Business Legal Structure and Tax Implications

One of the important questions when starting a business is finding the right legal structure for that business -- and understanding the tax implications of that legal structure.

Here is one question from one of our readers sent via our Consult Your Guides service:

Q. I have three small business operating as corporations and my objective is to find the best protection (limit liability) and gain tax advantage. My question, firstly is whether I can open up a parent holding company, a LLC, (can a holding company be an LLC?) which will then own the three corporations.

Secondly, should I open that parent LLC and make each of the three corporations LLCs also or do I really need to have a parent LLC or can I just convert the three corporations into three LLCs without opening a new umberella parent LLC.

Thirdly, one of the three corporations can convert into an LLC and own the other two. Again, the other two can remain as corporations or become LLCs. I own all three companies and I intend to be the boss in whatever direction I choose to go into with the structure change. Please advise ... Salman, Florida

Read the response of our incorporation expert Chrissie Mould "Objective: Limiting Liability and Gain Tax Advantage For Corporations" . You can also check out other questions on business legal structure, tax, licenses and other regulatory requirements.

9 Killer Mistakes to Avoid When Starting a Business

What are the common fatal mistakes when starting a business?

According to Ed Hess and Charles Goetz, authors of the book "So, You Want to Start a Business? 8 Steps to Take Before Making the Leap," you need to avoid the following mistakes if you want your business to survive and have a chance at success:

1. Choosing a bad business opportunity
2. Pursuing the wrong customers.
3. Trying to sell the unsalable.
4. Selling for the wrong price.
5. Overestimating the number of and the speed of customer purchases.
6. Mismanaging the business.
7. Failing to hire the right people.
8. Losing good employees.
9. Being unable to accommodate growth.

Read the book excerpt "Small Business DOA: Nine Killer Mistakes to Avoid When Starting a Business"

Article Marketing and How it Impacts Search Engine Rankings

I attended today a 2-hour Google Webmaster Event ("Tricks and Treats") hosted by several Google employees and attended by 400+ webmasters around the world. After the presentations, participants can ask questions for Google employees to answer.

Being in the business of information publishing, one question caught my eye -- that of article marketing and its impact on Google rankings. One of the common ways to inexpensively market a web site is through article marketing, which entails writing and submitting articles to article directory sites. The goal is to have as many websites use the article thereby building your reputation and getting more links to your site.

Alas, the article marketing strategy has started to show its cracks. Here is the question raised by a participant in the Google Moderator site for the Tricks and Treats event and answered by Google's head of web spam team Matt Cutts:

QUESTION:

"Until recently (the last six months or so) a high ranking was achievable by submitting articles to article directories (providing they were 40%-60% unique), it no longer seems to be the case. Have links from article sites been de-valued at all?"

ANSWER By Matt Cutts:

In my experience, not every article directory site is high-quality. Sometimes you see a ton of articles copied all over the place, and it's hard to even find original content on the site. The user experience for a lot of those article directory sites can be pretty bad too. So you'd see users landing on those sorts of pages have a bad experience. If you're thinking of boosting your reputation and getting to be well-known, I might not start as the very first thing with an article directory. Sometimes it's nice to get to be known a little better before jumping in and submitting a ton of articles as the first thing.

If you must do article marketing, be sure that the directory you will submit your articles are high quality. Submit only to those directories that are selective and reviews the submissions before inclusion in the directory. Avoid article directories that accepts articles from anyone on any topic imaginable.

Google has become smart about article marketing. As the guy who posted the question inferred, article submission may not give you any boost in terms of pagerank and rankings, thereby just wasting your time.

You can read other important search engine lessons -- from Googlers themselves -- in the Google Moderator page of the Tricks and Treats event

Advantages and Disadvantages of Selling on QVC Home Shopping Network

If you want instant -- and HUGE -- exposure for your product, check out home shopping networks such as QVC. If you've got the right product, QVC can be an excellent distribution channel.

