Welcome to ‘Basic Training’

Posted on December 18, 2018 in Business Essentials

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Basic Training for EntrepreneursAtten-SHUN! Welcome to “Basic Training,” a new spin on legal issues that I’m introducing. We all know that entrepreneurship is not a smooth ride. There’s no magic bullet, no “instant formula” to which you can just add water and–POOF!–find you have a fully grown and functioning company.

Entrepreneurs ask me legal (and quite a few non-legal) questions constantly. Some legitimately don’t know what to do first. Or they need guidance to help them focus. However, others may be looking for the easy way out and for someone to do their homework for them. That is not the route to a strong business. (Once–only once–in college, I wrote a paper on Asian philosophy for a boyfriend. Never again. Best grade he ever got.)

The Q&As you’ll see in this column share one important thing in common: a need to get back to basics. Ergo, ‘Basic Training.’ I can’t do the legwork your business needs to get off the ground. No advisor can. You’re the one who needs to have the passion and the drive to make it work. You’ll find a little more “tough love” in this column than in my others, but sometimes that’s just what’s needed to get back on track. Like rebooting the computer. Or hitting the reset button. Even if you have to go back to square one, your business will be on surer footing with a solid foundation.
Besides, we can all learn from the issues and questions that other business owners raise.

So grab yer gear, and let’s get started with three choice morsels.

Q: I wish to open a business about helping people, kinda like a shrink but not one. I consider myself to be like a muse and I am wondering what kind of credentials I have to have legally to operate this type of business. Do I have to go to school for something or not? I live in Florida. I actually want to help people. I have been to shrinks when I was younger and it was all about money, not about helping someone.

A: You need to give more careful thought to exactly how you want to help people and with which kinds of issues. “Shrinks” are licensed professionals, so yes, you’d have to go to school for that and pass your licensing exams. However, “coaches,” who sometimes perform a muse-like function, are not specifically licensed, although training courses are advisable. Once you have a clearer idea of what you want to do, you can start to build a business around it.

Q: I am seeking donors to help start my business, but I do not want to have loans or sell shares. If I receive money, will it be considered a personal gift to me and not the company if I do not repay it back? How is this treated for tax purposes?
A: Usually, a wanna-be business owner has to offer debt or equity for the privilege of receiving OPM (other people’s money). If you can find a generous donor, more power to you. However, there could be some serious tax ramifications, depending on who’s doing the donating. You’ll have income tax to contend with, and your donor may have gift tax issues. Talk to your accountant so that neither of you gets slammed.
Q: I want to create a business in clothing and merchandise like Calvin Klein, and also I want to form a film production company making hits such as Steven Spielberg does, and a vesting firm such as billionaire investors do, like Warren Buffet.

A: All three are lofty goals, but they involve totally and completely different businesses. Choose one and start from there. In addition, for the millions of entrepreneurs across the country, few have reached the levels of success of Calvin Klein, Steven Spielberg and Warren Buffet. Their success took many years and was hard-won. To emulate them, you might try reading their biographies or articles about them. Also look into your own store of talents to see whether your strengths truly lie in those areas.

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