BUSINESS
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How to land a bank loan
It's tougher to get business loans in this lender's market, but these tips
can improve your chances
The size of the loan. Smaller institutions tend to have capital
constraints (either self-imposed or dictated by regulators) that restrict
the size of loans they make.
Larger institutions sometimes have a per-transaction minimum, which
allows them to focus their managerial resources on fewer loans while
still lending in significant volume.
The industry within which the borrower is engaged. Banks will rarely
lend to a entrepreneurs in an industry with which they have little
experience. --- KNOWLEDGEFINANCIALGROUP.COM
The geographic location of the business and borrower. Lenders within
the federal banking system receive Community Reinvestment Act
credits lending within their geographical charter area and debits for
lending outside it. The challenge of dealing with varied collection laws
and other local regulations makes many regional banks unwilling to
lend outside certain areas.
When you call a potential lender, Bartmann recommends identifying
yourself and running through all three parameters in your first phone
call to the institution. The script he uses is:
"Hi, my name is John Doe and I am interested in borrowing $ (amount)
for (type of business), located in (geographic area). Would your
institution have an interest in visiting with me about that?"
"In a matter of a few minutes, you have found out whether this
institution is even capable of making the kind and type of loan you
desire," he says. "If the answer is no, you have saved lots of time and
can quickly pick up the phone and call the next one on your list. If they
say yes, then set an appointment to go pitch the deal - now with a
higher expectation of the likelihood of success."
Look at the credit score (also known as the CRA rating) of the bank as
well, recommends Leili McKinley of Haiku, Hawaii, business
consultancy Soaring Phoenix. She recommends that business owners
use Web sites such as iBank.com and TheStreet.com (TSCM) to make
comparisons between banks.
Once you have done your due diligence, make sure your business plan
is in top shape ----KNOWLEDGEFINANCIALGROUP.COM
It's tougher to get business loans in this lender's market, but these tips
can improve your chances
The size of the loan. Smaller institutions tend to have capital
constraints (either self-imposed or dictated by regulators) that restrict
the size of loans they make.
Larger institutions sometimes have a per-transaction minimum, which
allows them to focus their managerial resources on fewer loans while
still lending in significant volume.
The industry within which the borrower is engaged. Banks will rarely
lend to a entrepreneurs in an industry with which they have little
experience. --- KNOWLEDGEFINANCIALGROUP.COM
The geographic location of the business and borrower. Lenders within
the federal banking system receive Community Reinvestment Act
credits lending within their geographical charter area and debits for
lending outside it. The challenge of dealing with varied collection laws
and other local regulations makes many regional banks unwilling to
lend outside certain areas.
When you call a potential lender, Bartmann recommends identifying
yourself and running through all three parameters in your first phone
call to the institution. The script he uses is:
"Hi, my name is John Doe and I am interested in borrowing $ (amount)
for (type of business), located in (geographic area). Would your
institution have an interest in visiting with me about that?"
"In a matter of a few minutes, you have found out whether this
institution is even capable of making the kind and type of loan you
desire," he says. "If the answer is no, you have saved lots of time and
can quickly pick up the phone and call the next one on your list. If they
say yes, then set an appointment to go pitch the deal - now with a
higher expectation of the likelihood of success."
Look at the credit score (also known as the CRA rating) of the bank as
well, recommends Leili McKinley of Haiku, Hawaii, business
consultancy Soaring Phoenix. She recommends that business owners
use Web sites such as iBank.com and TheStreet.com (TSCM) to make
comparisons between banks.
Once you have done your due diligence, make sure your business plan
is in top shape ----KNOWLEDGEFINANCIALGROUP.COM
| Business structures 101 ---KNOWLEDGEFINANCIAL. COM -- BUY AND SALE HOMES, CONDOS, TOWN-HOMES, COMMERCIAL PROPERTIES AT KNOWLEDGEFINANCIALGROUP.COM LLP, LLC, S-corp and C-corp: It's not just alphabet soup! A breakdown of what you need to know, in layman's terms. Fortune Small Business) -- What exactly is an LLP? What's the difference between an LLC and a corporation? What about S-corps and C- corps? Sorting through the legal jargon and tax codes defining these business structures can be daunting for entrepreneurs - but picking the right structure for your company brings vital tax benefits and legal flexibility. LLC or corporation? There's virtually no reason why a small business should file as a corporation, unless the owners plan to take the business public in the near future, says Carter Bishop, a professor at Suffolk University Law School who helped draft the uniform LLC and LLP laws for several states. Instead, filing as an LLC, or limited liability company, is usually the best choice. The major differences between an LLC and a corporation include decision-making flexibility and the type of taxation the business faces, says Mark Patton, an attorney with Lewis and Roca in Tucson, Ariz. A corporation has to have a board of directors to make decisions according to a formal process. The "board" could technically be one person, but it still needs to exist. An LLC, on the other hand, can set up an operating agreement at the time the business is created, and make decisions more informally. Common provisions in operating agreements include: • Who can make decisions on behalf of the LLC? Will all owners manage the company, or will there be one primary manager? • What are the owners' responsibilities to contribute money to the company? • When and how will the company income be shared? • What procedure is required to transfer membership interests in the company? The second major difference is that an LLC benefits from "pass-through taxation." Pass-through taxation means the company pays no tax on its profits: It's like the company doesn't even exist for federal tax purposes, Bishop says. In fact, if the LLC is a sole proprietorship, the company does not have to file any tax returns. LLCs with more than one member must file a federal tax return, although the LLC itself is not subject to a tax. Earnings pass through to the owners, who then report the income on their own tax returns and pay the tax on their income. A corporation, on the other hand, must pay federal taxes as an entity; its shareholders are then taxed on any dividends or distributions they receive from the company, in effect allowing some of the company's profits to be taxed twice. There is an exception to this rule, however, for companies that file under subchapter S of the Internal Revenue Code. Such companies are commonly referred to as "S-corp" entities. S-corp or C-corp? ----KNOWLEDGEFINANCIAL.COM -- BUY AND SALE HOMES, CONDOS, TOWN-HOMES, COMMERCIAL PROPERTIES AT KNOWLEDGEFINANCIALGROUP.COM The terms "S-corp" and "C-corp" are merely shorthand references for a company's tax status - they're not distinct business entities. The major tax difference between the two is that an S-corp receives pass-through tax treatment similar to a partnership or LLC, whereas a C-corp (taxed under subchapter C) is required to pay tax on its income as a business entity. An S-corp's pass-through tax treatment does not come without some limits, however. An S-corp can have only 100 shareholders, each of whom must be an individual. (Certain types of trusts are also eligible.) Other businesses can't be an S-corp shareholder. "For tax purposes, a small-business owner will probably want to choose either an LLC or an S-corp to obtain pass through tax treatment and to avoid the double taxation of a C-corp," Patton says. The shareholders of a corporation can obtain subchapter S treatment by filing Form 2553 with the IRS within 75 days of starting operations. If this form is not filed, the corporation is taxed under subchapter C by default. So then, what's the difference between an LLC and S-corp? The members of an LLC can agree to share a company's income and absorb its losses disproportionately, whereas S- corp shareholders must share in the company's income in direct proportion to the number of shares they hold. Even if an S-corp is small and private, it's still subject to corporate formalities. The company will need to hold an annual meeting and file formal reports to its shareholders documenting its decision-making processes on significant corporate matters. An LLC does not need such documentation. "Between an LLC and an S-corp," Patton says, "the LLC is again the more flexible of the two and can accommodate most business arrangements." He recommends, however, that small-business owners consult their advisors to determine whether there are additional tax benefits of an S-corp in their specific situation that might justify incurring the structure's limitations. Okay, now what about partnerships? In addition to an LLC or a corporation, there are two types of partnerships a small business may want to consider: A general partnership and a limited partnership. The first requirement of any partnership is obvious: there must be more than one owner, or "partners" (hence the name). If you're a sole proprietor, opt for an LLC instead. Partnerships, Bishop says, are typically formed by professionals such as lawyers, architects, accountants and doctors. In some states, such firms are precluded from operating as LLCs; in others, where general partnerships and longstanding law firms predated LLC laws, many organizations opt to retain their existing status. ---- KNOWLEDGEFINANCIAL.COM -- BUY AND SALE HOMES, CONDOS, TOWN-HOMES, COMMERCIAL PROPERTIES AT KNOWLEDGEFINANCIALGROUP.COM |
| KNOWLEDGEFINANCIALGROUP.COM |
BUSINESS INFO, BUSINESS Structure Questions And Answers. HOW TO BUY A GOOD BUSINESS? WHAT ARE: LLP, LLC, S-corp and C-corp? How TO
ESTABLISH A NEW BUSINESS? HOW TO NEGOTIATE YOUR WAY TO A GREAT BUSINESS DEAL?
