Corporate Mergers Business|Business, Company, Money, Loan, Finance etc

Merchant accounts are the similar to normal accounts which are required by the business people in order to accept the credit card and debit card payments. Even though a merchant account is know to acquire the requirements of credit processors, its sales requirements may get differ from provider to providers. Business operation or companies that cannot provide these requirements are instantly not eligible to get merchant accounts. A high risk merchant account is required by businesses when compared to a ‘traditional’ goods/services business, are at a higher risk of

• Bankruptcy
• Fraudulent transactions
• High volume of sales
• High rate of refunds
• High rate of charge-backs

The greatest benefits of using merchant accounts is these accounts could be one located in one country and can handle the sales all over the world. With the higher risk merchant account, the bank involved needs to be account for the integrity of the funds and keep in mind that they could be left the responsible party. It is often possible to negotiate lower rates and one should always request multiple quotes before choosing which high risk merchant account provider to use for their processing needs.

Are you thinking about putting up your computer repair business for sale?

Or are you on the other side of the table and looking to buy an existing computer repair business for sale?

Either way, don’t let this major transaction be an afterthought.  Planning ahead is key for buyers and sellers alike.

Future planning and especially having an exit strategy is something many computer repair business owners don’t necessarily think about as they build their companies.  However, you have to think about how you can make your business not only profitable, but also appealing to future buyers once you decide it’s time to move on, for whatever reason.

The following 3 tips can help you develop an exit strategy so you are ready once you decide to move on and put your computer repair business for sale.  And if you’re looking to buy an existing business, consider this a quick checklist of what determines tangible value.

Set Your Prices Right from Day 1. Many new and inexperienced owners make the mistake of charging too little, often WAY too little, for their computer repair services.  One of the biggest causes of this is a copycat billing rate structure.  New computer computer repair business owners often will find out what a competitor is charging down the street and will simply charge the same, without looking at the company’s business structure or whether that rate really works for their specific type of business.  Also, how do you know this competitor knows what he/she is doing when it comes to setting prices?  And do you know anything about this competitor’s technical competence?  You need to determine your own pricing structure based on sound financial projections and your value proposition.  And make sure that your pricing structure makes your business profitable and thus appealing to future buyers once you decide it’s time to put up your computer repair business for sale. Focus on Getting Clients … Not Customers. New and inexperienced computer repair business owners often spend a lot of time chasing down one-shot deal customers, keeping their fingers crossed that these people will call them in a few months or a few years.  Your business is not going to be successful or appealing to future buyers if you base your services on the needs of one-shot deal customers.  Spending all that time and money acquiring customers for tiny, unpredictable projects is not going to be financially lucrative.   A computer repair business that offers on-going service agreements will grow a stable client list and have recurring revenue and predictability, as well as the ability to hire more staff.  And all of these benefits will make the business very appealing to those that might want to buy it when you need to or want to get out. Create Curb Appeal for Your Computer Repair Business for Sale. If you’ve ever watched one of those real estate TV shows that detail how they fix up a home about to be sold to make it more appealing, you’ve probably heard the term “curb appeal.”  However it’s also easily applicable to a computer repair business for sale.  If you ever want to be able to sell your computer repair company – if you move, get bored, get burnt out, get injured or pass away – the list of your clients on annual service agreements will become one of your few tangible assets.  For the overall valuation of your computer repair business, you of course need to consult your trusted accounting advisor.  But, as an example of how valuable on-going service contracts are, if your company has been averaging $200,000 per year in pure consulting revenue for the past 3 years and ¾ of that ($150,000) is locked in on annual service agreements, you have a pretty nice asset for someone thinking about acquiring your business at a multiple of your overall gross revenue.  On other hand, how much do you think a competitor would pay to purchase a list of one-shot deal cheapskate customers that just call once in a while?  Without on-going service agreements, you are starting from scratch every single month.  You need to cultivate your list of service agreement clients to prepare a very desirable computer repair business for sale… one with curb appeal.

In this article we talked about 3 ways to make your business more appealing for sale and plan for an exit strategy.  Learn more about how to succeed on either side of the table with a computer repair business for sale that attracts great, steady, high-paying clients now at http://www.ComputerRepairBusiness-ForSale.com

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Taking the leap of faith and starting a home based business can be an exciting and daunting experience at the same time. While there are numerous reasons why people are drawn to the concept of a home based business the challenge is getting it off the ground. Unlike several decades ago, having a respectable home business was unheard off.

