Small business owners typically know a lot about the operation of their business, but frequently struggle with managing the financial part of the business. Even though they use an accoutant, a bookkeeper or financial software, their lack of financial skills are a continuing obstacle to growth and sound decision making. In this course Small Business Owners will learn to collect, organize and use their financial information to make better decisions. Understanding the numbers and their complete impact on cash flow, profitability and company value will give you a whole new perspective on running and growing your business.

1. Sigma Free
Presents…
What’s the Best Entity?
Solve the Mystery of Legal Organization
Provided by Sigma College of Small Business, Inc.

2. Agenda
Introductions
Keynote Topic
What’s the Best Entity
Solve the Mystery of Legal Organization
Break – Refreshments and Networking
Ask
Questions Keynote Conclusion
Any Time What’s the Best Entity
Solve the Mystery of Legal Organization
What's the Best Entity? Solve the Mystery of Legal Organization 2
Copyright 2010, Sigma College of Small Business, Inc.

3. Business Strategy
Marketing Tactics
Implementation
Entity Structure
Five Pillars
Value Model
Exit Strategy
– Organization
of a – Perspective
– Approach
– Incentive
– Actions
Business
Strategy
What's the Best Entity? Solve the Mystery of Legal Organization 3
Copyright 2010, Sigma College of Small Business, Inc.

4. Sole Proprietor
Partnership
Limited Legal Organization
Partnerships
Limited Liability Legal organization is an important decision made to support
Company S‐ your personal and business goals
Corporation
C‐Corporation • Considerations
Sole Proprietor
Partnership
– Liability – accident and financial
Limited – Taxes – Income, payroll, estate
Partnerships – Investment , ownership transfer and
Limited Liability
Company S‐ management
Corporation • Types of Organization
C‐Corporation
Sole Proprietor – Sole Proprietor and Partnership
Partnership – “C” Corporation and “S” Corporation
Limited
Partnerships – Limited Liability Company
Limited Liability
What's the Best Entity? Solve the Mystery of Legal Organization
Company Copyright 2010, Sigma College of Small Business, Inc.
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5. Terminology
• Business Liability – company assets that are at risk
Liability
• Personal Liability – personal assets that are at risk
• Limited Liability –personal liability is limited for some
reason
• Personal Tax Rate – incremental tax rate on personal return
• Business Tax Rate – incremental tax rate on business return
Taxes
• Payroll Taxes – Social security and Medicare taxes
• Pass Through – Business profit taxed on personal taxes
• Active Investment – investor actively involved in
Ownership
management
• Passive Investment – investor not involved in management
What's the Best Entity? Solve the Mystery of Legal Organization
Copyright 2010, Sigma College of Small Business, Inc.
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6. Liability
The English Flyer The English Rose
Master John Fowles Sir Richard Starkley
• General Partnership • Corporation
• £250 for 10% • £250 for 10%
“ownership” “ownership”
• Unlimited joint and • Limited to £250 liability
several liability
• Each investor personally • Each investor’s liability
liable for all debts and limited only to the £250
obligations put into corporation
“Own Your Own Corporation”, Garrett Sutton, Esq.,
What's the Best Entity? Solve the Mystery of Legal Organization 6
Copyright 2010, Sigma College of Small Business, Inc.

7. Legal Organization
TAXES
7
What's the Best Entity? Solve the Mystery of Legal
Copyright 2010, Sigma College of Small Business, Inc.

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Copyright 2010, Sigma College of Small Business, Inc.

9. What's the Best Entity? Solve the Mystery of Legal Organization 9
Copyright 2010, Sigma College of Small Business, Inc.

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Copyright 2010, Sigma College of Small Business, Inc.

11. Entity Flexibility
Millennium Salsa
Thelma Hans Pepe
• Investing • Investing • Investing
– 2 Years low wages – Salsa Recipe – $200,000
– Management skill – Offer to help
• Wants • Wants • Wants
– 1/3 of business
– 1/3 of business – 1/3 of business
– Use of losses
– Job – Job
– First $300k
of profit
• Corporation requires stock ownership, equitable pass through of profit and loss
• LLC Flexibility allows financial and management desires to be met
From “Own Your Own Corporation”, Garrett Sutton, Esq.,
What's the Best Entity? Solve the Mystery of Legal Organization 11
Copyright 2010, Sigma College of Small Business, Inc.

12. Investment, Transfer and Management
Jim Aaron ‐ 17
From “Own Your Own Corporation”
• Interests ‐ Garrett Sutton, Esq.,
– Girls
Chris ‐ 15
• Interests
– Rock &
Bob ‐ 16 Roll
• Interests
– Sports
• Legal Entities can help with transfers of assets
• Management Control
• Financial
What's the Best Entity? Solve the Mystery of Legal Organization 12
Copyright 2010, Sigma College of Small Business, Inc.

13. “I’m Going to Start a Business”
Legal Organization Example
Generate Income for Myself Build Business for Growth
• S‐Corp or LLC • C‐Corp
– Liability Protection – Liability Protection
– Cash can pass through – Cash kept in company for
without double taxing growth taxed at corporate
– Losses pass through rate – 15% for <$50k
• May be a draw for some • Personal Service Corp – 35%
investors – Dividends taxed to
– LLC provides more flexible shareholders
management and ownership – Benefits to salaried
options shareholders not part of
– No “corporate” or foreign salary
investors for S‐Corp – Corporate Investors
What's the Best Entity? Solve the Mystery of Legal 13
Organization
Copyright 2010, Sigma College of Small Business, Inc.

14. Legal Organization
General Strategies
• LLCs and S‐Corps
– Minimum salary with higher distributions
• Reduce the payroll taxes
– Strategy for:
• Max cash out of business
• Pass through losses
• C‐Corp
– Higher salary, low distribuitons, high benefits
• Only double taxed on distributions
– Strategy for:
• Retaining cash for growth
• High value exit strategies (IPO or sale to public company)
• For Personal Service Corporation – Zero Profit!
• Limited Partnership
– Allow gifting and investment while maintaining control
– Manage liability through a corporate general partner
What's the Best Entity? Solve the Mystery of Legal Organization 14
Copyright 2010, Sigma College of Small Business, Inc.

15. Sigma College of Small Business
• Focus Workshops Critical Business
– Leveraging the Online Social Network Areas
• Tuesday, July 13th, 2010 Strategy and Planning
• 10am –2pm, $199 Marketing and Sales
• Upcoming SigmaFree Classes Accounting and
Finance
– 6/15 – What’s Your Business? The Art of an
“Elevator” Pitch Operations and
Quality
– 6/22 – Setting the Course! Build Your
Leadership and
Business Strategy
Administration
– 6/29 – Big Spending Decisions! Use More
Technology and
that a Gut Feel Innovation
Dedicated to the Learning Needs of Small Business!
What's the Best Entity? Solve the Mystery of Legal Organization
Copyright 2010, Sigma College of Small Business, Inc.
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