ESTABLISH A NEW BUSINESS? HOW TO NEGOTIATE YOUR WAY TO A GREAT BUSINESS DEAL?
SMALL BUSINESS CLICK HERE TO CONTINUE! Buying a Franchise a Consumer Guide:
Investments and Business Opportunities / Franchise & Business Opportunities for all. The Benefits and Responsibilities
of Franchise Ownership. ----KNOWLEDGEFINANCIALGROUP.COM -- BUY AND SALE HOMES, CONDOS, TOWN-HOMES,
COMMERCIAL PROPERTIES AT KNOWLEDGEFINANCIALGROUP.COM
Investments and Business Opportunities / Franchise & Business Opportunities for all. The Benefits and Responsibilities
of Franchise Ownership. ----KNOWLEDGEFINANCIALGROUP.COM -- BUY AND SALE HOMES, CONDOS, TOWN-HOMES,
COMMERCIAL PROPERTIES AT KNOWLEDGEFINANCIALGROUP.COM
11 Great things to do with your
money in financial crisis, in
difficult economic time
Trust Account: Definition of a
Trust; Land Trust, Living Trust,
Revocable Trust, Land Contract. It
is one of the oldest and best
defined relationships known in
the law
How to protect yourself and a
business against malicious
law-suits?
Will & Living trust
What is a will and what is living
trust? How does a living trust
avoid probate?
{Investment} The Ultimate
Retirement Guide for Everyone;
Retire Rich, Retire Early
How can I protect my assets?
{Business 101 --- Corp., S - Corp.,
LLC, General Partnership, Limited
partnership, Trust Account, Will
and Living-Trust
money in financial crisis, in
difficult economic time
Trust Account: Definition of a
Trust; Land Trust, Living Trust,
Revocable Trust, Land Contract. It
is one of the oldest and best
defined relationships known in
the law
How to protect yourself and a
business against malicious
law-suits?
Will & Living trust
What is a will and what is living
trust? How does a living trust
avoid probate?
{Investment} The Ultimate
Retirement Guide for Everyone;
Retire Rich, Retire Early
How can I protect my assets?
{Business 101 --- Corp., S - Corp.,
LLC, General Partnership, Limited
partnership, Trust Account, Will
and Living-Trust
General partnership and LLPs
In a general partnership, all owners have equal rights to manage the company, regardless of their
ownership shares in the company. On the downside, they can also all be equally liable for any
mishaps the company runs into, like debt or lawsuits. This is where an LLP, or limited liability
partnership, comes into play.
An LLP is merely a certificate a general partnership can obtain to create a liability shield
protecting the individual partners, ANTONY says. Take, for example, a law firm that has offices in
New York and Los Angeles. If a partner in Los Angeles commits malpractice, the partner in New
York will not be considered individually liable. Without an LLP certificate, however, the New York
partner would not be protected. ---KNOWLEDGEFINANCIAL.COM
Limited partnership and LLLP
A limited partnership structure varies from a general partnership in that not all partners are
entitled to participate in managing the business. The general partner or partners actively manage
the business, while the limited partners (usually passive investors) do not participate in the
day-to-day operations. This type of business structure usually suits real-estate investments.
When it comes to liability in a limited partnership, responsibility follows the management chain: in
most actions, the limited partner is not liable, but the general partner is.
In many states, however, a limited partnership can obtain an LLLP certificate, for a limited liability
limited partnership. This certificate, says, works in the same manner as the LLP certificate by
protecting the general partners with a liability shield.
An entrepreneur's best choice
In the end, an LLC business structure is the best bet for most small businesses. It's the structure
that gives the owners the greatest flexibility. Plus, it automatically includes a liability shield
protecting all owners.
For more information on your options, check out the Internal Revenue Service's guide to business
structures
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE HOMES, CONDOS, TOWN-HOMES, COMMERCIAL PROPERTIES
AT KNOWLEDGEFINANCIAL.COM
In a general partnership, all owners have equal rights to manage the company, regardless of their
ownership shares in the company. On the downside, they can also all be equally liable for any
mishaps the company runs into, like debt or lawsuits. This is where an LLP, or limited liability
partnership, comes into play.
An LLP is merely a certificate a general partnership can obtain to create a liability shield
protecting the individual partners, ANTONY says. Take, for example, a law firm that has offices in
New York and Los Angeles. If a partner in Los Angeles commits malpractice, the partner in New
York will not be considered individually liable. Without an LLP certificate, however, the New York
partner would not be protected. ---KNOWLEDGEFINANCIAL.COM
Limited partnership and LLLP
A limited partnership structure varies from a general partnership in that not all partners are
entitled to participate in managing the business. The general partner or partners actively manage
the business, while the limited partners (usually passive investors) do not participate in the
day-to-day operations. This type of business structure usually suits real-estate investments.
When it comes to liability in a limited partnership, responsibility follows the management chain: in
most actions, the limited partner is not liable, but the general partner is.
In many states, however, a limited partnership can obtain an LLLP certificate, for a limited liability
limited partnership. This certificate, says, works in the same manner as the LLP certificate by
protecting the general partners with a liability shield.
An entrepreneur's best choice
In the end, an LLC business structure is the best bet for most small businesses. It's the structure
that gives the owners the greatest flexibility. Plus, it automatically includes a liability shield
protecting all owners.
For more information on your options, check out the Internal Revenue Service's guide to business
structures
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE HOMES, CONDOS, TOWN-HOMES, COMMERCIAL PROPERTIES
AT KNOWLEDGEFINANCIAL.COM
| The Ultimate Retirement Guide for Everyone; Retire Rich, Retire Early. Long-term care insurance? Is a long-term care insurance policy really provides money to help cover the costs of living if you are no longer able to take care of yourself.? SOCIAL SECURITY RETIREMENT GUIDE. HOW DOES SOCIAL SECURITY WORK? What is the importance and benefits of life insurance in real life, and at retirement age? Pension Plans / IRA / INDIVIDUAL RETIREMENT ACCOUNT. What is an IRA? And what does it matter? What is Annuity Insurance Investment, Annuity & Pension Insurance? Are Annuities Planning today for a secure tomorrow? |
SMALL BUSINESS CLICK HERE TO
CONTINUE! Buying a Franchise a
Consumer Guide:
Investments and Business
Opportunities / Franchise & Business
Opportunities for all. The Benefits
and Responsibilities of Franchise
Ownership
CONTINUE! Buying a Franchise a
Consumer Guide:
Investments and Business
Opportunities / Franchise & Business
Opportunities for all. The Benefits
and Responsibilities of Franchise
Ownership
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| HOW TO BUY A BUSINESS? THE BEST GIFT YOU CAN EVER PROVIDE FOR YOURSELF: IS BUYING, CREATING, OWNING A BUSINESS IN YOUR OWN. METHODS, TECHNIQUES, AND STRATEGIES. TO ESTABLISH A SOLID BUSINESS. HOW TO BUY A FRANCHISE? Buying a Franchise a Consumer Guide: Investments and Business Opportunities / Franchise & Business Opportunities for all. The Benefits and Responsibilities of Franchise Ownership .How to Register Your Business with the Secretary of State.?. State Business Entity Registration.. State Licenses and Permits . Steps to Registering a Business. FINANCIAL KNOWLEDGE: Investments, and Insurance knowledge to help you start your own business. Be your own boss, make extra money, secure your financial future, obtain financial freedom. LEARN MORE.. |
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The Best Investment You Will Ever Make -----KNOWLEDGEFINANCIAGROUPL.COM
When buying a business, you can and should expect to make at least 25%–33% return on your cash
investment. Plus, you will have the opportunity to produce a steady personal cash flow, and you’ll be
building value that will pay you handsomely when the day arrives to sell the business.
Many people wrongly believe that acquiring a business is a risky investment. Personally, I think that
putting your fate in someone else’s hands has a heck of a lot more risk to it. While there is some
inherent risk buying a business, much, if not all, can be eliminated simply by doing your research
beforehand on any business you consider purchasing.
