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          IN THIS ISSUE

        1.     Welcome and Update from Elena
        2.     Home-Based Business Idea of the Week - Local Tour
        3.     Feature Article - Incorporating You
        4.     Surveys and Trends
        5.     Success Quotes of the Week

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        1.     Welcome and Update from Elena

        Hello again and a warm welcome to all the new subscribers
        who have joined us since the last issue.

        This week's article concerns a serious topic, relevant to
        virtually anyone running a home-based or online business
        -- how to protect yourself from personal liability by
        forming a corporation.  Too many people don't realize
        that their pleasant little hobby-business has the potential
        to cost them everything they own.  If you haven't
        got around to thinking about the legal structure of your
        business yet, this week's article is essential reading.

        As always, thanks for reading and I hope you enjoy this
        week's issue.

        Remember, AHBBO is for YOU!  If you have comments or
        suggestions for topics you would like to see addressed, or
        would just like to share your experiences with other
        subscribers, I want to hear from you.  Please send
        comments, questions and stories to Contact By Email .



        2.     Home-Based Business Idea of the Week - Local Tour

        Do you live in a city or town that attracts large numbers of
        tourists? If so, and you enjoy meeting new people, have you
        considered setting up shop as a personal tour guide?

        To start, you obviously need to have an intimate knowledge
        of the places of interest in your area as well as some
        knowledge of its history. Some cities or towns will lend
        themselves well to a walking tour of the city center while
        others will require some form of motorized transportation to
        ferry your guests to the various points of interest.

        Be prepared to recommend particular restaurants, hotels,
        theatres and the like. Your guests will see you as an authority
        on the area and will be likely to ask for your recommendations.

        To generate custom for your tour guide service, target visitor
        information bureaus in your area as well as relocation
        consultants. If you are aware of any major businesses in your
        area who frequently entertain overseas business colleagues,
        approach them with an outline of your services. Often,
        overseas businesspeople travel with their partners and your
        service would be a welcome complement to their itineraries.

        Also target convention organizers. Quite often, partners of
        convention delegates would prefer to spend their time
        sightseeing rather than hanging around the convention or the
        hotel pool.

        Design and have a brochure printed and leave copies in places
        you think people looking for tour guides will frequent including
        tourist information centers and hotels. Leave your brochures
        with the concierge.


        There are many more ideas like this at the AHBBO Home Business
        Ideas page at free home based business ideas with more being
        added regularly.


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        3.     Feature Article:  Incorporating You

        © 2017 Elena Fawkner

        Running a business involves risk - the risk that the business
        may either succeed brilliantly or fail miserably.  Or neither. 
        The upside is high -- financial and (perhaps) time freedom;
        independence; unlimited earning capacity.  The downside
        is equally steep, just in the wrong direction -- potential
        financial ruin if you've staked everything you own on your
        business's ultimate success and thrown your career down
        the proverbial to boot.  If you're running your business as
        a sole proprietorship or a general partnership, make no
        mistake -- everything you own is on the line.

        There's a lot that can go right and wrong in a business.  A
        lot of it out of your control.  But the extent of your personal
        financial liability for what goes wrong is one thing you can
        and should control.

        The answer is to form an entity separate from yourself to run
        the business. 


        As you probably already know, you have several choices
        when it comes to your business entity.  The most basic is a
        sole proprietorship, followed by a partnership (general or
        limited), a limited liability company ("LLC") and a corporation
        (either a general "C" corporation or an "S" corporation - more
        about these later).

        Although sole proprietorships and general partnerships are
        relatively straightforward and inexpensive business entities
        to establish and maintain, hence their popularity, neither
        of them protects you from personal liability. 

        If you're a sole proprietor, you've probably made this election
        by default - by doing nothing other than starting a part-time
        Internet business out of your spare bedroom, most likely.

        A limited partnership will protect the limited partners from
        personal liability beyond the extent of their capital
        contribution to the partnership, but limited partners cannot
        participate in the management and control of the business
        so that's not a good option for most of you reading this
        article.  Needing to control and manage your own business
        is most likely non-negotiable.

        As an attorney, I generally recommend that small business
        owners, including (especially!) home-based and Internet
        entrepreneurs, incorporate at least as soon as they are
        generating sufficient profits from the business that the
        amount of tax payable on such profits equals or exceeds the
        minimum franchise tax payable in the state in which the
        business is being conducted.  In California, for example,
        one of the most onerous states in the U.S. when it comes to
        taxes, the annual minimum franchise tax is $800 per year. 
        Therefore, as soon as you're generating profits the tax
        on which is $800 or more in a year, there is no tax
        disadvantage to incorporation and every advantage.


