Even Lawyers Have Questions for Me Sometimes

cliffTwice a year, I host a program on “Legal and Tax Issues for Small Businesses and Their Owners” for a local bar association.  Most of the attendees are young lawyers who are just beginning to experience the joys of working with entrepreneurs.

Here are some of their more interesting questions, and the answers I gave during the program.

Q:  “After I form a limited liability company (LLC) for a client (so far I’ve done this for owners of residential real estate), what else should I advise them? Do for them?”

A:  The short answer is “as much as possible.” Unlike corporations, LLCs are designed to be ‘low maintenance’ – for example, they are not required to have annual meetings.  You should always try to “sell” additional services when sending the final LLC document package out to clients.  So, for example, your cover letter could say:   “If I can assist you in drafting or negotiating any contracts, employment or partnership documents, or handle any other legal or tax matter relating to your LLC, please do not hesitate to call me.”

If your clients are forming LLCs to own second or vacation homes, you should point out that (1) you can prepare their leases with tenants, (2) you can help with mortgage and refinancing paperwork, and (3) you can represent them if the IRS questions any tax savings they claim as a result of putting the property in an LLC.

Q:  “What’s the difference between a management (or voting) agreement and an operating agreement for an LLC?  Can the terms of the former be folded into the latter?”

A:  Most attorneys use the terms “management agreement” and “voting agreement” interchangeably, but when I was first forming LLCs the term “management agreement” was used only in situations where a manager-managed LLC was managed by someone who was not a member of the LLC.  I caution clients against trying to spell out in an agreement “who will be doing what” within the business, which is of course what you would do in a traditional management agreement.  If they really insist on doing that, then I set them up as “officers” of the LLC with formal job descriptions just as you would do in the bylaws of a corporation.

Q:  “What must a C Corporation do to convert to an S Corporation?  Are there any time limits?  Are there any substantial disadvantages?”

A:  A C corporation must file IRS Form 2553 to become an S corporation.  It may also have to file an election form at the state level in order to get S corporation treatment for state corporate income taxes.  Generally, there are no time limits, but if an S corporation goes back to C corporation status it cannot re-elect S corporation status for three years.

There are some disadvantages to S corporations, specifically:  (1) the rules are complicated and you have to keep track of them (for example, all S corporation shareholders must be U.S. citizens or “green card” holders, i.e. permanent residents of the country); (2) S corporations cannot issue preferred shares and so won’t be attractive to venture capitalists and other professional investors; and (3) there are limits on an S corporation’s ability to deduct expenses for “passive” activities such as real estate investment.  For more information on the advantages and disadvantages of S corporations, see the “Demystifying the Business Organization” outline which is available as a free download from my website at www.succeedinginyourbusiness.com.

Q:  “Are a husband and wife operating a business together with no legal entity documentation a partnership and do they have to file a partnership forms on their tax returns?”

A:  Many accountants and CPAs I work with take the position that while a husband and wife engaged in business together are a “partnership,” they do not have to file Form 1065 unless there are other partners (they would file Schedule C, the same as a sole proprietor).  I confess I have never found solid authority in the federal Internal Revenue Code for this position, but I simply defer to my client’s accountant when the question comes up.

Q:  “How do you transfer a corporation or LLC to a Trust?  Is it just a matter of amending the Trust document to include the business entity in the Trust or is there more to it?”

A:  The big question is: why are you transferring the corporation or LLC (actually, the owner’s shares) into a trust?  If you are doing this to minimize estate and gift taxes, you should consider setting up a “family limited partnership” or “family limited liability company” instead.  Just remember the IRS sometimes looks at these as “audit triggers”.

If you are looking at a trust to protect the owner’s shares from attachment by creditors, you will have to set up a “domestic asset protection trust,” preferably in Delaware, Alaska, or Nevada where these trusts are viewed favorably.  For an excellent article on these trusts, see http://blog.law.vandrew.com/2011/07/domestic-asset-protection-trusts-worth.html.

Cliff Ennico (www.succeedinginyourbusiness.com), a leading expert on small business law and taxes, is the author of “Small Business Survival Guide,” “The eBay Seller’s Tax and Legal Answer Book” and 15 other books.

eBay Helps Customers Pay Without Opening Their Wallets

PayPal BeaconeBay has just unveiled the newest program in a line of mobile payment platforms. This program is called the “Beacon” and is meant to facilitate payments in shops that have inserted the small hardware device that has been inserted into a wall in a brick and mortar store. The device uses Bluetooth technology to transmit date and facilitate payments. With this system, Paypal app users will be able to shop at Beacon-enabled stores without having to even open their wallet. The point of sale at the register simply reads the information from their mobile device and completing the transaction for them. EBay has promised that they will not use this new software to track user’s location and check-in will depend on the user. If it has been enabled, a customer’s phone will make a sound to confirm that it has been picked up by the system.