Take the time to properly assess your strengths and weaknesses. Take an honest inventory of
yourself. Your goal is to buy the right business
Determine Your Investment Level
Determine with absolute certainty how much of your own cash you are prepared to invest. Forget any
relatives who may have promised that they’ll "back you". When the time comes to lay down the money,
chances are they won’t be around.
Don’t bother looking at businesses that are unaffordable. Over 90% of small business purchases
involve seller financing. Generally, this is 40%-50% of the purchase price. If you have $150,000 to
invest, don’t look at businesses that will sell for $500,000. It’s OK to dream, but be realistic.
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE HOMES, CONDOS, TOWN-HOMES, COMMERCIAL PROPERTIES
AT KNOWLEDGEFINANCIAL.COMN
When buying a business, you can and should expect to make at least 25%–33% return on your cash
investment. Plus, you will have the opportunity to produce a steady personal cash flow, and you’ll be
building value that will pay you handsomely when the day arrives to sell the business.
Many people wrongly believe that acquiring a business is a risky investment. Personally, I think that
putting your fate in someone else’s hands has a heck of a lot more risk to it. While there is some
inherent risk buying a business, much, if not all, can be eliminated simply by doing your research
beforehand on any business you consider purchasing.
Take the time to properly assess your strengths and weaknesses. Take an honest inventory of
yourself. Your goal is to buy the right business
Determine Your Investment Level
Determine with absolute certainty how much of your own cash you are prepared to invest. Forget any
relatives who may have promised that they’ll "back you". When the time comes to lay down the money,
chances are they won’t be around.
Don’t bother looking at businesses that are unaffordable. Over 90% of small business purchases
involve seller financing. Generally, this is 40%-50% of the purchase price. If you have $150,000 to
invest, don’t look at businesses that will sell for $500,000. It’s OK to dream, but be realistic.
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE HOMES, CONDOS, TOWN-HOMES, COMMERCIAL PROPERTIES
AT KNOWLEDGEFINANCIAL.COMN
Your Six Steps To Success. ------
KNOWLEDGEFINANCIALGROUP.COM
1-Commit to a deadline for buying a business (not just “looking” for one).
2-Set aside time every day to work on this project.
3-Organize your finances.
4-Work on determining what type of business will thrive from your strengths and not suffer
from your weaknesses.
5-Seek professional advice from a qualified accountant and attorney.
Unless you have a wealth of experience buying businesses, then educate yourself about this
6-process. Learn as much as you can. When it comes to investing in your future, you can never
know too much! ---------KNOWLEDGEFINANCIALGROUP.COM -- BUY AND SALE HOMES, CONDOS, TOWN-
HOMES, COMMERCIAL PROPERTIES AT KNOWLEDGEFINANCIALGROUP.COM
Structuring The Offer – and Remember, It’s YOUR Offer!
KNOWLEDGEFINANCIALGROUP.COM
1-Commit to a deadline for buying a business (not just “looking” for one).
2-Set aside time every day to work on this project.
3-Organize your finances.
4-Work on determining what type of business will thrive from your strengths and not suffer
from your weaknesses.
5-Seek professional advice from a qualified accountant and attorney.
Unless you have a wealth of experience buying businesses, then educate yourself about this
6-process. Learn as much as you can. When it comes to investing in your future, you can never
know too much! ---------KNOWLEDGEFINANCIALGROUP.COM -- BUY AND SALE HOMES, CONDOS, TOWN-
HOMES, COMMERCIAL PROPERTIES AT KNOWLEDGEFINANCIALGROUP.COM
Structuring The Offer – and Remember, It’s YOUR Offer!
KNOWLEDGEFINANCIALGROUP.COM
The world's richest man, Warren Buffett, says it best. "I will tell you how to become rich. Close
the doors. Be fearful when others are greedy. Be greedy when others are fearful." In today's
real estate market, naive investors are fearful. Choose to be greedy. Choose to be rich.
KNOWLEDGEFINANCIALGROUP.COM
While others run from the chaos, savvy investors are doing what they do best. They're "bargain
hunting". They realize that there's a record number of troubled homeowners who need to sell
fast to avoid foreclosure. And they know that these homeowners are often willing to sell at big
discounts. KNOWLEDGEFINANCIALGROUP.COM
The world's richest man, Warren Buffett, says it best. "I will tell you how to become rich. Close
the doors. Be fearful when others are greedy. Be greedy when others are fearful." In today's
real estate market, naive investors are fearful. Choose to be greedy. Choose to be rich.
KNOWLEDGEFINANCIALGROUP.COM
While others run from the chaos, savvy investors are doing what they do best. They're "bargain
hunting". They realize that there's a record number of troubled homeowners who need to sell
fast to avoid foreclosure. And they know that these homeowners are often willing to sell at big
discounts. KNOWLEDGEFINANCIALGROUP.COM
Learn How to Save Money With a business well structured with an LLC
KNOWLEDGEFINANCIALGROUP.COM
1-Protect your assets and reduce your tax bill!
2-FREE Webinar December 10, 8 p.m. EST
3-If you are serious about investing in real estate or starting a new venture, you need to know
4-about the many advantages of incorporating your business. For many investors and small
business owners, the benefits of forming a limited liability corporation (LLC) are significant. By
forming an LLC business you can:
5-Protect your personal assets through liability protection
6-Deduct many business expenses such as tuition for educational programs
7-Enjoy certain tax advantages
8-Establish credibility with clients, partners and investors
9-Reduce the risk of personal identity theft
KNOWLEDGEFINANCIALGROUP.COM
Why do you need an LLC business?
As an investor or entrepreneur, it is important to think about incorporation before you begin
your new venture, especially in today's legal environment in which frivolous lawsuits have spun
out of control. If you operate a business as a sole proprietorship, you are personally
responsible for any business debts or lawsuits against your business. As a sole proprietor,
almost everything you own can be at risk including your home and your personal bank account!
KNOWLEDGEFINANCIALGROUP.COM
1-Protect your assets and reduce your tax bill!
2-FREE Webinar December 10, 8 p.m. EST
3-If you are serious about investing in real estate or starting a new venture, you need to know
4-about the many advantages of incorporating your business. For many investors and small
business owners, the benefits of forming a limited liability corporation (LLC) are significant. By
forming an LLC business you can:
5-Protect your personal assets through liability protection
6-Deduct many business expenses such as tuition for educational programs
7-Enjoy certain tax advantages
8-Establish credibility with clients, partners and investors
9-Reduce the risk of personal identity theft
KNOWLEDGEFINANCIALGROUP.COM
Why do you need an LLC business?
As an investor or entrepreneur, it is important to think about incorporation before you begin
your new venture, especially in today's legal environment in which frivolous lawsuits have spun
out of control. If you operate a business as a sole proprietorship, you are personally
responsible for any business debts or lawsuits against your business. As a sole proprietor,
almost everything you own can be at risk including your home and your personal bank account!
HOW TO BUY A GOOD BUSINESS -----KNOWLEDGEFINANCIALGROUP.COM
You can easily convince yourself that right now is not the time to buy a business. I don’t
blame you one bit for thinking it may be best to wait.
Or, perhaps you are thinking that you should just go about this cautiously, and if the right
opportunity comes up, you will consider it. While caution is always the right approach,
nobody has ever been successful sitting on the sidelines.
Don’t get me wrong, today’s market is something you have to be concerned about.
Unfortunately, many business buyers, and especially first-timers, are going to end up buying
bad businesses.
But, if you know how to find the good ones, you can put together an incredible deal today
because the market is upside-down and primed for a knowledgeable buyer to steal a great
business. -----KNOWLEDGEFINANCIAL.COM -- BUY AND SALE HOMES, CONDOS, TOWN-
HOMES, COMMERCIAL PROPERTIES AT KNOWLEDGEFINANCIAL.COM
THE BEST GIFT YOU CAN EVER PROVIDE FOR YOURSELF:
IS BUYING, OWNING A BUSINESS IN YOUR OWN.
It’s amazing how we see an immediate increase in our business right after the
December holidays and the day after every long weekend. The former may be many
“New Year’s Resolutioners” as I call them, and the latter is because most people dread
the thought of
You can easily convince yourself that right now is not the time to buy a business. I don’t
blame you one bit for thinking it may be best to wait.
Or, perhaps you are thinking that you should just go about this cautiously, and if the right
opportunity comes up, you will consider it. While caution is always the right approach,
nobody has ever been successful sitting on the sidelines.
