Networking

Starting a Business in Virginia

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How To Start a Business in Virginia

The Commonwealth of Virginia is a great place to do business because it’s a fairly easy state to operate in with fair tax rates. Some states make it more difficult, a few may make it easier, but very few states offer the diverse demographics and geographical beauty, options and cultural diversity that Virginia does, making it an ideal grounds for clientele for any business. Whether you’re thinking of starting a new business in Virginia Beach, Richmond, Fairfax, Roanoke, Danville or Abington, it’s all basically the same. The following is a helpful list of things that you’ll need to do in order to succeed in your entrepreneurial endeavor.

1. Write a business plan.
2. Know your competition.
3. Develop a Marketing plan.
4. Identify what “kind” of business license you should have.
5. Come up with a budget.
6. Market your business.

1. Write a Business Plan

Why are you going into business? What will you sell? How will you sell it? What makes you different? Why are you special? How do you want to be seen in the marketplace? From whom will you get your supplies? What will you offer that will make people come back for more? What is your budget? (see budget below, later). Write out about a 3 pages business plan. Identify the basics and what’s important, but don’t get too in depth with it, spending weeks and months formulating it. The reason why you shouldn’t is because your business will naturally change and evolve every few months for about 3 years until it settles into what you will eventually become.

2. Know Your Competition

Who are your biggest competitors? Are you doing business locally or nationally? Regionally? Identify who the big cats are that are out there as well as some of the smaller players. Sometimes it’s the other small guys that are really the biggest poachers of your business to watch out for. What are they doing that you should and shouldn’t be doing? Know your enemy! But don’t think of competition as your enemy. Competition is what makes capitalism thrive. Competition drives us all. In fact, you’ll probably find that some of your competitors might actually send you a ton of business! Whether it’s the fact that they are so terrible at what they do that their customers come flocking to you because they’ve heard better things, or it’s that your competitor might not offer one of the things that you offer and vice versa, so you two end up referring business to each other. Both of those things happen to me on a regular basis and I’m grateful for it.

3. Develop a Marketing Plan

You’re going to need a name, a logo, a website, business cards, maybe shirts, promotional items and so on. But you’re going to need advertising too. Identifying a budget for advertising is usually very difficult for a start-up. You’ve just sunk all your money into getting the business going, now there’s not much to throw at advertising. The good news is there’s a secret. Networking. Get out there and meet people. Join your local chapter of BNI, or any referral group. You can even find a ton of local groups on Linkedin in your area such as Entrepreneurs of Southeast Virginia for example. Join associations and business-related clubs. This is a cost-effective way to meet people who will refer you business. You can also develop a program where you pay people for referrals if you want. Sometimes that works.

Set aside some money for a quality website, an SEO link-building campaign and the occasional media run. This is what’s important in the first year or two of your business. But plan it from the beginning. If you’re unsure of what types of marketing you should be doing for your type of business, call up a small business marketing consulting company such as Commonwealth Creative Marketing, located in Virginia. They’ll help you identify what you need to do.

4. What Kind of Business Should You Be?

You’ll need to identify and decide what type of business you want to be structured as. Should you be an LLC, an S-Corp, a proprietorship, Inc, etc? You should talk with an attorney that specializes in business law. Find one that you trust, or that a friend of yours recommends… They’ll know the pro’s and con’s and help steer you in the right direction. Usually they won’t even charge you to help give you some advice on this. What they want is for you to assign them to be the registered agent for your business, which essentially means that they would handle writing your operating agreement and handle the annual renewals to the Virginia State Corporations Commission. Usually this will cost most small businesses less than $300 per year and it is totally worth it. It’s worth it because your time is money and unless you were a business attorney in your prior life, you probably don’t know exactly how to word things and to whom they should be filed with the state and how. Having a solid business attorney as your registered agent is well worth it.

Types of Businesses

There are a lot of options for how you can structure your business, but most SMALL BUSINESSES IN VIRGINIA will opt to form as one of these three:

  • LLC (limited liability company) or; LLC-P (limited liability partnership)
  • S-Corp (small corporation)

The similarities:
LLCs and S corps have much in common:

    • • Limited liability protection. With both, owners are typically not personally responsible for business debts and liabilities.
    • • Separate entities. Both are separate legal entities created by a state filing.
    • • Pass-through taxation. Both are typically pass-through tax entities, and while S corps must file a business tax return, LLCs only file business tax returns if the LLC has more than one owner. With pass-through taxation, no income taxes are paid at the business level. Business profit or loss is passed-through to owners’ personal tax returns. Any necessary tax is reported and paid at the individual level.
    • • Ongoing state requirements. Both are subject to state-mandated formalities, such as filing annual reports and paying the necessary fees.