What are your thoughts on this software? The fleeting thought that ran through my head was “invasion of privacy,” but seeing as you would have to enable the program to check you in, I suppose it could become a very simple, easy way to pay. If you’ve been to a Dollar General store recently and checked out using the credit card machine, you probably noticed that they have a new feature on their machines that allows you to sign in to your Paypal account and check out with only your login information. This new software is a step ahead of that, and I thought it was pretty cool. I love how eBay and Paypal are working together on this program, as well. Paypal accounts for over half of eBay’s yearly revenue, and they are hoping to expand beyond simply being an online payment provider. I believe this could very well be their shot. What do you think?

Stitch Labs Raises $3.5 Million As It Makes Plans To Address Inventory Management For Larger Business

stitch-labs-logoStitch Labs, the startup founded in 2011 to help small and medium-sized businesses manage their sales operations, has raised $3.5 million in Series A financing. Founder Brandon Levey said that Stitch Labs’ business has outgrown what its platform can handle, and they will be releasing a new product in January to serve larger scale businesses that they currently cannot accommodate.

Greg Sands of Costanoa Ventures led the round, with participation from True Ventures and Greg Waldorf, the founding investor in eHarmony. In February 2012, Stitch Labs raised a seed round of $1 million led by True Ventures.

Last we reported, Stitch Labs had been working to become the one business platform to rule them all by integrating with companies that provide specific services. That includes the cloud accounting software provider Xero; sales sites like Etsy, Shopify, and BigCommerce; shipping providers ShipStation and Amazon.com; and Verifone’s Sail for payments.

Levey explained that Stitch Labs isn’t aiming to be the best shopping cart or POS system or warehouse manager. There are others who can do that better. What they can be is the best engine to bring together all those disparate elements of running a business.

The launch of an expanded platform in January will now enable Stitch Labs to reach businesses that do $5-20 million in revenue each year. As it stands, the platform can readily serve those customers who are doing half a million to $5 million a year, along with those in the $100,000 range.

Stitch Labs is not moving on to larger businesses beyond SMBs, Levey explained, but rather expanding its capability to provide services on the larger end of the SMB spectrum.

“In terms of our platform, if a company is doing more than 10,000 orders a month we have to turn them away right now,” Levey said. “Our total order volume has grown over 20x in the last year. [Order processing] was at one million per month in the last year alone. We have to accommodate those doing 30,000 a month, or those doing 5,000 a month and in November and December they do 30,000 a month.”

While Stitch Labs does have a number of competitors in that space, like BrightPearlTradeGecko,Unleashed, and Lettuce, Levey said the company differentiates itself on its real-time integrations, a focus on design, and analytics reports,

On that last point, Stitch Labs is at work on developing forecasting reports in addition to its current roster of analytics reports, all of which focus on past sales data.

It’s a service that many of Stitch Labs’ users would not necessarily think to ask for, Levey said, because they are so tied up with the daily work of running their business. But once introduced to the idea of analytics that project into the future, it’s a no-brainer.

“I want Stitch to be the brains behind the operations,” Levey said. “I want us to be the things that link all of these sales channels. Holistic commerce, that’s where we can play… When I think of features around that, it’s all about sales channel intelligence and automation. In building out key inventory and operational features, it’s the ability to manage multiple warehouses on a mobile phone.”

Who Will Amazon Buy Next?

Thanks to Michael Koploy of Software Advice for this info! I have to admit I am intrigued with all the companies buying each other up. I have learned over the years to Pay Attention! when either eBay or Amazon buys a company. If you are careful to read between the lines, many times you can discern a direction the company is taking before the majority of people. This gives you all kinds of chances to take advantage of moves. In addition, it’s fun to speculate! So come along with me and see WHO Amazon has been buying and let’s guess WHO they will buy next!

amazon-acquisitions

 

So, now you have all the data – VOTE!  Who do YOU think they will buy next?

 

 

 

Here are some ideas from Software Advice – be sure to check them out! Software Advice!