Don’t get me wrong, today’s market is something you have to be concerned about.
Unfortunately, many business buyers, and especially first-timers, are going to end up buying
bad businesses.
But, if you know how to find the good ones, you can put together an incredible deal today
because the market is upside-down and primed for a knowledgeable buyer to steal a great
business. -----KNOWLEDGEFINANCIAL.COM -- BUY AND SALE HOMES, CONDOS, TOWN-
HOMES, COMMERCIAL PROPERTIES AT KNOWLEDGEFINANCIAL.COM
THE BEST GIFT YOU CAN EVER PROVIDE FOR YOURSELF:
IS BUYING, OWNING A BUSINESS IN YOUR OWN.
It’s amazing how we see an immediate increase in our business right after the
December holidays and the day after every long weekend. The former may be many
“New Year’s Resolutioners” as I call them, and the latter is because most people dread
the thought of
CERTAINLY YOU NEED: Real Estate Broker, Mortgage
Broker, Business Broker--- Do You Need One? Yes you do!
CALL Mr. ANTONY AT: -- SOUTH FLORIDA ---
LICENSED REALTOR, LICENSED MORTGAGE
BROKER.
I am a firm believer in using one, or all of these guys to help you throughout the
process. And so their role from an advice point of view may be very important
sometimes limited however, a good broker can, and will:
Provide you with access to a vast database of businesses for sale
walk you through the valuation process
Provide you with Real Estate and Financing information. And also with
comparable business valuations, and
keep the deal moving along when obstacles are encountered
The Broker will make sure all pertinent documents are assembled for the
closing. KNOWLEDGEFINANCIAL.COM -- BUY AND SALE HOMES, CONDOS,
TOWN-HOMES, COMMERCIAL PROPERTIES AT KNOWLEDGEFINANCIALGROUP.COM
Broker, Business Broker--- Do You Need One? Yes you do!
CALL Mr. ANTONY AT: -- SOUTH FLORIDA ---
LICENSED REALTOR, LICENSED MORTGAGE
BROKER.
I am a firm believer in using one, or all of these guys to help you throughout the
process. And so their role from an advice point of view may be very important
sometimes limited however, a good broker can, and will:
Provide you with access to a vast database of businesses for sale
walk you through the valuation process
Provide you with Real Estate and Financing information. And also with
comparable business valuations, and
keep the deal moving along when obstacles are encountered
The Broker will make sure all pertinent documents are assembled for the
closing. KNOWLEDGEFINANCIAL.COM -- BUY AND SALE HOMES, CONDOS,
TOWN-HOMES, COMMERCIAL PROPERTIES AT KNOWLEDGEFINANCIALGROUP.COM
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A step by step guide to gaining control
of your financial life.
Setting priorities
Here's help for the first -- and often the
hardest -- step in achieving your financial
goals: deciding which goals to pursue.
LESSON 2
Making a budget, saving money
How to bring your spending under
control, so that you get the most out of
every dollar.
LESSON 3
Basics of banking and saving
Here's how to get the best banking
services at the best price, either online or
off.
LESSON 4
Basics of investing
An introduction to making money in
stocks, bonds and mutual funds REIT'S,
real estate.
LESSON 5
Investing in stocks
The market can be a great place to turn
savings into wealth -- or to lose your
shirt. Here are some fundamentals of
investing wisely.
LESSON 6
Investing in mutual funds
It's a mutual-fund jungle out there. Here's
how to create a simple portfolio that
works.
of your financial life.
Setting priorities
Here's help for the first -- and often the
hardest -- step in achieving your financial
goals: deciding which goals to pursue.
LESSON 2
Making a budget, saving money
How to bring your spending under
control, so that you get the most out of
every dollar.
LESSON 3
Basics of banking and saving
Here's how to get the best banking
services at the best price, either online or
off.
LESSON 4
Basics of investing
An introduction to making money in
stocks, bonds and mutual funds REIT'S,
real estate.
LESSON 5
Investing in stocks
The market can be a great place to turn
savings into wealth -- or to lose your
shirt. Here are some fundamentals of
investing wisely.
LESSON 6
Investing in mutual funds
It's a mutual-fund jungle out there. Here's
how to create a simple portfolio that
works.
Common Limited Liability
Company (LLC) Questions
Getting Started With Questions
and Answers..
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE
HOMES, CONDOS, TOWN-HOMES,
COMMERCIAL PROPERTIES AT
KNOWLEDGEFINANCIAL.COM
PART- 1
1-How long does it take to get a LLC entity set up in
Florida?
2-How do I begin the process of incorporating my
business?
3-How do I go about naming the LLC?
4-What Else Do I Need And Why?
5-What is a business license or occupational license
and where do I get one?
6-What is a fictitious name or DBA (Doing Business
As) and why would I need one?
7-What is a Registered Agent and is one needed?
8-What is an EIN and why do I need one?
9-What are certificates of ownership and why would I
need them for my LLC?
8-What is a Certificate of Status and why would I need
one?
9-How do I get a resale certificate or a Florida Tax ID
number from the Florida Department of Revenue?
--------------------------------------------------------------------------------
How long does it take to get an LLC entity set
up in Florida?
Depending how quickly the state processes the
filings, it will take between two and five business
days to set up your LLC entity.
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE
HOMES, CONDOS, TOWN-HOMES, COMMERCIAL
PROPERTIES AT KNOWLEDGEFINANCIAL.COM
How do I begin the process of incorporating
my business?
Articles of Organization must be filed with the State of
Florida, together with the required fees.
How do I go about naming the LLC?
The name of your LLC must comply with requirements
of the Florida Department of State. Florida
Incorporation Service will perform a preliminary
name check for you at no additional charge.
The name of your LLC must comply with requirements
of the Florida Department of State. We will perform a
preliminary name check for you at no additional
charge as you form your company to help make sure
you meet the following requirements.
As a minimum, keep these points in mind as you
select a company name:
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE
HOMES, CONDOS, TOWN-HOMES, COMMERCIAL
PROPERTIES AT KNOWLEDGEFINANCIAL.COM
The name cannot be the same as another corporation
or LLC on file with the State of Florida.
The name should not be confusingly similar to that of
an existing corporation or LLC, i.e., the name should
be distinguishable.
Adding "The", "and". "&", or any punctuation or
pluralization,
will not make it unique according to the state. Adding
"of Florida" or a
name of a city is also rejected by the State.
Using works like Services, Group, Management,
Enterprise,
Associates, International, Property, Properties,
Holdings, Marketing,
Investments and the like are well used put you at risk
for reject.
May not contain language implying that the Florida
Corporation
is connected with a government agency or that the
corporation is
chartered under United States law.
You can look up your company name to see if it is
available at
the Florida Department of State website.
For an LLC, please select a designator for the last
part of the name (use either "LLC" or "Limited
Liability Company") to identify your company as an
LLC.
The name you select may not contain language
implying that your company is connected with a
government agency or that it is chartered under
United States law.
Important Liability Issue for LLCs:
You should make a point of using the correct name of
your company, including the "LLC" or "Limited
Liability Company" designation at the end of the
name, as you conduct your business. Once you form
your LLC, keep in mind that omission of the
designation in the use of the name shall render any
person who knowingly participates in the omission,
or knowingly acquiesces in the omission, liable for
any indebtedness, damage, or liability caused by the
omission (Florida Statutes, Chapter 608.406).
You can look up your company name to see if it is
available at the Florida Department of State website.
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE
HOMES, CONDOS, TOWN-HOMES, COMMERCIAL
PROPERTIES AT KNOWLEDGEFINANCIALGROUP.COM
What is a business license or occupational license
and where do I get one?
A business or occupational license is issued yearly
by the county government. Most but not all counties
in Florida require that you register your new business
with them.
The costs depends on the county, the type of
business and your company's impact on the county
itself.
Please contact your local county once you have all
your corporation documents to find out where you will
need to go to get this license.
What is a fictitious name or DBA (Doing
Business As) and why would I need one?
A fictitious name or DBA (Doing Business As) or
Trade Name is a name you can register with the
Florida Department of State so that you may transact
business as another name besides your company
name.
You do not need to file for a fictitious name if you will
be conducting business with your company name.
You will only need to file for a fictitious name if you
will be conducting business as a DIFFERENT name
then your LLC name
For example, you can have a company name ABC,
LLC then register a fictitious name Ray's Pizza and
then do business as Ray's Pizza in advertising,
letterhead, internet names and the like. So the
company name remains the same and you will be
able to transact business with this fictitious name.
