Hi, I am Robert Naini, your Spray Foam Advisor, and “The Guy in the Hawaiian Shirt”.
I wear the Hawaiian Shirt as a symbol of freedom and flexibility, something that all business owners should want.
And one of my goals is to help 100 Spray Foam business owners set up their business in a way that gets them freedom and flexibility.
This includes providing spray foam training, education, tips & tricks, business fundamentals and coaching or consulting services.
In this video, I want to talk about the different types of business entities and how that might affect you and your organization.
First, for legal reasons, I need to put a disclaimer here – I am not a CPA, certified accountant or lawyer; I am simply sharing my opinions and the knowledge I have from my experience with my own business.
Now, let’s get started.
There are several different business entities you should be aware of – sole proprietor, partnership, limited liability company, or LLC, S Corporation, or S Corp, and C Corporation, or C Corp.
A sole proprietor refers to a business owned by one person. Whereas a partnership refers to a business with multiple owners or partners. These multiple owners may have an equal partnership, or they can have varying levels of ownership. When it comes to partnerships, make sure you have a written and clearly defined partnership agreement, this will include documented percentages of ownership for each partner, a good business lawyer should be able to help you prepare this document.
A sole proprietorship or a partnership are typically created by just saying that you are in business and filing paperwork in the local offices. All you have to do is say “I am going to be in business under ABC Spray Foam” and, as long as no other business by that name exists in your local area, you can start operating. You will have to go down to the county court office and file paperwork to register your business name, typically you file an Assumed Name form, also called a DBA form, or “Doing Business As” form, to register the name and establish that you are going to operate under that name.
I would file the paperwork establishing that I, Robert Naini, am going to operate a business called ABC Spray Foam, and that I am “doing business as” ABC Spray Foam. This allows me to advertise this name, use it in public transactions, open a bank account, etc.
In this DBA processes you have to verify that there is not another company in the local area or in the operating region with the same name, to avoid duplicate business names and minimize market confusion.
Now, depending on your state and local requirements, you may be able operate under your own name without filing any paperwork. My business could be Robert Naini Services or Robert Naini Spray Foam and in most jurisdictions I would not have to file any special paperwork.
The purpose of an assumed name or a DBA is to document and identify who you are representing yourself as and what company name you represent in the local market, so if I decide to operate as Robert Naini Handyman, then I probably won’t need a DBA, although it wouldn’t hurt to file the paperwork.
Whether you are a solo entrepreneur running the business yourself, or you are operating a partnership with others, you should file a DBA unless you are going to operate under your own personal name.
After sole proprietor and partnerships, we get into incorporated businesses, the process of creating a business entity separate from yourself for operation – this includes LLCs, S Corps and C Corps.
The corporate documents created in establishing the incorporated business are sufficient for operation and you will not typically need to file a DBA, unless you want to operate the business under a name different than what is in the corporation papers.
Now, the biggest differences between sole proprietorship or partnership and LLC, S Corp or C Corp are liability and taxation.
The details and intricacies related to liability and taxes are the primary reasons that you should consult a lawyer and/or tax advisor when considering the most beneficial entity for your business.
Over the next few weeks, I am going to talk about the tax and liability implications associated with each of the business entities we have discussed – sole proprietorship, partnership, LLC, S Corp and C Corp. If these topics are of interest to you, make sure you review the next couple of videos and go talk to a tax advisor and legal advisor to identify the best entity type for your business and the amount of risk that you deal with daily.
If you found this video helpful then it would probably be valuable to your friends in the spray foam industry, so help us all out and send it to three or four people that you know.
Additionally, if you have any questions, want info on a specific topic, or want to learn how Spray Foam Advisor might be able to help you or your business, you can email us at [email protected].
This is Robert Naini, your Spray Foam Advisor, and “The Guy in the Hawaiian Shirt”, thanks for checking this out and catch me on some more videos.