In fact if you didn’t have a shop front or office then you were considered to have a questionable business operation that lacked credibility. Times have certainly changed and so have our lifestyles. These days with the modern advances in technology you can comfortably setup a home business and compete successfully with much more established and larger businesses without any noticeable decrease in credibility.

In fact many of the multinational technology companies we know today as household names started out in dorm rooms, in the garage or a spare bedroom. Below are a few handy steps to help you get your home business off the ground.

1. Decide on your business structure. While you may be working from home you will still need to register the business and deciding on the business structure can be a critical decision. You hardly want to settle on a structure just because it is the easiest to setup or most cost effective only to have to restructure the whole business when it gets larger. If you don’t want to invest in an accountant to help you with this step there are some useful resources available at any local library about the different business structures and the benefits each structure can provide.

2. Decide on a name and register it. You will need to register your business name with the appropriate business authority in your area so that you can commence business operations. Rules and regulations differ from state to state and from country to country so consult your local government business department and they will be able to assist you on the forms you will need to fill out.

3. Decide on where your business is going to operate from. If you are lucky enough to have a spare room then you are pretty much set with getting your business going. You can probably get by with a table, chair, a filing cabinet, phone and computer in the early days. If you need other things relevant to your business you can get them later on when you are starting to create some turnover. Don’t worry about not have the perfect business setup from day one as your success won’t be determined by how beautiful your office looks. If you don’t have the luxury of a spare room then you might need to make do with a temporary office table that you need to setup and pack away at the end of each day.

4. Invest in business stationary. Probably the most important aspect of getting a business off the ground is making sure people know about it. Tell your friends and family that your open for business. A useful and cost effective way to promote your business is to get business cards designed and printed. While your at it you might as well print letterheads as well. With the abundance of cheap online printing companies out there this can be quite inexpensive and certainly well worth the small investment. Either use the available templates provided by your printer or engage the services of a cheap graphic designer from your local university to get them designed for you.

5. Start marketing. Its all well and good to have your business open but in order for it to stay open you need to have customers. Unlike having a shop front or office people aren’t going to just stumble across your business and wonder in your doors. You are going to need to do some leg work. Whether it be a telemarketing campaign or a direct mail campaign you are going to be the one that needs to do that if you want your business to grow. There are many wonderful small business associations that you can join that can give you useful advice and resources on how best to maximize your small marketing budget most effectively.

Starting a small business can be such a rewarding experience and once of the ground the fun is just beginning.

STEP 4: Organizational Structure

This is the step where I need to select an organization structure that best fits my business model. I personally find there is no “best” structure for all businesses. However, I normally prefer to select one that provides me with high autonomy and low tax liability. Again, this will also depend on the national, federal or local tax structure for each business entity in the country or state I conduct my business.

Before setting up my company, I would do insight research on all the options available for my particular business model, particularly the advantages and disadvantages of each formation, paying special attention to the tax implication and government formalities as well as red tape in the location or country where I operate. I never assume all countries are similar.

Let’s take a look at four common forms of business ownership:

1. Sole proprietor

2. Partnership

3. Corporation

4. Limited Liability Company

Before selecting the form of business, I always find it best to work closely with a lawyer or a financial planner to ensure I have the right information, compliance and resources that allow me to make the right choice.

Sole Proprietor

This is a very popular form of business in many countries (i.e. America, Canada, UK, India, Australia, Hong Kong, Malaysia, etc.) because so little is needed to set up a sole proprietorship. Apart from local business licenses, there are minimal government fees and paperwork. It is instant, cost effective and minimal (or even zero) compliant requirements by local authorities.

On the other hand, there is also considerable risk to consider. The owner’s personal assets are vulnerable to creditors and other liabilities. Sole proprietorship doesn’t get the advantage of certain tax breaks that are reserved for Corporation or Limited Liability Company.

In short, this form of business is very ideal for home based business that has no massive inventory or a high number of staffs.