There are no holds on a fictitious name as it is a
"nickname" or trade name of the company. So other
companies can have the same fictitious name.
What is a Registered Agent and is one
needed?
Florida requires that an individual, or service
company, be responsible for receiving important
legal and tax documents.
This service is provided by an "agent" of the LLC
who is "registered" within Florida, thus the term
"Registered Agent."
The registered agent for the LLC must have a valid
street address within Florida and be available during
normal business hours to receive documents. The
services performed by a registered agent may
include:
Receiving and forwarding legal documents;
Receiving and forwarding franchise tax and annual
report forms; and,
Accepting and forwarding service of process.
A Registered Agent must be an adult, residing within
Florida and provide a physical address, (no P.O.
boxes).
Florida Incorporation Service offers the Registered
Agent Service as an additional item, à la carte, if you
would like someone other than yourself to be your
Registered Agent.
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE
HOMES, CONDOS, TOWN-HOMES, COMMERCIAL
PROPERTIES AT KNOWLEDGEFINANCIALGROUP.COM
What is an EIN and why do I need one?
An Employer Identification Number (EIN), also known
as a federal tax identification number, is a nine-digit
number that the IRS assigns to business entities.
This number is used to identify a business entity and
to identify taxpayers that are required to file various
business tax returns.
A business will need to apply for a new EIN if the
business is sold or is otherwise transferred.
You will need an EIN if you have employees in your
new business.
Banks may require an EIN to open an account for
most LLC.
What are certificates of ownership and why
would I need them for my LLC?
A Certificate of ownership is a printed document used
to indicate the percentage ownership in the LLC.
Please note: If you are applying for Workman's
Compensation Exemption, you will need to supply a
certificate of ownership to them with your application
of exemption.
Florida Incorporation Service offers these in our a la
carte as an additional item. There are 10
custom-printed certificates which may be issued at
the discretion of the LLC members.
KNOWLEDGEFINANCIALGROUP.COM -- BUY AND
SALE HOMES, CONDOS, TOWN-HOMES,
COMMERCIAL PROPERTIES AT
KNOWLEDGEFINANCIALGROUP.COM
What is a certificate of status and why would I
need one?
A Certificate of Status is issued by the Florida
Department of State to show that your company is
active and has paid the initial filing fees or annual
report after the first year.
Some banks and governmental agencies require this
certificate as verification that the company is an
active Florida company.
If you choose this certificate as part of your package,
it is issued electronically by the Florida Department of
State and will be emailed to you with your articles.
How do I get a resale certificate or a Florida Tax ID
number from the Florida Department of Revenue?
Please visit the Florida Department of Revenue
website or call them at 1-800-352-3671.
KNOWLEDGEFINANCIALGROUP.COM -- BUY
AND SALE HOMES, CONDOS, TOWN-HOMES,
COMMERCIAL PROPERTIES AT
KNOWLEDGEFINANCIAL.COM
Company (LLC) Questions
Getting Started With Questions
and Answers..
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE
HOMES, CONDOS, TOWN-HOMES,
COMMERCIAL PROPERTIES AT
KNOWLEDGEFINANCIAL.COM
PART- 1
1-How long does it take to get a LLC entity set up in
Florida?
2-How do I begin the process of incorporating my
business?
3-How do I go about naming the LLC?
4-What Else Do I Need And Why?
5-What is a business license or occupational license
and where do I get one?
6-What is a fictitious name or DBA (Doing Business
As) and why would I need one?
7-What is a Registered Agent and is one needed?
8-What is an EIN and why do I need one?
9-What are certificates of ownership and why would I
need them for my LLC?
8-What is a Certificate of Status and why would I need
one?
9-How do I get a resale certificate or a Florida Tax ID
number from the Florida Department of Revenue?
--------------------------------------------------------------------------------
How long does it take to get an LLC entity set
up in Florida?
Depending how quickly the state processes the
filings, it will take between two and five business
days to set up your LLC entity.
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE
HOMES, CONDOS, TOWN-HOMES, COMMERCIAL
PROPERTIES AT KNOWLEDGEFINANCIAL.COM
How do I begin the process of incorporating
my business?
Articles of Organization must be filed with the State of
Florida, together with the required fees.
How do I go about naming the LLC?
The name of your LLC must comply with requirements
of the Florida Department of State. Florida
Incorporation Service will perform a preliminary
name check for you at no additional charge.
The name of your LLC must comply with requirements
of the Florida Department of State. We will perform a
preliminary name check for you at no additional
charge as you form your company to help make sure
you meet the following requirements.
As a minimum, keep these points in mind as you
select a company name:
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE
HOMES, CONDOS, TOWN-HOMES, COMMERCIAL
PROPERTIES AT KNOWLEDGEFINANCIAL.COM
The name cannot be the same as another corporation
or LLC on file with the State of Florida.
The name should not be confusingly similar to that of
an existing corporation or LLC, i.e., the name should
be distinguishable.
Adding "The", "and". "&", or any punctuation or
pluralization,
will not make it unique according to the state. Adding
"of Florida" or a
name of a city is also rejected by the State.
Using works like Services, Group, Management,
Enterprise,
Associates, International, Property, Properties,
Holdings, Marketing,
Investments and the like are well used put you at risk
for reject.
May not contain language implying that the Florida
Corporation
is connected with a government agency or that the
corporation is
chartered under United States law.
You can look up your company name to see if it is
available at
the Florida Department of State website.
For an LLC, please select a designator for the last
part of the name (use either "LLC" or "Limited
Liability Company") to identify your company as an
LLC.
The name you select may not contain language
implying that your company is connected with a
government agency or that it is chartered under
United States law.
Important Liability Issue for LLCs:
You should make a point of using the correct name of
your company, including the "LLC" or "Limited
Liability Company" designation at the end of the
name, as you conduct your business. Once you form
your LLC, keep in mind that omission of the
designation in the use of the name shall render any
person who knowingly participates in the omission,
or knowingly acquiesces in the omission, liable for
any indebtedness, damage, or liability caused by the
omission (Florida Statutes, Chapter 608.406).
You can look up your company name to see if it is
available at the Florida Department of State website.
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE
HOMES, CONDOS, TOWN-HOMES, COMMERCIAL
PROPERTIES AT KNOWLEDGEFINANCIALGROUP.COM
What is a business license or occupational license
and where do I get one?
A business or occupational license is issued yearly
by the county government. Most but not all counties
in Florida require that you register your new business
with them.
The costs depends on the county, the type of
business and your company's impact on the county
itself.
Please contact your local county once you have all
your corporation documents to find out where you will
need to go to get this license.
What is a fictitious name or DBA (Doing
Business As) and why would I need one?
A fictitious name or DBA (Doing Business As) or
Trade Name is a name you can register with the
Florida Department of State so that you may transact
business as another name besides your company
name.
You do not need to file for a fictitious name if you will
be conducting business with your company name.
You will only need to file for a fictitious name if you
will be conducting business as a DIFFERENT name
then your LLC name
For example, you can have a company name ABC,
LLC then register a fictitious name Ray's Pizza and
then do business as Ray's Pizza in advertising,
letterhead, internet names and the like. So the
company name remains the same and you will be
able to transact business with this fictitious name.
There are no holds on a fictitious name as it is a
"nickname" or trade name of the company. So other
companies can have the same fictitious name.
What is a Registered Agent and is one
needed?
Florida requires that an individual, or service
company, be responsible for receiving important
legal and tax documents.
This service is provided by an "agent" of the LLC
who is "registered" within Florida, thus the term
"Registered Agent."
The registered agent for the LLC must have a valid
street address within Florida and be available during
normal business hours to receive documents. The
services performed by a registered agent may
include:
Receiving and forwarding legal documents;
Receiving and forwarding franchise tax and annual
report forms; and,
Accepting and forwarding service of process.
A Registered Agent must be an adult, residing within
Florida and provide a physical address, (no P.O.
boxes).
Florida Incorporation Service offers the Registered
Agent Service as an additional item, à la carte, if you
would like someone other than yourself to be your
Registered Agent.
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE
HOMES, CONDOS, TOWN-HOMES, COMMERCIAL
PROPERTIES AT KNOWLEDGEFINANCIALGROUP.COM
What is an EIN and why do I need one?