QVC has been instrumental in the success of many products. Footless hosiery Spanx first appeared in QVC in May 2001 and sold 8,000 pairs in under eight minutes. Necklace extender Shooks sold $37,128 worth of products in less than five minutes, while the illuminated fragrance jar of Potpourri Glo sold $39,018 worth of products. And the list goes on and on.

But selling on QVC has its advantages and disadvantages that you should consider. While the network offers an incredible opportunity to new entrepreneurs, potential participants should also understand that they’ll assume some risk should their product be chosen.

Advantages

• Television allows for three dimensional demonstrations of your product. Through your story and live presentation, you can convince the customers of the benefits your product can offer.
• Response can be instantaneous. If your product resonates with the audience, home shopping networks can allow you to move thousands of units of your products in a few minutes.
• Huge distribution potential. As amazing as that is for an unknown merchant hawking an unknown product, the feat is repeated over and over again during the show.
• Ability to reach wide geographic targeting of audience.
• Venue allows for feedback from buyers. The company encourages feedback from its customers and so remains aware of what they want.

Disadvantages

• Getting in on the show is tough. On average QVC receives 20,000 applications a year, only 4 percent of those landed on the show.
• Huge inventory requirements. You will be required to have enough inventory in stock prior to your appearance in the show. But you will be paid only if and when QVC sells your product.
• Rigorous quality tests. Your products must pass QVC quality standards. Depending how much you want your product to be on QVC, you must be willing to change the packaging or even the use of your products as you've envisioned it to be in order to be acceptable to QVC audience
• QVC can remove your items. QVC's success stems from listening to their customers. As such, they take no chances with their products and will quickly remove any item that gets complaints totaling more than one percent of units shipped.

If you think QVC is right for you, visit their QVC Product Search website to learn about the process of pitching your products to QVC

Starting a Business: Pursue Your Passion

One way to start your business is to find your passions, and build on the things you are passionate about to create a successful business.

Diane Dreher, author of the book "Your Personal Renaissance: Twelve Steps to Finding Your Life's True Calling" defines passion as the "collection of innate talents that drive them." But can passion be the key to the success of a business?

Starting a business that revolves around that passion ensures that you will enjoy what you will be doing. And this is very important. Starting a business is hard and requires persistence, hard work, time and commitment -- and feeling passionate about what you do in your business can help sustain you even during bad times. As others have said -- Do what you love and money will follow.

However, it is important to ask the following questions when starting a business:

• Can your passion be a profitable business?
• Do you have unrealistic expectations about your passion?
• Are you making sound business decisions, or are your passions taking you too far?
• Can you create new passions instead?

Passion can be a good starting point. BUT -- passion should be combined with clear opportunities and need in the marketplace. You can't start a business based on your passions when there's no demand for it. You need to listen to the marketplace and find how your passions can address the needs of your potential customers.

And if your passions really do not work that well in business, you can learn new passions.

How to Sell to a Big Company

Selling your products or services to a big company can be a huge boost for your small or home-based business. Imagine Wal-Mart carrying your product or Carlson Group hiring you to train their employees. That would be a great accomplishment!

However, it is not easy, especially if you are just a new company without a wide portfolio of customers or a strong brand. Plus, competition is often tough as everyone wants to get that big account. You will be up against other businesses -- both big and small.

The article "How to Sell to a Big Company: Small Business Guide to Offering Products or Services to Big Businesses" offers tips on how to get that large business by helping you understand what a big business typically looks for when considering your small business to become their supplier or partner. Here's what big businesses consider:

• Your credibility as well as that of your founding team (if any)
• Quality of your presentation
• Readiness for business and hard work
• Strength of your offer
• Cost
• Flexibility
• Company's relationship with existing suppliers
• Willingness to offer free trial

Read the full article

Content Rich: Writing Your Way to Wealth on the Web

Success on the Web starts with the quality of your content. It is your content that engages the visitors, and turns these visitors to buyers for ecommerce sites. Your site's traffic depends on how well you write your content, and how well you understand what search engines look for in a site content.