Partnership

Similar to sole proprietorship, this form is very easy to set up and maintain, requiring minimal government fee and paperwork. The initial setup cost and maintenance fees to run a partnership are very low. Moreover, no capital is required to form a partnership. Each partner is not required to raise any capital to start this form of business.

On the downside, each partner is required to account full responsibility for all the company’s debts. If one of the partners defaults on a company loan, creditors can actually go after your personal assets and belongings. Besides that, capital raising is also very limited in a partnership. Just like sole proprietorship, partnership doesn’t get much tax incentives.

Corporation

There are a few types of corporations available depending on the location or country the owners conduct business. However, most corporations (in many countries) share similar characteristics.

The key advantage of incorporating a business is that it shields equity holders (owners) of the company from personal liability. In other words, if business hits hard times, creditors cannot go after the owners’ personal assets to make up for any company debts. Yet, most creditors nowadays would require the owners of the corporation to guarantee the shortfalls if the company goes under. Besides that, a corporation offers significant tax savings (usually not extended to sole proprietorship or partnership), greater business flexibility, company name protection and better opportunity to raise capital via venture capitalist or financial institution.

Bear in mind that corporations are not cheap to set up. It requires some initial set up fees and certain amount of regular maintenance. With a corporation, you have to keep a proper set of financial records, audited by a certified accountant. Depending on where the business is conducted, some government or local authority would require a minimum set of compliance and would also require regular fees to be paid.

There is one option that a corporation possesses – that allow owners to sell their shares of stock to the public (known as public listed corporation). Then this will involve higher startup capital (usually runs into the millions), more legal and meticulous accounting compliances to adhere to.

Limited Liability Company

As for many new entrepreneurs, choosing a business structure comes down to liability protection, low startup costing, tax savings and convenience. This form of business requires fewer formalities and less on-going paperwork than corporations while offering the same personal liability protection and tax flexibility. Just as with a corporation, the company name is protected, and the other members of the company are shielded from creditors and other company liabilities such as lawsuits. A limited liability company only requires the owners to keep minimal company records, and there is no limit to the number of equity owners.

Nonetheless, this form of business is dissolved when a member dies or undergoes bankruptcy. In comparison to sole proprietorship or partnership, it has more paperwork and complexity to set up and to be maintained.

*Note: Unproven teories to not be shown to my readers! If you need any small business startup help, feel free to visit my Website

=> To get the complete online business course on

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Disclaimer – This article may be freely reprinted in its entirety in any e-zine, newsletter, blog or website. The author’s name, bio and website links must remain intact and be included with every reproduction.

Copyright (c) 2007 Juli Walsh

The mere thought of an audit or a lawsuit strikes abject terror in the hearts of most small business owners. No one wants to find their business the target of an IRS audit in fact, most of us shudder at the mere mention of the phrase. Lawsuits are also frightening prospects. Yet small businesses and entrepreneurs frequently leave themselves open to failing audits and losing lawsuits by not taking steps to prepare or plan for them.

Scary Fact #1: A study released in March of 2007 estimated that U.S. citizens pay about $865 billion every year in expenses related to lawsuits. A significant amount of these lawsuits are brought against doctors and other professionals. But a sizeable amount of this cost is tied to suits brought against small businesses.

Small businesses and entrepreneurs are particularly susceptible to lawsuits because they are often so focused on starting and growing the business often with a minimal staff that they just dont get around to doing the paperwork needed to protect their businesses and their personal assets. Further, many believe that a business license and articles or incorporation, articles of organization or partnership agreements are the only documents they need in order to do business.

Depending upon the state in which your business is located, this may be sufficient to allow you to do business. But it is woefully inadequate to protect your business.

Scary Fact #2: If you didnt form and structure your business correctly, your personal assets could be at risk in the event of an audit or a lawsuit. Incorporation is a great thing, as is formation of a partnership. Without proper structure and continued documentation, the business is susceptible to disallowed deductions and personal assets are well within the reach of those who bring lawsuits.

Business structures cannot prevent audits or lawsuits. But S Corporation or C Corporation and Limited Liability Company structures do allow you to separate your business and your personal assets and offer liability protection. The same is true of Limited Liability Partnership. You have worked hard for your home and your possessions, not to mention your savings and retirement plans and investments. Dont risk losing everything because your company isnt structured correctly.