An Employer Identification Number (EIN), also known
as a federal tax identification number, is a nine-digit
number that the IRS assigns to business entities.
This number is used to identify a business entity and
to identify taxpayers that are required to file various
business tax returns.
A business will need to apply for a new EIN if the
business is sold or is otherwise transferred.
You will need an EIN if you have employees in your
new business.
Banks may require an EIN to open an account for
most LLC.
What are certificates of ownership and why
would I need them for my LLC?
A Certificate of ownership is a printed document used
to indicate the percentage ownership in the LLC.
Please note: If you are applying for Workman's
Compensation Exemption, you will need to supply a
certificate of ownership to them with your application
of exemption.
Florida Incorporation Service offers these in our a la
carte as an additional item. There are 10
custom-printed certificates which may be issued at
the discretion of the LLC members.
KNOWLEDGEFINANCIALGROUP.COM -- BUY AND
SALE HOMES, CONDOS, TOWN-HOMES,
COMMERCIAL PROPERTIES AT
KNOWLEDGEFINANCIALGROUP.COM
What is a certificate of status and why would I
need one?
A Certificate of Status is issued by the Florida
Department of State to show that your company is
active and has paid the initial filing fees or annual
report after the first year.
Some banks and governmental agencies require this
certificate as verification that the company is an
active Florida company.
If you choose this certificate as part of your package,
it is issued electronically by the Florida Department of
State and will be emailed to you with your articles.
How do I get a resale certificate or a Florida Tax ID
number from the Florida Department of Revenue?
Please visit the Florida Department of Revenue
website or call them at 1-800-352-3671.
KNOWLEDGEFINANCIALGROUP.COM -- BUY
AND SALE HOMES, CONDOS, TOWN-HOMES,
COMMERCIAL PROPERTIES AT
KNOWLEDGEFINANCIAL.COM
PART- 2 ---- KNOWLEDGEFINANCIAL.COM -- BUY AND SALE HOMES, CONDOS,
TOWN-HOMES, COMMERCIAL PROPERTIES AT KNOWLEDGEFINANCIAL.COM
1-LLC Structure Questions And Answers
2-What is a Limited Liability Company (LLC)?
3-What are some of the benefits/advantages and disadvantages of forming an
LLC?
4-What is the difference between a Member Manager and an External Manager?
5-Where can I find definitions for commonly associated LLC terms?
6-Things To Know About LLC's
7-What is an Operating Agreement?
8-What are articles of organization?
9-How is an LLC classified for Federal tax purposes?
10-How is an LLC classified for Florida state tax purposes?
11-Do I need an attorney or CPA to form an LLC?
12-What are the business activities I can choose for my LLC?
13-What are the different types of employees?
14-What is the difference between a principal address and a mailing address for
an LLC?
15-Can I change the principal and mailing address of my corporation after I have
filed?
1- What is a Limited Liability Company (LLC)?
In the early 1980s Florida became the second state to authorize the formation of
limited liability companies ("LLCs"). Now more than 100,000 LLCs are formed in
Florida annually.
One or more persons may form an LLC. A single-member LLC is allowed in
Florida.
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE HOMES, CONDOS, TOWN-
HOMES, COMMERCIAL PROPERTIES AT KNOWLEDGEFINANCIAL.COM
What are some of the benefits/advantages and disadvantages of
forming an LLC?
The primary reason for forming a limited liability company is to limit the liability of
the owners.
Interests in LLCs, in addition, are protected from the claims of creditors of their
members.
Organizational changes related to the LLC can generally be made in the operating
agreement alone (without amending the articles of organization).
Managers and managing members are also protected from personal liability
regarding claims pertaining to the exercise of their management authority except
for more egregious conduct (criminal or reckless acts, deriving improper
personal benefits, voting for unlawful distributions, etc.).
Changes to Florida's corporate income tax laws in the 1990s effectively
eliminated the corporate tax for LLCs.
Generally, an LLC with multiple members is treated for Florida income tax
purposes as a partnership (nontaxable entities that act as conduits for
transferring income and loss directly to the individual partners) and a single-
member LLC is "disregarded" as a separate entity for tax purpose, the same way
it is disregarded for federal tax purposes. Thus, most LLCs are not subject to
Florida's corporate income tax.
LLCs are similar to S corporations for federal tax purposes and do not pay tax
themselves, but pass their income through to their shareholders.
Selected benefits over a corporation:
Flexibility: One of the benefits of an LLC over a corporation is the great latitude
provided in the drafting of the operating agreement and the flexibility that is
possible on such issues as members' contribution obligations, member and
management voting powers, profit and loss allocations, governance structure,
members' distribution rights, etc. Amendments may be made to the operating
agreement as needed.
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE HOMES, CONDOS, TOWN-
HOMES, COMMERCIAL PROPERTIES AT KNOWLEDGEFINANCIAL.COM
A corporation requires that specific formalities be completed on a regular basis,
including annual meetings of shareholders and directors each year, meeting
minutes which are kept with the corporation's records, etc. It is a good business
practice to document major decisions regardless of the structure of your
business; however these formalities are not required for LLCs.
The interest a member owns in an LLC can be protected from creditors while the
stock a person has in a corporation may be seized and sold by creditors.
LLCs can make special allocations of profits and losses among members; S
corporations cannot. S corporations have one class of ownership with profits and
losses allocated according to the percentage of ownership.
LLC Disadvantages
The main disadvantage of the LLC as compared with an S corporation has to do
with the tax treatment for profits that are taken out of the business. If yours is a
smaller company, you may want to consider the LLC carefully as the
disadvantage primarily affects smaller companies. KNOWLEDGEFINANCIAL.COM
Here's the situation: With an S corporation, profits taken out of the business (other
than salary) are not subject to social security and Medicare taxes (which together
amount to 15.3% in 2004)*.
Consider this: In larger companies, where company owners take out salaries of
$85,000 or more, plus profits, this situation would not have much of an impact;
however, in smaller companies where the owners take out more modest salaries
(and then take profits out of the business when available), all the profit taken out
of the LLC would be subject to social security and Medicare taxes, where in the S
corporation it would not. The result: For a small business where the owner paid
themselves a $35,000 salary and took and additional $40,000 in profit out of the
business, the extra taxes on the $40,000 would be over $6,000.
* The maximum amount subject to the social security portion for tax years
beginning in 2004 has increased to $87,900. All net earnings of at least $400 are
subject to the Medicare portion.
Additional LLC Information
A limited liability company may be organized for any lawful purpose, and remains
subject to statutes and regulations of the laws of the State of Florida for regulating
and controlling its business.
Unless its articles of organization or operating agreement provide otherwise,
each limited liability company organized and existing under Florida law shall
have the same powers as an individual to do all things necessary to carry out its
business and affairs, including, without limitation, the power to:
Sue and be sued, and defend, in its name.
Purchase, receive, lease, or otherwise acquire, own, hold, improve, use, and
otherwise deal with real or personal property, or any legal or equitable interest in
property, wherever located.
Sell, convey, mortgage, grant a security interest in, lease, exchange, and
otherwise encumber or dispose of all or any part of its property.
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE HOMES, CONDOS, TOWN-
HOMES, COMMERCIAL PROPERTIES AT KNOWLEDGEFINANCIAL.COM
Purchase, receive, subscribe for, or otherwise acquire, own, hold, vote, use,
sell, mortgage, lend, grant a security interest in, or otherwise dispose of and deal
in and with, shares or other interests in or obligations of any other entity.
Make contracts or guarantees, or incur liabilities; borrow money; issue its notes,
bonds, or other obligations, which may be convertible into or include the option to
purchase other securities of the limited liability company; or make contracts of
guaranty and suretyship which are necessary or convenient to the conduct,
promotion, or attainment of the business of a corporation the majority of the
outstanding stock of which is owned, directly or indirectly, by the contracting
limited liability company; a corporation which owns, directly or indirectly, a
majority of the outstanding membership interests of the contracting limited liability
company; or a corporation the majority of the outstanding stock of which is
owned, directly or indirectly, by a corporation which owns, directly or indirectly,
the majority of the outstanding membership interests of the contracting limited
liability company, which contracts of guaranty and suretyship shall be deemed to
be necessary or convenient to the conduct, promotion, or attainment of the
business of the contracting limited liability company; or make other contracts of
guaranty and suretyship which are necessary or convenient to the conduct,
promotion, or attainment of the business of the contracting limited liability
company.