        Quite simply, when you form a corporation (or an LLC),
        you're forming a separate legal entity.  This separate legal
        entity has the power to enter into contracts, own and
        dispose of assets, hire and fire employees and generally do
        anything that a sole proprietor could do.  The difference
        between the corporation and the sole proprietorship, however,
        is that only the corporation's assets are at risk, not the
        owner/shareholder's (beyond the shareholder's contribution
        to share capital, that is).

        Let's take an example.  You run a part-time Internet
        business.  You're still working a day job and this is really
        just a way to make a little money on the side to save
        for your annual Hawaiian vacation and even more expensive
        spa stay for your dog while you're away.  To you, this is
        only a pocket-money venture and so you don't really think
        of it as a business at all, really.  So you don't give a
        second's thought to the fact that you're running a business
        as a sole proprietor.

        You register a domain name that, unbeknown to you,
        violates a Macrohard trademark.  You create a website
        for that domain and, lo and behold, overnight (of course,
        because this is the Internet) your business becomes
        successful beyond your wildest dreams due, in no small
        part, to site visitors mistakenly believing they are doing
        business with Microsoft's arch-rival. 

        Macrohard, meanwhile, sees all of this and figures your
        gain is its loss and sues you for an account of profits
        based on your misuse of its trademark.  And wins.  It
        gets a judgment for $100,000.  Then it executes on its
        judgment.  And you lose your house, your savings and
        your business.

        Now let's look at a slightly different scenario.  You're
        fortunate enough to have read this article before you
        established your business and formed an S-corporation,
        Hawaii Here We Come, Inc.  The only asset of HHWC, Inc.
        is the domain name and website.  So, when MarcoHard
        gets its judgment against HHWC, Inc., the only asset
        it can touch is the domain name and website.  That's
        bad enough, of course, but you did, after all, violate
        their trademark.  But get this.  Because they're in your
        name, not HHWC, Inc.'s, you still have your house
        and your savings.


        Merely incorporating is not enough to avoid personal
        liability, however.  As a director and shareholder, you
        must run your corporation or company (if an LLC) as
        a separate legal entity, NOT your alter ego!  This
        means you can't just siphon off cash from the
        corporation's bank account to pay your house mortgage.

        Do that, and the court will "pierce the corporate veil"
        in a heartbeat, thereby exposing you to full personal
        liability on the grounds that the corporate structure is
        nothing but a sham designed to unfairly protect you from
        personal liability.

        It is also particularly important that you follow all
        corporate formalities such as those set out in the by-laws,
        passing board and/or shareholder resolutions for major
        decisions and holding annual meetings of the shareholder(s)
        to elect the directors and directors' meetings to elect
        the officers.

        Also, don't think the "corporate veil" will protect you
        from criminal acts such as filing a false income tax
        return, because it won't. 


        You are paid by the corporation as an owner/shareholder
        in the form of dividends and/or as an employee in the form
        of a salary.


        While both corporations and LLCs limit your personal liability,
        there are differences between states when it comes to
        how other states' LLCs are treated in this regard.  By
        contrast, corporations are treated uniformly when it comes
        to personal liability.  Especially if you're operating an
        Internet-based business where you can be transacting
        with people from pretty much anywhere, for the greatest
        certainty concerning your personal liability, a corporation
        is preferable to an LLC.

        One of the advantages of an LLC as a business entity is that
        the profits and losses of the LLC "flow through" to the
        personal income tax return of the members.  However, if you
        make a "subchapter S" election when forming the corporation
        (thereby forming an S-corporation), you can achieve the
        same result. 


        Although the S-corporation's profits and losses flow through
        to the shareholders (rather than the S-corporation being
        taxed as a separate entity as in the case of a C-corporation),
        S-corporations are limited to 75 shareholders and, generally,
        those shareholders must be U.S. citizens or resident aliens. 

        You would therefore not be able to have foreign shareholders
        with an S-corporation (but you can with a C-corp), which may
        be an issue, particularly for Internet-based businesses with
        shareholders from various countries. 

        Also, you cannot have multiple classes of shares with an S-
        corporation so this will not work if you want to issue preferred
        shares, for example.  You'd need to form a C-corporation


        Forming a corporation is a relatively straightforward matter
        (at least for an attorney) and shouldn't cost you more than a
        few hundred dollars depending on the complexity of the
        corporate structure.  Most attorneys would charge between
        $500 and $1,000 for a straight C or S-corporation.