Scary Fact #3: Many small businesses and entrepreneurs fail to properly and adequately document decisions, agreements and business activities. This failure puts the entire business at risk. You must record business decisions and summarize them in your Annual Meeting. If you dont, your notes will not stand up in court.

Every agreement made by a business needs to meet three criteria:

1. It should be in writing.

2. It should clearly state how disputes will be resolved.

3. It should be reviewed by an attorney before it is signed.

Finally, ensure that every product you release and every property you own and use for business carries appropriate warnings, disclaimers, and the like. No matter how much we might like to think otherwise, we live in a society in which people are more than ready to take others to court if they think they will gain financially. Once a lawsuit is brought, your legal fees begin to accumulate. Even if you win, you will incur significant financial loss.

We all need to plan for retirement. As the baby boomers approach retirement age, we can expect more people competing to purchase the same commodities i.e. golf shoes and Florida condos. Therefore, that old adage about planning for retirement has never been more relevant.

For those people who are employed in a pension environment, the process of planning for retirement is greatly simplified. Business owners on the other hand must create their own pension through RRSP savings. Often, however, any excess funds which may have been available for contribution to an RRSP are pumped back into the business for growth and expansion. As such, many business owners find themselves approaching retirement age with their retirement plan trapped within the business. Unfortunately, a private business is arguably one of the most non-liquid of all assets. The trick, therefore, is to turn that non-liquid asset into cash.

Starting the Process

As most financial advisors will tell you, it is never too soon to start planning. When dealing with a business the first step in the process is to consider possible buyers. The available categories include existing business partners, employees, family members and competitors. Each category has its own set of challenges which must be identified and addressed. For example, employees and family members will often require training and, therefore, there will need to be an extensive transition period until they can assume control of the business. It must also be recognized that bringing family members into the business can introduce elements of the family dynamics into the business environment which can create additional challenges. Further, it is often the case that all family members will not become involved in the business and that can, in turn, cause difficulties in the family dynamics. In estate planning it is generally regarded as wise to avoid leaving an interest in a business to uninvolved family members. In such situations there will be a need to develop creative strategies to equalize the distribution of assets among family members on the death of the business owner. When dealing with competitors, the timing of the sale is critical to ensure that the value of the business is maximized. It is easy to get into a situation where the business is a “lame duck” in that it becomes unable to operate without a change of management control.

Sale of Shares vs. Sale of Assets

One of the most crucial considerations in succession planning is the structuring of the sale of the business i.e. assets vs shares. Generally, the vendor of a business will prefer a sale of shares. In large part this is due to the main tax advantage of a share sale which is that a shareholder can shelter up to $500,000.00 of capital gains using the capital gains exemption. Each exemption is worth approximately $120,000.00 in tax savings. In a family owned business where there are multiple shareholders, the tax savings can be significant. The capital gains exemption can even be used following the incorporation of a sole proprietorship immediately prior to a sale. The use of the exemption is subject to several complicated conditions under the Income Tax Act which, with the help of your lawyer, must be carefully analyzed to ensure that the shares are onside.

In order to sell the shares of a business corporation, it is important to identify exactly what assets and liabilities are in the corporation since everything effectively goes along with the corporation on a share sale. There may be ways to separate business from non-business assets prior to a sale but this planning often takes a lengthy period of time to implement, particularly if it is to be achieved on a tax-deferred basis. In an asset sale, on the other hand, the seller and the buyer can agree on which assets are to be sold. The sale of depreciable assets in an asset sale will often give rise to recapture which imposes a substantial tax burden on the vendor. Conversely, the purchaser is able to allocate the purchase price among the purchased assets to achieve optimal tax results. It is important to note that in an asset sale the corporation stays with the original owner and is the recipient of the sale proceeds. Accordingly, the corporation will often be used as an ongoing investment vehicle.

The point of the exercise is to begin the process of analyzing the business structure sooner rather than later. The development of an optimal share structure and the separation of investment and business assets early on can greatly simplify the process of sale and maximize the after-tax proceeds. Another point which cannot be over emphasized is the need for proper documentation. This is particularly important during the transition stages when a new family member or employee is assuming control of the business. Proper Shareholders’ Agreements, Employment Agreements, Consulting Agreements, etc. must be in place to outline the rules of the game for management, control, profit distribution and the various “what if” scenarios.