Lend money, invest or reinvest its funds, and receive and hold real or personal
property as security for repayment.
Conduct its business, locate offices, and exercise the powers granted by this
chapter within or without this state.
Select managers or managing members and appoint officers, directors,
employees, and agents of the limited liability company, define their duties, fix their
compensation, and lend them money and credit.
Make donations for the public welfare or for charitable, scientific, or educational
purposes.
Pay pensions and establish pension plans, pension trusts, profit-sharing plans,
bonus plans, option plans, and benefit or incentive plans for any or all of its
current or former managers, members, officers, agents, and employees.
Be a promoter, incorporator, shareholder, partner, member, associate, or
manager of any corporation, partnership, joint venture, trust, or other entity.
Make payments or donations or do any other act not inconsistent with law that
furthers the business of the limited liability company.
Back to top
What is the difference between a Member Manager and an External
Manager?
An LLC can be run by Members or External Managers.
What is a member?
A member is an owner of the company. An LLC can be run by a member (owner)
or several members (owners) of the company. Thus, where a member or several
members run the company, the people who own the company also run the
company. Most Limited Liability Companies are member managed in this way.
What does it mean to have external managers?
If not managed by its members, you will choose to hire an outside person to run
the company who does NOT own a part of the company. This would be termed an
"External Manager." You may have one external manager or several external
managers.
KNOWLEDGEFINANCIALGROUP.COM -- BUY AND SALE HOMES, CONDOS, TOWN-
HOMES, COMMERCIAL PROPERTIES AT KNOWLEDGEFINANCIALGROUP.COM
Additional Definitions
Authorized Representative - One or more persons acting to form a limited liability
company by executing and filing the articles of organization , as authorized by a
member of such limited liability company. The authorized representative may, but
is not required to be, a member of the limited liability company that is being
formed. Capital Account - The agreed value of the initial contributions, increased
by the agreed value of subsequent contributions to capital, if any, and reduced by
distributions of capital, unless otherwise provided in the articles of organization
or the operating agreement.
Contribution - Any cash, property, or services rendered or a promissory note or
other obligation to contribute cash or property or to perform services, which a
person contributes to the limited liability company as a member.
Distribution - A direct or indirect transfer of money or other property or incurrence
of indebtedness by a limited liability company to or for the benefit of its members
in respect of their economic interests.
Foreign limited Liability Company - A limited liability company formed under the
laws of any state other than Florida or under the laws of any foreign country or
other foreign jurisdiction.
Majority-in-interest of the members means, unless otherwise provided in the
articles of organization or operating agreement, members owning more than 50
percent of the then-current percentage or other interest in the profits of the limited
liability company.
Manager - A person who is appointed or elected to manage a manager-managed
company and, unless otherwise provided in the articles of organization or
operating agreement, a manager may be, but need not be, a member of the limited
liability company.
Manager-managed company means a limited liability company that is designated
to be managed by one or more managers.
Managing member means a member appointed or elected as a managing member
of a member-managed company.
Management agreement - If the LLC will be managed by a subset of its members
or by someone who is not a member, there should be a management agreement in
place which spells out the rights and duties of both the members and managers.
Member - Any person who has been admitted to a limited liability company as a
member and has an economic interest in a limited liability company which may,
but need not, be represented by a capital account or, in the case of a foreign
limited liability company, has been admitted to a limited liability company as a
member in accordance with the laws of the state or foreign country or other
foreign jurisdiction under which the foreign limited liability company is organized.
The member need not reside in Florida. See also Management of a Limited
Liability Company.
Membership interest, member's interest, or interest means a member's share of
the profits and the losses of the limited liability company, the right to receive
distributions of the limited liability company's assets, voting rights, management
rights, or any other rights under this chapter or the articles of organization or
operating agreement.
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What is an Operating Agreement and why would I need one for my LLC?
An operating agreement can contain a writing setting out:
The amount of cash and a description and statement of the agreed value of any
other property or services contributed by each member and which each member
has agreed to contribute.
The times at which or events on the happening of which any additional
contributions agreed to be made by each member are to be made.
Any events upon the happening of which the limited liability company is to be
dissolved and its affairs wound up.
It may also contain:
Members and managers name and responsibilities as well as ownership
percentages and signatures.
Profits, losses, distribution of monies, management, banking resolutions, taxes
and other legal agreements regarding internal conflicts as well as general
provisions.
We offer as part of our a la carte service a SAMPLE Operating Agreement. For
complete requirements, please obtain a copy of your state's Limited Liability
Company legislation. There you will be able to determine the guidelines for your
Operating Agreement.
Additional information regarding Limited Liability Company requirements can be
located in Florida Statutes, Chapter 608: Limited Liability Companies.
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What are Articles of Organization?
(1) In order to form a limited liability company, articles of organization of a limited
liability company must be executed and filed with the Department of State by one
or more members or authorized representatives of the limited liability company.
The articles of organization shall set forth the following and additional information
as required:
(a) The name of the limited liability company.
(b) The mailing address and the street address of the principal office of the limited
liability company.
(c) The name and street address of its initial registered agent for service of
process in the state.
(2) The articles of organization are executed by at least one member or the
authorized representative of a member.
Note: Articles of organization are filed quickly and efficiently using our online
system. Since filings are completed with the Division of Corporations
electronically, this cuts the processing time required to form your LLC.
Back to top
How is an LLC classified for Federal tax purposes?
For Federal tax purposes, an LLC business entity must file as either a corporation,
partnership or sole proprietorship.
Federal tax laws will automatically classify and tax certain LLC business entities
as corporations. These entities are:
A business entity formed under a Federal or State statute or under a statute of a
federally recognized Indian tribe if the statute describes or refers to the entity as
incorporated or as a corporation, body corporate, or body politic.
An Association under Regulations section 301.7701-3.
A business entity formed under a Federal or State statute if the statute describes
or refers to the entity as a joint stock association.
A state chartered business entity conducting banking activities if any of its
deposits are insured by the FDIC.
A business entity wholly owned by a state of political subdivision thereof, or a
business entity wholly owned by a foreign government or other entity described in
Regulations section 1.892.2-T.
A business entity taxable as a corporation under a provision of the code other
than section 7701.(a)(3).
Certain foreign entities (see Form 8832 instructions).
An Insurance Company.
If your LLC is not in one of the above categories:
An LLC that is not automatically classified as a corporation can file Form 8832 to
elect their business entity classification. A business with at least 2 members can
choose to be classified as an association taxable as a corporation or a
partnership , and a business entity with a single member can choose to be
classified as either an association taxable as a corporation or disregarded as an
entity separate from its owner, a “disregarded entity”. The Form 8832 is also filed
to change the LLC’s classification.
What is the effect of Not Electing and Entity Classification, the Default Rules?
If an LLC does not File Form 8832, it will be classified, for Federal tax purposes
under the default rules. The default rules provide that if the LLC has at least two
members and is not required to be classified as a corporation, it will
automatically default as a partnership, and be required to file a partnership return.
An LLC that has only a single member and is not required to be classified as a
corporation will automatically default to the classification of disregarded entity.
The disregarded entity files as a sole proprietorship and completes the
appropriate schedules as part of the single owners Form 1040.
Note: The above is a summary of tax information from the IRS website and does
not present complete information. Please consult an appropriate tax professional
if you need clarification or contact the IRS directly for more detail.
Here is the web link to the IRS website for more information on different tax
situations.
http://www.irs.gov/businesses/small/article/0,,id=98359,00.html
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How is an LLC classified for Florida state tax purposes?
A limited liability company that is classified as a corporation for Florida and
federal tax purposes is subject to the Florida Income Tax Code and must file a
Florida corporate income tax return.
A limited liability company that is classified as a partnership for Florida and
federal tax purposes is required to file Form F-1065 if one or more of its owners is
a corporation. In addition, the corporate owner of a limited liability company that is
classified as a partnership for Florida and federal tax purposes must file a Florida
corporate income tax return.
A single member limited liability company that is disregarded for Florida and
federal tax purposes is not required to file a separate Florida corporate income
tax return. However, the income of the company is not exempt from tax if it is
owned by a corporation, whether directly or indirectly. In this case, the
corporation is required to file Form F-1120 reporting its own income, together with
the income of the single member limited liability company.
Source: Fl Dept Revenue
Do I need an attorney or CPA to form an LLC?
No. An attorney or CPA is not legally required to form an LLC.
