EXPERT advice needed

[old grunt]

Will be making a career change on or about 1 Jan that will require me to form an LLC(mostly for liability purposes)and was wondering are there any programs that allow me to access money through the VA for this purpose? I'm currently sitting on Post 9/11 educational funds thanks to my Iraq deployment...BUT I have two degrees and NOT looking to do traditional courses and the like. I really need no more than $3000 to get the business up and running and would rather NOT dip into savings or retirement monies if I don't have to. Any advice would be great. THANKS!

[zanshin]

First, I'm no expert.

Depending on your state laws, simply filing the paperwork and forming the LLC doesn't cost much. On the advice of an attorney, I went the way of Incorporation (as an S Corp) for even more liability protection and for a lot of advantages for being able to set up benefits plans that are tax-exempt), but in retrospect, the hassle of IRS paperwork every quarter at my income level has not made that to my advantage. Plus there's just more paperwork all the way around. You probably know that, and is why you chose LLC.

To my knowledge, there is no small-business funding services through the VA. You might consider setting the business up in your wife's name as there is often better funding available through the Small Business Administration for woman and minority owned businesses.

If you think about it, $3K is not a lot of funding to sweat, and if taken from your retirement/savings and subsequently lost, will likely only make a difference of a month or two of funds total difference when you're eligible to start drawing it, or over time, a few dollars a month. Right now, I can save $10 a month by not driving the truck for 50 miles... And if you're relatively successful, just be sure to pay yourself back out of the profits.

One thng for sure: there is a big difference between an accountant/bookkeeper/tax preparer and an accountant/tax ADVISOR. I heartily recommend the cost of the latter as making a huge difference in your business P&L.

BTW, I kow they're not popular with people right now, but if your business is gonna be kept small by design -- between 1 and 20 employees on payroll -- I recommend you check out Bank of America's payroll services. I have it, and what it does saves me ungodly amounts of money over paying for a QuickBooks or bookkeeper scenario. It means I have to have a business account that I depost money from clients and pay things out of, and I have a personal account to pay myself by online transfer (you can use check-to-account transfer for up to 20 employees for free if they have BOA accounts). It creates an astonishing array of records and reports, automatically prepares my monthy, quarterly, and annual tax forms and reports for state and Federal requirements based on payroll done through it, and keeps records I can go back to. The only thing I have to do is keep a balance sheet, which is a simple Excel spreadsheet of income and expenses. Cost for me is about $15/month, and I do everything via internet from anywhere I am.

[Jeff82]

Check for a local Small Business Council or some such that gives startup seminars. They usually cover ways/places to get funding. Mine had reps come in from different places and they gave their little shpeil.

[abnbull]

I would highly recommend checking with the SBA. Lots of good information for anyone starting a small business.

http://www.sba.gov/

Chamber of Commerce may also have some helpful information. I would also look in your area for any non-goverment small business centers or associations.

[recondo82]

As far as loans, look at the Patriot Express Loan. It is a very fast turnaround as far as whether or not you qualify, but unfortunately still requires the same qualification criteria as any other SBA loan. Because you have to go through private lenders to get these loans, they aren't easy to get these days. Back in 2010, the Obama administration changed the guarantee rate from 75% to 90 percent and banks were giving out SBA loans like crazy. Now that the guarantee rate has dropped back to 75%, banks are back to requiring collateral, a very detailed business plan, and that the business owner front 30% of the start-up costs. It's still worth looking into, but be aware that lenders are very tight with SBA loans in the current market.

As far as LLC versus C corp, it depends on how many employees you have. If you run a sole proprietorship, I would definitely go with the LLC, because your personal assets will be protected from creditors of the LLC while making your taxes much easier to file. If you are going to incorporate, I would strongly advise getting both an attorney and a CPA to help you through the incorporation process and your tax filings.

One other thing I would suggest is to check out and join the National Veteran Owned Business Association (NaVOBA). Joining will get your business listed with them and get you into a national network of veteran business owners. In addition, they have a lot of useful articles about starting up and expanding your business.

[david1833]

If that's all the money you need set up your LLC and then borrow the money from your self and let the LLC pay it back with interest.

[old grunt]

Thanks guys...ALL sound advice. The 3K is NOT a problem, just always felt Trump said it best(paraphrasing):"never spend your own money when you can spend somebody else's". The LLC will be the way I go, as I will be the only employee for the foreseeable future and I'll check out both the SBA and the NaVOBA. Much appreciated troops!!

[Tunanut]

SBA loans are a pain in the ass. Three times the paperwork of a home mortgage, twice the collateral, and you'll be required to carry a separate life ins. policy naming the SBA beneficiary to cover the loan if you die before it's paid back. At least that's what I went through in 2009. If I had to do it over again, I'd find a different route. The legal doc fees are outrageous because of all the bureaucracy involved. $4800 in legal fees for a $40,000 loan. Our government considers it job creation for the lawyers and insurance companies.