and pace event activities
• Be prepared to deal with risk and liability issues
• After the event follow up with an assessments and overview

Create Printed Communications Material

• Create brochures, newsletters, and annual reports.