 

 

 

 

September Monthly Focus – Show 37 – Ryan Stephens of Inventory Lab & Beth Cherkowsky from Bling My Bra

Audio: {http://recordings.talkshoe.com/TC-112441/TS-779662.mp3}

1 – Guests This Week

 

2 – Chat Room Chatter:

 

  • Kat was the first one in the chat room today, followed quickly by a few guests
  • We listened to a few commercials and then it was on to the first interview
  • For the first interview, Kat was interviewing Ryan Stephens of Inventory Lab.
  • Kat asked Ryan what Inventory Lab was and what it could do for someone’s company.
  • Ryan and Kat discussed the benefits of having software like Inventory Lab to help you track your expenses and reports.
  • The Inventory Lab software also has the capability to help you calculate your net profits after all of your expenses, such as fees, cost of goods, shipping costs and so on.
  • Kat and Ryan discussed how Inventory Lab software can also help you list your products for sale on Amazon.
  • Kat asked Ryan what type of seller should be using Inventory Lab and his answer was, all of us!
  • With Inventory Lab, you just enter a few figures and the software does the work for you!
  • After a short commercial break, Kat began the interview with Beth Cherkowsky of Bling My Bra.
  • The “Bling My Bra” campaign was one that Kat ran last year. It was tons of fun, participants got to make specialty bras or get bras autographed by celebrities, then the bras were placed up for auction on eBay in support of Breast Cancer Awareness through the Susan G Kolman Foundation.
  • Last year, they raised over $5000 and all of the funds were donated directly to the foundation. Kat and Beth kept none of the money. They even paid the eBay fees themselves!
  • Kat and Beth discussed how this year, they intended to raise even more money.
  • This year, the proceeds will be going to medical research for breast cancer, as both Beth and Kat agreed that there is more than enough “awareness” of Breast Cancer out there.
  • This year, their goal is to raise $10,000!
  • Kat and Beth said that they need everyone’s help this year to ensure success. They want everyone to help create the bras and join the Facebook and Twitter pages to share the program with their friends and family.
  • This year, Kat and Beth are also creating pages where you can bid on small items for $5 or $10 if you would rather just donate a few dollars instead of trying to bid on a bra.
  • We listened to one last commercial from our sponsor.
  • Kat wrapped up by telling everyone she knew they had very busy lives in this world of e-commerce and she hopes they have a very productive week.

 

Meetings – 

  1. SCOE coming up soon! Sept 19 – 21 in Philladelphia – space available http://www.SCOE.biz/Philly

  1. ICE Retailer is still accepting registrations.  Sept 21st in Atlanta. You NEED to hear the amazing  key-note speaker at www.iceretailer.com – Coupon code THATKAT for $249 savings

  1. Kansas Jubilee is coming up fast! Oct 25 – 26 this year with some great new ideas and speakers coming! http://www.KansasJubilee.net

  2. CES Conference in Orlando will be happening November 9-10 in Orlando, Florida!  https://www.facebook.com/groups/ceswithjim/
  3. SeaBay Cruise has over 100 signed up! February 8 – 13, 2014 – Join us on Facebook to learn more!            Http://www.Seabaycruise.net

 

Other Links & Resources:

  • That Kat Facebook Group: http://Facebook.com/groups/ThatKat – click on the “Join” button and I’ll add you to the group right away
  • That Kat Blog http://ThatKat.com Sign up for my newsletter here!
  • Do you have a question about selling on Amazon, FBA or any of the topics discussed in this podcast?  Best place to ask is on the Facebook group – see the link above. Over 400 folks willing to help!

Next Show, September 16th, Kat will be back with Marsh Collier & Stitchlabs! Until then, may you have tons of fun, laughter and success!

 

Wildcard Searching on eBay — Still Possible (with a little help)

Guest Post by WatchCount.com

What’s a wildcard, you ask? It has a long, under-the-radar, and noble history in the annals of computer science and database theory. When searching for a range of values — or on eBay, items — simply by appending an asterisk ‘*’, one can obtain an array of targeted search results. Looking for silver coins in the 1940s? “Silver coin 194*” might just be the syntax you need.

Or, save yourself the trouble of specifying plurals by querying “Christmas card*” to home in on eBay titles with “card” or “cards” in them.

Misspellings, plurals, part numbers — the wildcard symbol stands for most any sequence of characters, saving you time and effort when seeking a specific, yet varied, array of results. eBay, like many other search engines, implicitly allowed this capability, and a very focused minority of users knew how to employ this functionality to zero in on the things they sought, on the web, and on eBay.

But in late 2012 eBay felt it needed to drop this feature, as its search engine evolved and fewer and fewer searchers knew about this long-standing, somewhat peculiar, feature. Wildcard search just for some reason didn’t fit into the big picture of eBay’s next-generation search technology, and a small but vocal long-time crowd of buyers lamented the loss of this time-saving trick. So, what to do now?

