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5 Tips to Stretch Your Startup Capital

You’re starting a new business. Like many entrepreneurs, you probably need to be conscious about how, where, and when you spend your start up money. You’re not alone. Indeed, of the biggest challenges many new businesses face is ensuring they don’t burn through their startup piggy bank too fast.

How do you avoid burning through your find? To start, self-fund through cash flow as long as you can. If you must raise outside money, try to make each round of capital last at least eighteen months.

Read on for more some strategies…

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When Birth Control Pills Cause Harm

If you watched the news over the last few years, you have probably heard about the oral contraceptive recalls and various birth control manufacturer lawsuits. What makes a birth control pill defective and/or dangerous in the eyes of the law? A dangerous prescription drug is any drug that has the potential to seriously harm its user. A dangerous drug may also be considered a defective drug if it does not provide the intended health benefits. Further, a drug may be considered both dangerous and defective if the sole source of its danger stems from a flaw in its manufacturing process. An experienced product liability can explain in further detail.

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Choosing a Business Structure that Protects Personal Finances

When a small business takes a turn for the worse, the outcome could be disastrous for your personal finances. Unless you’ve chosen a business structure to protect you.

As opposed to DBAs, or doing business as, the owners of limited liability companies, limited partnerships, and corporations are generally only liable up to the amount they invested in the business. Creditors and plaintiffs can’t go after the owners’ personal assets. This means that your home / car / art collection could be safe.

If protecting your personal finances is of interested to you, you will need to chose which legal structure is right for you. An experienced business attorney can help you decide and look at the various factors, including taxes. For example, are taxes paid before or after profits are distributed to owners? How does selling the business potentially affect them? Knowing the answers to these questions are important, as switching business structures down the road can be a challenge.

Limited and limited liability partnerships.

A limited partnership is a pass-through entity — all profits, losses, credits, and deductions flow through to each member’s individual tax return.  With a limited partnership, only owners with active control of the business, known as general partners, are liable. Limited partners, those who have only put up capital and stay out of company affairs, have liability protection.

In a limited liability partnership, all partners generally share management responsibility and have liability protection. Many professional practices, such as doctors, lawyers, and accountants, form LLCs.

C Corporation.

Often used with companies that intend to go public, with a C-Corp, there is no limit on the number of C-corp shareholders, each of whom can normally trade that stock freely.

S Corporation.1441784200_20

An S-Corp is a pass-through entity and avoids the double tax bite, like the LLP. One S-Corp advantage is that it’s easier for owners to sell the business outright and yet the S-Corp retains some of the features that make a corporation attractive (liability protection, freely traded shares, and the distinction between profit and wages)..)

Limited liability company.

Like an S-corp, an LLC combines the pass-through nature of a partnership with the corporation’s liability protection. However, an LLC is much more flexible than an S-corp. An LLC can also set its own terms for distributing income among members–unlike a corporation, it doesn’t have to treat all investors equally.

For more information on which business structure is the ideal choice for your small business, contact the experienced attorneys at Hart, Watters & Carter today.

 

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Understanding CA’s Unfair Competition Law

California’s Unfair Competition Law (UCL) is a significant source of business litigation in the state. UCL claims are commonly brought in California class actions, and can result in significant financial losses for California businesses and huge wins for class plaintiffs.   It is therefore important that companies understand both the protections and liabilities associated with California’s Unfair Competition Law when engaging in business in the state of California.

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