        At its simplest, a corporation can have a single director and
        shareholder with that same individual holding each of the
        three required offices (president, secretary and treasurer).
        (If a corporation has three or more shareholders it must have
        a minimum of three directors but if it has fewer than three
        shareholders, it may have the same number of directors.)

        Your attorney will prepare and file articles of incorporation
        with your State's Secretary of State, and then prepare
        by-laws and organizational minutes.  You'll need a Federal
        Employer Identification Number (SS-4) from the IRS and,
        if you have more than one shareholder, a buy-sell agreement
        to ensure that the shares do not pass to shareholders
        unacceptable to the other shareholders. 

        Your attorney will also attend to annual filings with the
        state (a statement of officers and directors is usually required
        to be filed every one or two years) and make sure you stay in
        compliance with state corporate requirements (such as annual
        minutes etc.).

        Taking the time and trouble to think about the legal
        structure of your business may seem like overkill when
        all you're doing is running a fun little business out of your
        spare bedroom in your spare time.  But fun little businesses
        have a way of becoming very unfunny major headaches
        when things go wrong.  No matter how small or fledgling
        your business is, do yourself and your family a big favor
        and at least think about incorporating.  What may seem
        like a pleasant past-time today could be anything but



        Elena Fawkner is an attorney and editor of A Home-Based
        Business Online ... practical business ideas, opportunities
        entrepreneur.  She
        offers discounted, fixed-rate legal services to her ezine
        subscribers and site visitors within the United States.
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        4.     Surveys and Trends

        © 2017 Ryanna's Hope


        Advertising Time Line ...

        1892 - The Ladies Home Journal announces it will no longer
        accept patent medicine advertising.


        Age plays a key role in whether people use ?or don't use ?
        the Net. The Pew study found that the older a person, the
        less likely he is to use the Internet. While only 35 percent of
        adults age 18 to 29 are not online, 83 percent of those over
        age 60 don't use the Net.


        Advertising Time Line...

        1890s - Advertising manuals increasingly recommend the use
        of post cards as a low cost means of direct communication
        with consumers.

        1892 - Sears, Roebuck & Co. mails out 8,000 post cards with
        imitation handwriting across the country. 2,000 orders are
        received directly from this promotional campaign.


        How Teenagers Are Influenced by Advertising

        1. Give-aways offering such things as CD's or posters of
        popular bands 50.1%
        2. Use of brand names 49.2%
        3. Use of popular musical groups that appeal to teens 37.6%
        4. Use of upbeat lyrics in a commercial's music 34.8%
        5. Promotional events offering reduced prices 32.4%
        (American Research)


        Advertising Time Line ...

        1891 - Nathan Fowler, in Advertising Age, recommends that
        because women make most of the purchasing decisions of
        their household, manufacturers would do well to direct their
        advertising messages to them.


        Top Advertising Turnoffs

        1. The ad contains vulgar language.
        2. The fine print is too small to read.
        3. The ad sells "sex" instead of the product.
        4. No prices are shown.
        5. Ad presentation is jumbled and hard to understand.
        6. Discounts are not believable (70 percent range and up).
        7. The ad does not include a customer satisfaction
        (America Research)


        Ernst And Young Tell You What Customers Want More Of
        In Their Internet Shopping:

        Lower shipping costs 63%
        Lower/more competitive pricing 61%
        Easier to find Internet site 22%
        More choices/selections 21%
        Guarantee of credit card security 20%
        More information about products 16%
        Faster shipping 16%
        Toll-free telephone support 14%


        Where Will Americans See Your Ads?

        By 2004, Americans will spend more hours each year playing
        video games (161 hours) and using the Internet (228 hours)
        than they spend reading daily newspapers (147 hours), books
        (92 hours), and magazines (77 hours).



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        5.     Success Quotes of the Week

        "Success usually comes to those who are too busy to be
        looking for it."
          -- Henry David Thoreau

        "Prosperity is only an instrument to be used, not a deity to
        be worshipped."
          -- Calvin Coolidge

        "Genius begins great works; labor alone finishes them."
          -- Joseph Joubert



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        9.     Contact Information

        Elena Fawkner, Editor
        A Home-Based Business Online
        Contact By Email
        Ahbbo Work from Home Business Online


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