While eBay still supports some next-best search features (logical OR, negative keywords) to help fill the gap, without a wildcard certain kinds of search strings just aren’t possible any more. Bummer!

Watchcount

Enter WatchCount.com — a 3rd-party website that’s home of some clever alternative eBay search tools, such as an eBay Pulse replacement and Most Watched search tool. At WatchCount.com we got to work on creating and launching a new eBay wildcard search utility, re-enabling wildcard functionality so long-time die-hard searchers can once again utilize the flexibility and expansiveness of the asterisk in their search queries. Free of charge, this tool can be found here.

Our tool leverages the fact that eBay is still quietly running their former search platform on their servers, and our utility taps into that. Just enter your wildcard-supported search query via the WatchCount.om tool, and with a simple click you can view your results on eBay in a wildcard-supported environment. Voila!

Bryan Goodman over at Thrifting with the Boys gave a nice, clear example of searching for Beatles memorabilia from the 1950s, using WatchCount.com’s wildcard search tool. A search of “Beatles 195*” (without quotes) on eBay itself would cause eBay to drop the asterisk and return Beatles items with just “195” in the title — having nothing to do with years in the 1950s. Yuck!

But by specifying that search at the WatchCount.com eBay wildcard search tool, numerous search results appear that include 195_ in the title — specific years that are just what he was originally seeking. The asterisk character fulfills its promise and saves the day! (…In the fine print on our search tool/page, you’ll also see a live example of searching for books on eBay from the 1800s, and how our functional tool measures up to eBay’s current and active search engine.)

As an eBay seller, you might be on the lookout for eBay items to buy and resell on eBay — “eBay arbitrage” as it’s sometimes termed. Perhaps there are things in your specific niche that are often misspelled (ex: “des*” to possibly capture both ‘dessert’ and ‘desert’), include years, decades, or part numbers, or are often listed either in singular or plural forms — and would be much more accessible with a simple wildcard search. If that’s the case, give the WatchCount.com wildcard tool a whirl and see if it helps you locate the eBay listings you’re seeking.

Staples’ Greatest Idea Ever

Did you know that Staples has a price matching policy? I’m sure most of us are aware that Walmart will price match anyone. I wasn’t aware that Staples price matched other companies until recently. I went in, shopping for a cheap toner that I found via their website. The toner was $30 more in-store than it was on their site and I was simply trying to ask the manager why that was, when he informed me that they price matched the prices on their site, along with the other office stores. Now, it seems, they have taken their price matching a step above that! Staples is now price matching Amazon! I love this idea! I wish other big retail chains would take note.

 

It seems you can find most anything on Amazon for cheaper than you find it in the stores. Can you imagine if all stores began offering Amazon price matching? It could change the way we shop. Normally in these articles, I focus on the selling aspect of Amazon, but I felt this news was so buzz worthy, you all should hear it! What are your thoughts on this? Do you think Staples will incur big losses from price matching a giant like Amazon? Do you think that as a seller, you could use their price matching other office stores to make a profit on office products? I’ve never been big into selling office products, but now that I’m armed with this knowledge, perhaps it would be yet another niche to break into. What do you think?

eBay Rolls Out a New Help Site via Social Media

Are you looking for some great tips for selling on eBay? If so, head on over to eBay’s newest pages, their eBay For Business pages on Facebook and Twitter. eBay recently announced this newest tool via their announcement page Their page states that they are “making it easier than ever to get the latest news, tips and tools.” The new pages will help you collect the information you need, as well as allow you to connect with other sellers. What do you think of this new approach? I believe that Facebook has become such a big tool in selling, that this has the potential to be a really big tool!

 

Unless you’ve been hiding under a rock, you know that social media is the new trend among sellers. Most sellers understand that everyone is on social media, and a big way to reach new potential customers is to have your store online and accessible through sites such as Facebook, Twitter and Pinterest. Even if you don’t have these sites up and running for your business yet, you can access the new eBay For Business page via your personal site. I strongly recommend that you begin setting up your business social media pages, however. If you need any tips or more information, feel free to visit my business Facebook group. You can ask me or any of my members, and we would be happy to help you get started. We sellers have to stick together. Social media is the wave of the future for sellers, and you don’t want to get left behind!

Ready To Sell Toys?