Differences in ownership and formalities:

Ownership. The IRS restricts S corporation ownership, but not that of limited liability companies. IRS restrictions include the following:

    • • LLCs can have an unlimited number of members; S corps can have no more than 100 shareholders (owners).
    • • Non-U.S. citizens/residents can be members of LLCs; S corps may not have non-U.S. citizens/residents as shareholders.
    • • S corporations cannot be owned by C corporations, other S corporations, LLCs, partnerships or many trusts. This is not the case for LLCs.
    • • LLCs are allowed to have subsidiaries without restriction.
      Ongoing formalities. S corporations face more extensive internal formalities. LLCs are recommended, but not required, to follow internal formalities.
    • • Required formalities for S corporations include: Adopting bylaws, issuing stock, holding initial and annual director and shareholder meetings, and keeping meeting minutes with corporate records.
    • • Recommended formalities for LLCs include: Adopting an operating agreement, issuing membership shares, holding and documenting annual member meetings (and manager meetings, if the LLC is manager-managed), and documenting all major company decisions.

Differences in management:

    • • Owners of an LLC can choose to have members (owners) or managers manage the LLC. When members manage an LLC, the LLC is much like a partnership. If run by managers, the LLC more closely resembles a corporation; members will not be involved in the daily business decisions.
    • • S corps have directors and officers. The board of directors oversees corporate affairs and handles major decisions but not daily operations. Instead, directors elect officers who manage daily business affairs.

Other differences:
Other differences between S corps and LLCs include:

    • • Existence. An S corporation’s existence is perpetual, but some states require LLCs to list a dissolution date in the formation documents. Certain events, such as death or withdrawal of a member, can cause the LLC to dissolve.
    • • Transferability of ownership. S corporation stock is freely transferable, as long as IRS ownership restrictions are met. LLC membership interest (ownership) typically is not freely transferable—approval from other members is often required.
    • • Self-employment taxes. S corporations may have preferable self-employment taxes compared to the LLC because the owner can be treated as an employee and paid a reasonable salary. FICA taxes are withheld and paid on that amount. Corporate earnings after payment of the salary may be able to be treated as unearned income that is not subject to self-employment taxes. For more information and whether this might apply to your particular situation, please contact your accountant or tax adviser.

Key Advice:

Partnerships with little to no employees:

If you’re a partnership that will not be immediately hiring a bunch of employees but rather paying subcontractors with 1099’s for the forseeable future, you should become a LLC, but elect to be taxed as an S-Corp. This is actually an option that you have. The key advantage to this is that you won’t have to pay any social security tax as a business. If you don’t have a payroll, you don’t need to be paying social security tax as a business. But you’ll still be set up as an LLC in this circumstance which best meets your needs as a partnership with no “actual” employees.


Partnerships with employees:

Become an LLC or an S-Corp. As an LLC, the owners are not considered employees. LLC’s do not pay income tax on earnings as a company. Instead, income is reported to the IRS and each owner or partner is given a From 1065-K which indicate your personal earnings for the year. This form 1065-K is what YOU pay your yearly income tax based on. So as an LLC you’re only responsible for paying taxes on what you earned as an individual whatever that amount may be. As an S-Corp, you have to file your business income taxes yearly.

Not a Partnership:

Become an LLC (not an LLC-P). This way you won’t have to file business taxes with the IRS. You will only have to report your earnings on your personal taxes in most instances. *Consult your CPA and/or business attorney as this is not guaranteed legal advice.

How Do I Pay My Virginia State Tax?

If you are selling tangible goods in the state of Virginia, you must pay the State a 5% tax rate on all items sold (as of 2/1/2013) to the state on a monthly basis. It’s as easy as signing up your business at http://www.tax.virginia.gov and paying by eform ST-9 with a secure online payment from your business bank account each month.
What is sales and use tax exempt in the Virginia? Anything such as website design, graphic design, consulting, advice, repairs, maintenance, and anything that is not a physical good. Physical goods such as business cards, batteries, tires, food, candles and any type of product is subject to 5% Virginia State Sales Tax.

5. What’s Your Budget?

What will your expenses be? What will each sale cost you? How much overhead do you have? What’s the hard cost of a product or service you offer before you sell it? This will determine your profit margins. If your margins are bad, you won’t be in business very long at all. When figuring out your profit margins, always consider the hard cost upfront, taxes and how this fits into your monthly expenses as well such as rent, bills, marketing etc. As long as there’s still some significant profit left over, you’ll be sitting well.

6. Marketing Your Business in Virginia

Marketing may easily be the single most important part of your business. Businesses who develop their branding from the beginning or their existence always tend to do better from a sales and marketing standpoint. Having a nice logo and branding is where it all starts. These days you can’t just think of a name for your business and go from there… You need to consider a few other things when coming up with a name. Is there a domain name available for this name? You probably want a .com domain and those hard to come by nowadays. You don’t want a website that has a neverendingongoingdomainnamewithtonsofwordslikethis.com. You want something that’s short and easy to remember and something that preferably has your name in it as well as what you offer. Think “Daniels Heating & Air” for example. That’s a good name because you can have the domain name www.danielsheatandair.com. But if all the good domains are taken you could be stuck with www.danielsheat-and-airconditioning.com which no one will remember, and radio ads are completely out of the question at that point. So go to www.1and1.com or any popular domain registrar’s website and start looking up domains that would be good for potential business names for your business. Think ahead. It will be worth it!

