Business and Small Business

Everyone today wants their business to reach its peak and stay there. But always there are problems in the business that you can’t solve on your own. Some things laymen won’t understand only masters from Yale or Harvard do. So in that case one would need to employee a CFO forthe business . This can be really an added expense as the salaries for CFO’s reach the skies. Small scales businesses can’t afford an MBA with 15 years of experience. An easy solution is CFO for hire.

The Chartered Financial Officer handles all aspects of a business related to finance. He not only takes care of the current business but implements strategies and policies to tackle every conditionthe business would meet in the future. The CFO in other words is the brain of the business. Every decision taken, is taken by him after due consideration on the pro’s and con’s. CFO for hire would give you the services of a CFO on an hourly basis or a weekly basis depending on your requirements. This way you cannot only get the services of a CFO you don’t have to pay as much as you would have to for it.

The reasons why you would need a CFO are far too many to count but to name a few you would require a CFO to predict the cycle your business to running in, analyzing and projecting your business and cash flow needs, telling you how much cash you should keep in hand and how much to invest and where, work aggressively to reduce cost expense and sorting out for tax and other issue’s. They would review the financial statements and check what actions need to be taken, help in the process of hiring and firing employees. They would closely monitorthe business and make recommendations to improve it. The models used in financial planning are often so complex that no one except the experts understand them, CFO’s use them forthe business giving it the professional touch you business would lack.

The small and medium scale enterprises are normally working on very tight margins and to employ a CFO would ruin them. CFO for Hire would be an option where they can avail professional counseling and that too with very little expense.

Caution must be maintained however on whom you hire since you don’t want anyone but the best for your business. You should conduct rounds of interviews, get necessary reference checks, conduct pre employment checks and then hire the suitable candidate. The tests range from ability tests, behavior tests, character tests to productivity tests.

There are plenty of agencies that offer the services of CFO for hire and help you make the right decision for your business needs.

Talking about your “business structure” means, essentially, what legal organization your enterprise is going to take. There are three general types, and details about what constitutes what may change from state to state, but in the main you will choose to be a sole proprietorship, a partnership or some form of corporation. There are pros and cons to each, which we shall investigate.

Kind of businesses

When starting a small business one must decide if they wish to incorporate, set up shop with a partner (or a few) or do business as a sole proprietor. Some of the advantages of sole ownership are that the accounting is simpler, there are fewer filing requirements, there are no corporate taxes and you answer only to yourself in terms of management authority. These are compelling advantages, and this structure works for many “professional service” businesses (architect, writer, insurance agent, etc.).

However, the disadvantages of sole ownership are serious and can affect your ability to grow in the future. You will find that it is often harder to raise capital, and financing can be difficult to obtain from banks. Also, as to sole ownership, you are liable for all debts incurred by the business and if sued you could lose your home and any other assets, whether or not they are legally “tied” to the business.

Partnership structures

Partnerships, often called “general partnerships,” add a few dimensions to the proprietor structure. Of major importance is that you can spread the liability among the partners, therefore dampening the blow of losses, lost lawsuits and/or dissolution ofthe business. The partnership structure also enables you to bring in additional expertise to the business, and can give you flexibility in remuneration for the partners.

Partnerships, since they are formed by individuals, are taxed in the same manner as sole proprietorships. This means that each partner adds his or her business income to a personal income tax return. Of course, each partner can also deduct business losses (pro rated). Depending on your tax planning and business strategy, this can be either good or bad for your goals. However, there are some disadvantages to a partnership, such as differing visions forthe business, an unequal commitment in time or resources and the fact that each partner may be liable for the decisions, debts and actions of other partners.

There will certainly be disagreements over management style, growth plans, operations and future goals for the business. You must learn to deal with these without souring a working relationship. You may or may not do well going into business with family. Finally, you may encounter difficulty in attracting investors, since a partnership is much closer to being a proprietorship than a corporation.

The corporate option

If our fictional partners in the foregoing example decide to incorporate, they won’t have fewer people to answer to, but more. They will have shareholders or investors inthe business , people who will help them get started but may also be there second-guessing from the sidelines. These individuals will provide the capital necessary to get the ball rolling, but if this is your situation, you must consider what ongoing role they will play.

With corporations the burden of any liability is not solely resting on the shoulders of one person as with a sole proprietorship, or even several, as with a partnership. You can limit your liability in other ways than incorporating, although that is a major benefit. In fact, there is one business structure called a Limited Liability Corporation, a partnership with the additional feature of corporate-style limited liability.

The IRS also recognizes what is called a “Subchapter S” corporation (or “S Corporation”), available as a structure for most companies with 75 or fewer shareholders. This form of organization allows the company some of the corporate benefits, particularly limited liability and financing options, while taxing it as a partnership.

A regular corporation, of course, is the ultimate form of legal organization for business today. However, it does take some expertise to set up and run, and is not appropriate for everyone. If you do not know how your own business would fare under another structure, you should speak with a knowledgeable business consultant, financial planner and/or attorney. It is not a decision you should make on a snap basis.

Bottom line

Whichever legal structure you decide on is almost at the level of a moot point if there is no business plan – and you can’t develop a plan unless you know what it is you are going to market, where and what your target market is, what your costs are and so forth. Do the research. You may have a great idea but if no one is interested in using your product then you have no business.

The final step before deciding on a legal structure is doing a business plan that extends out at least five years. You have to consider where you may be down the line, and be prepared to make quick moves in the future depending on changing market conditions and other factors. In today’s volatile economy, you must be more vigilant than ever, and no business decision is a simple or easy one anymore. Get some good advice from people and institutions you trust.

Finally, be prepared to ask yourself some hard questions before embarking upon a new enterprise or taking your existing one to the next level. If you cannot be brutally honest with yourself about your product, marketing, sales efforts and the rest, then you will doom yourself from the start. Be honest, be careful, be wise and always – always – have contingency plans ready for those “what if” moments that just might come true. We are seeing a lot of that these days!