Tools Used for Business Succession Planning

There are various legal tools available which can help facilitate the business succession process. Your lawyer can help you find the one that is right for your business. The first is the use of a trust as a shareholder in the business. A discretionary trust with multiple beneficiaries can provide substantial income-splitting opportunities as well as the ability to multiply the capital gains exemption amongst available beneficiaries. Besides these obvious tax advantages, a discretionary trust also allows a business owner to defer the decision of share allocation until some point in the future. The discretionary trust allows the business owner to step back and observe how family members are turning out and their degree of involvement and success in the business before making a decision on ultimate ownership of shares.

The next planning tool which may be used in the business succession process is an estate freeze. An estate freeze is a term used to describe the capping of value of an asset in the hands of an individual. In the context of business succession we are most interested in an estate freeze involving shares of a private corporation. This strategy is particularly useful if the business is going to be transferred to an employee or family member where available cash may be at a premium. An estate freeze of shares involves the conversion of the growth shares into fixed value shares at the current value of the business. Immediately following this re-structuring, new growth shares may be issued to the ultimate “purchaser” for nominal value. The fixed value shares can then be bought out over time to complete the transfer of the business. An estate freeze involving shares can normally be completed on a tax deferred basis. Again however, there are complicated rules which must be navigated to ensure that there are no unintended tax consequences.

A leveraged buyout is another vehicle which may be used when cash is at a premium for the buyer. A leveraged buyout involves the use of future business profits to fund the acquisition of the business. This structure is often used to transition the business to

employees. In this scenario, careful

attention must be paid to the issues of

management transition and the consequences of non-payment.

Conclusion

Clearly, there are a lot of issues to consider. The moral of the business succession story is to get your head out of the sand, develop a road map and ensure that each stage along the road is properly documented. And by the way…. you should start yesterday!

So you’ve decided to start your own business – congratulations! It’s a huge leap from letting someone else take care of taxes, accounting, payroll, inventory, and/or a myriad of other activities necessary to run a business. However, running your own business has its advantages, too. You get to be your own boss, set your own hours and days to work, and are responsible for your own success. It can be a great way to free yourself from the tedium of 9-5 and work at doing what you love, but you have to begin by asking a few questions:

Are you doing what you love, or just doing something you’re good at? A desire to get away from the regular working world can be a good motivation to work for yourself, but you have to be excited to get up in the morning to do what it is you have chosen to do for a living.

What is it you are planning to do? What niche is it going to fill? Is there a need for what you can provide? Will the market bear another entry?

What technical skills or talents do you have? Just being able to do something may not be marketable enough to convince customers or financiers that you are a good financial investment.

Who are your competitors in your chosen profession and how are you going to do it better? Why should customers come to you? What do you have to offer that no one else does?

Once you are satisfied with the answers to these questions, it is time for the decision of what kind of business structure you will use. Will you be a sole proprietor, responsible for every facet and the penultimate authority as to how to run the business? Will you enter in with a partner, the better to share the cost and workload, but also the profits and the business decisions? Perhaps the decision will be made to incorporate, with its financial safeguards but more complex and costly structure? At this stage, legal advice is recommended, if only so that you fully understand the advantages and disadvantages of your chosen structuring plan. Many lawyers will provide a free or reduced-rate primary consultation, though often not more than an hour. When the structure is finalized, a name for the business should be decided upon, if not already having been done so in advance. It should be easy to remember, avoid initials and single letters (B & L & R, Inc. will be difficult to remember for customers) and try to say something about the business (Bob’s House of Hobbies is easier to remember and spell).

Next, a business plan is a vital step in laying out all these topics and proposals in a standardized format. A good business plan serves as a formal statement of the new company’s goals, financing, structure and legal considerations. It acts as a “resume” to prospective investors and is the primary documentation they will use to evaluate whether or not your business will be worth investing into. It also provides the proprietor(s) with a chance to see the workings of the new business in black and white. A basic business plan should at the least contain a balance sheet, income statement and statement of cash flow, as well as a proposed financial budget for the first year, or as long a period as necessary if a year is impractical.

So with these quick tips, plan for success, and good luck in your chosen endeavor!

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