The next step is coming up with a great logo. You want something that fits your business that will be recognizeable to people. Your logo should contain colors that you like but not too many. You don’t want something too busy or with too much detail. You want a simple, clear, clean, sharp logo that will translate well to shirts, letterhead, signs, business cards, your website, Facebook, pens, you name it. Not just any design will do.

Once you have a logo designed, the rest can fall into place pretty easily. Get yourself some business cards printed from a local Virginia printer like Commonwealth Creative Marketing that does quality work for affordable rates.

No one uses the Yellow Pages anymore, so you’ll need a good website. Your competition already has a strong website with good SEO (search engine optimization), so you’ve immediately got some catching up to do on the web. Start thinking about what you want your site to say about you, what you want your customers to be able to see and do on your website. Plan it out with a web design company in Virginia like Commonwealth Creative Marketing. They can do great design work and build you a site that is makes you look outstanding on the web. Make sure you’re trusting a web designer that knows how to build a site with quality SEO practices. Otherwise you’ll end up with a nice site, but what good is it if no one can find it. Commonwealth Creative Marketing is your best bet for SEO website design in Virginia.

If you are an entrepreneur looking to start a business in Virginia and you have questions or just want to talk to someone who has done it themselves and works with new businesses everyday helping them, please give me a call anytime during the week. I’d love to offer any advice that I have and help you with marketing your new business.

-Marc Bethel,
Owner, Commonwealth Creative Marketing
(757)858-2020

Never Pitch To Them In The Bathroom & 5 Other Networking Tips

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Never Pitch To Them In The Bathroom & 5 Other Networking Tips

Note from Kim:  I do a great deal of networking and CCM gets many referrals that are based in relationships founded in networking.  I get questions about the “how” and “why” of networking all the time, so I thought I would let Early explain his viewpoint to you.   Enjoy!

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We all have to do it, some hate to do it but fewer people know how to do it! It’s call networking and for some, it is the ultimate ‘dirty word’. Why? We are usually intimidated when we walk into a room of strangers with a hand full of business cards. We don’t know who to talk to first, we don’t have any idea of what we want out of the experience and most importantly, we don’t know what the other person is after. It boils down to knowing your audience and knowing how you can deliver what they REALLY want. Realistically, everybody has a need that they want filled. Here are a few points to remember as you go to your next ‘Networking Event’.http://www.peevepile.com/images/1023-pp-bathroom-stal.jpg

(1) As a rule of thumb, keep conversations to a minimum in the bathroom:  I don’t know about you, but I am usually not in the mood to discuss a sale as I exit a stall. I’m more concerned with washing my hands and getting out. But time after time, I have been approached by an eager networker to get the jump on me. No thanks, let’s chat over the buffet.

(2) Do not start off too ‘Joe’: This is so offensive. When someone walks up and begins joking and talking as if you guys were high school buddies. The real purpose of networking is not to make best friends. It is to provide an introduction to another level of service and resources. So take it slow and respectful.

(3) You have no ability to communicate your own business: You know the question is coming; “What do you do?” but really what they are asking is; “Why should I care?” When you open your mouth be prepared to answer the latter FIRST! People care less about your mission statement or projections; they only care about what you can do for their business. Since you know this is coming…why not practice your answer before you get there?

(4) Do not become cannibalistic: We’ve seen them at all kinds of events. The ‘man eater’ that has a pocket full of everyone’s cards and will stalk them until they refuse their phone calls. Do not enter the event licking your lips like it is dinner time. People avoid people who seem too hype. So relax and enjoy meeting new business people.

(5) Asking for referrals for no reason: Just like the above point, people are usually in business for profit. It’s called (WIIFM) or “What’s in it for me?” So when you connect with a person, show them the true value of know you and then you can with bold confidence ask them to refer you to their friends and family. You have to develop credibility FIRST!

(6) Do not always be the friend in need and never in deed: This is the ultimate turn-off! People will begin to recognize your number on caller id and avoid you like you have leprosy! So do not put people in that position. Instead of calling to ask for things, try calling with an offer, a gift or even just to let them know you got a hot tip from an email they may benefit from. Your reputation will grow as dependable ‘barter’ and then your phone will start to ring.

Enjoy these tips and remember, “you can do bad all by yourself or you can connect to a dream team and created wealth.” The choice is yours.

See you at the TOP!

Early Jackson

Chief Empowerment Officer and Founder, New Direction Coaching Associates