One common mistake I see from small business entrepreneurs, particularly the newbies, is that they are always on the lookout for shortcuts to get huge traffic. They look for programs or banner exchange schemes that can give them 100,000 visitors quickly. Many even turn to the dark side and spam the search engines, thinking that they can trick Google and other search engines. They overlook the simpliest secret to success on the Web -- content.

If you want your website or blog to succeed, grab a copy of Jon Wuebben's new book "Content Rich: Writing Your Way to Wealth on the Web." This is the best book I've read on the topic of writing on the Web in a way that search engines love (afterall, what's the point of writing on the Web when your website is nowhere to be found?). The author provides an excellent guide on how to present your product and teaches you how to use the right keywords in your site copy, among other important tips.

I interviewed Jon Wuebben (JW) on the importance of writing copy that search engines love and compel visitors to buy, and here are his tips:

How important is writing optimized, compelling and keyword-rich copy on the Web, particularly for small businesses?

JW: It’s critically important because it can help your site move up to page 1 in the search engines for your keyword phrases, which in turn gets people to click on your site, which means more leads and more sales. It’s that simple. And it’s the most affordable marketing option you have. It will pay dividends for years to come.

What are the top 5 tips to remember when writing content for the Web?

1. Use keywords
2. Use a call to action
3. Write lots of different things – web pages, blog posts, press releases, articles and more
4. Write about benefits
5. Write often!

How can writing well on the Web enable small businesses to compete with the big boys?

JW: The web doesn’t discriminate between large and small companies. Your site can rank above a Fortune 100 brand simply by writing compelling, keyword rich content – it happens all the time. That means you have a fair shake at the business. And that never could have happened before the web. Plus, many people like to give business to young, growing companies. So, positioning yourself well can be huge.

What are the most common mistakes in SEO copywriting?

JW: Most businesses don’t understand how important their “meta” tags are in the code of their web pages. This is an important place for keyword content. There are two tags that are critically important> the title tag and description tag.

The title tag is what appears at the very top of your browser window and should be a string of 2 -3 keyword phrases or a “headline” that incorporates an important keyword phrase. Its also what appears first in the search engine results pages when people search for you, hence the “headline” concept – you want to them to click on your title tag so they will come to your site and find out more about you.

The description meta tag explains what the page is about and is also a place where you want to use those same keyword phrases that were in the Title tag.

Also – and here’s a biggie - Every page should have unique title and description tags. This is probably the biggest offense that websites make, I see it all the time.

What other lessons can you share to small businesses regarding copywriting Web content?

JW: Look for a good niche and start a blog. It’s the single best thing you can do right now to maximize your online presence through the power of words.

How Can a Small Business Provide Excellent Customer Service

In this economically challenging times, excellent customer service becomes even more important for home-based and small businesses. Excellent customer service can help you retain the customers you need to keep your business afloat, or with a lot of good luck and great strategy, even thriving.

But how do you know if you are providing the kind of service your customer wants and needs?

I interviewed Kathy Doering, President of market research agency Ann Michaels & Associates, Ltd. http://www.ishopforyou.com/ , on the importance of customer service to a company. Kathy is well entrenched in the business of customer service as her company offers various market research services such as mystery shopping, phone and web based surveys, social media monitoring, among other services.

Here are some excerpts from the interview:

How important is customer service to the success of a business?

Kathy: Customer service is the lifeline of any business. Business owners spend large amounts of time and money to win new customers but yet they don’t do much to insure that the customer is well taken care of once they arrive. Making sure your new customers turn into loyal customer is critical to a company’s success. Loyal customers create “word of mouth” advertising which is the best form of marketing a company can do.

How can a small business leverage customer service to compete effectively?

Kathy: Small Business owners should consider offering their loyal customers something to thank them for their patronage. Little touches go a long way and they don’t have to be expensive. Sending a personal email alerting a loyal customer of a sale before the general public learns of it is a great way to personalize service. Give customers the Disney experience whenever you can. Gather ideas from your employees. Since they deal with your customers on a day to day basis, they may have some create ideas to share as well.

Read the full interview "Excellent Customer Service: A Must for Small Businesses"