Amazon.com logoOn Monday, Amazon sellers received the email we have all been waiting for. Once a year, as an informal signal to the beginning of fourth quarter and Holiday sales, Amazon sends out an email detailing their toy selling policy. If you are new to Amazon, this email may have worried you a little bit. No need to worry though, they simply want sellers to know what to expect before sending in loads of toys to be sold. If you are still a newbie, you might not qualify to sell toys this year. You are still allowed to sell in all the other categories you are currently selling, their toy policy is just a little stricter to prevent them for receiving an influx of toys that they can’t turn over.

The restrictions take effect November 19, 2013 and run through the end of January. Only sellers who meet the following criteria are allowed to sell toys for the restricted period. Keep in mind that these restrictions are for sellers who operate on a third-party selling basis. If you are an FBA seller, you can sell toys as long as your account is paid up and in good standing.

  1. You must have had a sale prior to September 19, 2013. The sale could be in any category, it just has to be a finalized sale to qualify you.
  2. You must have processed and shipped at least 25 orders in the months of September and October, 2013. Again, the sales could be in any category
  3. You’re pre-fulfillment cancel rate must be no bigger than 1.75% for the month of October, 2013. To find these stats, just visit your FBA homepage.
  4. Your late shipment rate must be no bigger than 4% for the month of October as well. This applies only to third party sellers.
  5. Your order defect rate can’t be bigger than 1% for the month of October

Final notices will be sent out in November, telling you if you are approved or not. The qualifications are different for every country, so if you sell on multiple sites across the world, you may need to check with each one to see what you are qualified for. Good luck! Fourth quarter is upon us. This is the time of year that we all look forward to. I can’t wait to hear how well you all did afterwards!

ICE Retailer Event! Coming Soon!

iceretailerbanner

eBusiness Experts to Give Insider Tips On How To Win Big in the $327 Billion Internet Industry

Register at: http://www.ICERetailer.com/

Join the mass of Internet Commerce Entrepreneurs, senior marketers, project designers and managers, business developers and more than 25 internet and marketing experts for an unforgettable experience at the ICE Retailer eCommerce Conference in Atlanta, GA; September 20-21 at the Marriot Renaissance Airport Hotel.

Hosted by ColderICE Media and it’s CEO, John Lawson, the conference promises to deliver in depth content and vital workshops that cover everything from the latest digital marketing and ebusiness strategies to best practices and hands-on classes in Social Media, ePR, Customer Engagement, Content Strategy, Mobile Marketing and Apps, Ecommerce, Email, Search, Usability/Design, Marketing Automation, Analytics and more!

This two-day eCommerce boot camp includes hours of peer networking, a field trip to the Atlanta Gift Show to teach both basic and advanced strategies for product sourcing, a hosted Luncheon and totally cool swag provided by participating speakers and sponsors.
Featured speakers include Dr. James (JB) Glossinger, internationally known speaker, author, coach, and consultant also known to his 20,000 web subscribers as “The Morning Coach”; Sam Mallikarjunan, the Director of eCommerce Marketing for HubSpot; Jay Berkowitz, CEO of Ten Golden Rules, an internet marketing agency based in Boca Raton, Florida and Dahna Chandler, Principal at Audience Matters, an Atlanta-based social web marketing agency.

Also taking prominent positions are Atlanta-based Eric Yonge, CEO, EY Studios, Al Loise, Director, Market Development, Vayu Media, Brandon Dupsky and Jacqueline Knight, Managing Partner, Knight Owl Communications.

Atlanta City Councilman, Kwanza Hall, is slated to attend along with presentations by Alaa Hassan, Vice President, iNetVideo.com, Montreal; Shirley Tan, Founder, Ecommerce Systems, San Francisco; Brandon Eley, Interactive Director for Kelsey Advertising & Design,/Owner shoe retailer 2BigFeet.com, and author of “Online Marketing Inside Out”, Steven Kennedy, Co-Founder, Business Sumo; Kat Simpson, Creator, “Podcasting in Pajamas”, Sorrento, FL; Sandi Garcia, Owner, Social Sandi & Office Threads Alameda, CA; Shan Thomas, Founder, Collective Success, Inc., Atlanta; Danni Ackerman, CEO, The Danni App, Las Vegas.

The event boasts major sponsors, InfusionSoft, the only all-in-one sales and marketing automation software for small businesses, Kabbage, Inc., an online financing corporation based in Atlanta, Georgia that provides working capital to small businesses and who raised over $56 million dollars in its last round of funding, HubSpot, an All-In-One Inbound Marketing Software and Reply Manager, an email management tool that is entirely web based.

For more media information, interviews and media passes, contact: Jacqueline Knight, Knight Owl Communications, 678-765-2744 or prjacqui@gmail.com. For ticket sales and discounts go to: http://iceretailer.com/.