Network – Consult with friends, family, and others who own businesses or operate in your field. Build your idea with the benefit of the knowledge and the experience of others.
Plan – Although this may be a labor intensive step, it will allow you to make some of your mistakes on paper before committing. We strongly recommend making a formal Business Plan to flush out the details of your business, which should include:
(See chart below for greater detail)
Borrowing – You can seek a traditional loan from an individual, bank, or credit union. This typically requires some collateral, a down payment, and monthly payments. The cost of this method is in interest.
Equity – You can also capitalize by partnering with others who are willing to make capital contributions to the business. The details of this varies depending on your business form:
Crowd Funding – A new popular form of capitalization, where the owner promises products, services, and/or recognition to anyone in a large population in exchange for usually smaller sums of money. Kickstarter, Indiegogo, Rockethub, and GoFundMe are some examples of popular crowdfunding websites.
| Formation Requirements | Management | Liability | Finance | Tax | |
|---|---|---|---|---|---|
| Sole Proprietor (one owner only) | None. | The owner manages all aspects of the business. | The owner is fully liable for all business debts. | The owner has the power to retain all profits. | The owner is taxed for all profits. |
| General Partnership | None. But best to have a partnership agreement. | The partners manage all aspects of the business. | The partners are fully liable for all business debts. | Partners share profits and losses equally by default, or as the partnership agreement indicates. | The partners are personally taxed for all profits. |
| LLC | 1. File Articles of Organization. 2. Sign and keep in force an Operating Agreement. | Two options to be set out in Articles of Organization: 1. Member Managed – where all members take part in management. 2. Manager Managed – where a manager runs the day to day operations of the business. | Members’ liability limited to investment in the business (not personal liability). | Members share profits and losses according to the Art. of Organization. | Two options: 1. Double taxation – the business is taxed at the company level, then members are taxed as profits are distributed. 2. Pass through taxation – profits are taxed only when distributed to members. |
| Corporation | 1. File Articles of Incorporation. Sign and keep in force Corporate Bylaws. | – Shareholders elect Board of Directors.– Board of Directors make major business decisions and elect the Corporate Officers. – Corporate Officers (President, VP, Secretary, Treasurer) make day to day decisions. | Shareholders’ liability limited to contributions to business (no personal liability). | Shareholders may receive dividends. | Two Options: 1. Double Taxation – the business is taxed at the corporate level, then shareholders are taxed on profits. 2. Pass through taxation – profits are taxed only when passed on to shareholders. |
Office Location
Our Brattleboro Offices
42 Park Place
Brattleboro, Vermont 05301
Phone: 802-257-2221
Cell: 802-380-2335
Email: [email protected]