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What are the business activities I can choose for my LLC?
These are broad categories that the IRS provides to help you select what type of
company you are creating. If your company does not fall into any of these
categories choose “other” then tell us specifically what you will be doing in the
blank next to “other.”
Accommodation & food services - providing customers with lodging, meal
preparation, snacks, or beverages for immediate consumption.
Construction - erecting buildings or other structures, (e.g., streets, highways,
bridges, tunnels). The term “construction” also includes special trade contractors
(e.g., plumbing, HVAC, electrical, carpentry, concrete, excavation, etc.)
Finance & insurance - in transactions involving the creation, liquidation, or
change of ownership of financial assets and/or facilitating such financial
transactions; underwriting annuities/insurance policies; facilitating such
underwriting by selling insurance policies; or by providing other insurance or
employee-benefit related services.
Health care and social assistance - providing physical, medical, or psychiatric
care using licensed health care professionals or providing social assistance
activities such as youth centers, adoption agencies, individual/family services,
temporary shelters, etc.
Manufacturing - the mechanical, physical, or chemical transformation of
materials, substances, or components into new products. The assembling of
component parts of manufactured products is also considered to be
manufacturing.
Real estate - renting or leasing real estate to others; managing, selling, buying or
renting real estate for others; or providing related real estate services (e.g.,
appraisal services).
Rental and leasing - providing tangible goods such as autos, computers,
consumer goods, or industrial machinery and equipment to customers in return
for a periodic rental or lease payment.
Retail - selling merchandise to the general public from a fixed store; by direct,
mail-order, or electronic sales; or by using vending machines.
Transportation & warehousing - transportation of passengers or cargo;
warehousing or storage of goods; scenic or sight-seeing transportation; or
support activities related to these modes of transportation.
Wholesale-agent/broker - arranging for the purchase or sale of goods owned by
others or purchasing goods on a commission basis for goods traded in the
wholesale market, usually between businesses.
Wholesale-other - selling goods in the wholesale market generally to other
businesses for resale on their own account.
Other - activity not described above. Describe the applicant's principal business
activity in the space provided.
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What are the different types of employees?
Other
Applies to most employees. Most new companies will designate their employees
in the "Other" category.
Household employees
Employee who performs household services, such as a maid, babysitter,
gardener, or cook, in your home are not subject to social security and Medicare
taxes if you pay that employee cash wages of less than $1,400.
Agricultural Employees
In general, you are an employer of farm workers if your employees:
Raise or harvest agricultural or horticultural products on your farm,
Work in connection with the operation, management, conservation, improvement,
or maintenance of your farm and its tools and equipment,
Handle, process, or package any agricultural or horticultural commodity if you
produced over half of the commodity (for a group of up to 20 unincorporated
operators, all of the commodity),
Or do work for you related to cotton ginning, turpentine, or gum resin products.
What is the difference between a principal address and a mailing address for an
LLC?
The principal address is the physical location in Florida where the company
conducts business. Florida Department of State Division of Corporations
mandates that this be a physical Florida address. A P.O. Box number cannot be
used for this address.
The Mailing address for an LLC can be a P.O. Box and does not have to be in
Florida. What the Florida Department of State does require of this address is that
this be a current and good address where you can be reached at any time.
Can I change the principal and mailing address of my corporation after I have
filed?
Yes, you can update both of these addresses by emailing the Florida Department
of State – Division of Corporations at corpaddresschange@dos.state.fl.us.
The principal address will still have to be a physical Florida address.
You can also update the officer and director after your initial filing
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1-LLC Structure Questions And Answers
2-What is a Limited Liability Company (LLC)?
3-What are some of the benefits/advantages and disadvantages of forming an
LLC?
4-What is the difference between a Member Manager and an External Manager?
5-Where can I find definitions for commonly associated LLC terms?
6-Things To Know About LLC's
7-What is an Operating Agreement?
8-What are articles of organization?
9-How is an LLC classified for Federal tax purposes?
10-How is an LLC classified for Florida state tax purposes?
11-Do I need an attorney or CPA to form an LLC?
12-What are the business activities I can choose for my LLC?
13-What are the different types of employees?
14-What is the difference between a principal address and a mailing address for
an LLC?
15-Can I change the principal and mailing address of my corporation after I have
filed?
1- What is a Limited Liability Company (LLC)?
In the early 1980s Florida became the second state to authorize the formation of
limited liability companies ("LLCs"). Now more than 100,000 LLCs are formed in
Florida annually.
One or more persons may form an LLC. A single-member LLC is allowed in
Florida.
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What are some of the benefits/advantages and disadvantages of
forming an LLC?
The primary reason for forming a limited liability company is to limit the liability of
the owners.
Interests in LLCs, in addition, are protected from the claims of creditors of their
members.
Organizational changes related to the LLC can generally be made in the operating
agreement alone (without amending the articles of organization).
Managers and managing members are also protected from personal liability
regarding claims pertaining to the exercise of their management authority except
for more egregious conduct (criminal or reckless acts, deriving improper
personal benefits, voting for unlawful distributions, etc.).
Changes to Florida's corporate income tax laws in the 1990s effectively
eliminated the corporate tax for LLCs.
Generally, an LLC with multiple members is treated for Florida income tax
purposes as a partnership (nontaxable entities that act as conduits for
transferring income and loss directly to the individual partners) and a single-
member LLC is "disregarded" as a separate entity for tax purpose, the same way
it is disregarded for federal tax purposes. Thus, most LLCs are not subject to
Florida's corporate income tax.
LLCs are similar to S corporations for federal tax purposes and do not pay tax
themselves, but pass their income through to their shareholders.
Selected benefits over a corporation:
Flexibility: One of the benefits of an LLC over a corporation is the great latitude
provided in the drafting of the operating agreement and the flexibility that is
possible on such issues as members' contribution obligations, member and
management voting powers, profit and loss allocations, governance structure,
members' distribution rights, etc. Amendments may be made to the operating
agreement as needed.
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A corporation requires that specific formalities be completed on a regular basis,
including annual meetings of shareholders and directors each year, meeting
minutes which are kept with the corporation's records, etc. It is a good business
practice to document major decisions regardless of the structure of your
business; however these formalities are not required for LLCs.
The interest a member owns in an LLC can be protected from creditors while the
stock a person has in a corporation may be seized and sold by creditors.
LLCs can make special allocations of profits and losses among members; S
corporations cannot. S corporations have one class of ownership with profits and
losses allocated according to the percentage of ownership.
LLC Disadvantages
The main disadvantage of the LLC as compared with an S corporation has to do
with the tax treatment for profits that are taken out of the business. If yours is a
smaller company, you may want to consider the LLC carefully as the
disadvantage primarily affects smaller companies. KNOWLEDGEFINANCIAL.COM
Here's the situation: With an S corporation, profits taken out of the business (other
than salary) are not subject to social security and Medicare taxes (which together
amount to 15.3% in 2004)*.
Consider this: In larger companies, where company owners take out salaries of
$85,000 or more, plus profits, this situation would not have much of an impact;
however, in smaller companies where the owners take out more modest salaries
(and then take profits out of the business when available), all the profit taken out
of the LLC would be subject to social security and Medicare taxes, where in the S
corporation it would not. The result: For a small business where the owner paid
themselves a $35,000 salary and took and additional $40,000 in profit out of the
business, the extra taxes on the $40,000 would be over $6,000.
* The maximum amount subject to the social security portion for tax years
beginning in 2004 has increased to $87,900. All net earnings of at least $400 are
subject to the Medicare portion.
Additional LLC Information
A limited liability company may be organized for any lawful purpose, and remains
subject to statutes and regulations of the laws of the State of Florida for regulating
and controlling its business.
Unless its articles of organization or operating agreement provide otherwise,
each limited liability company organized and existing under Florida law shall
have the same powers as an individual to do all things necessary to carry out its
business and affairs, including, without limitation, the power to:
Sue and be sued, and defend, in its name.
Purchase, receive, lease, or otherwise acquire, own, hold, improve, use, and
otherwise deal with real or personal property, or any legal or equitable interest in
property, wherever located.
Sell, convey, mortgage, grant a security interest in, lease, exchange, and
otherwise encumber or dispose of all or any part of its property.
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Purchase, receive, subscribe for, or otherwise acquire, own, hold, vote, use,
sell, mortgage, lend, grant a security interest in, or otherwise dispose of and deal
in and with, shares or other interests in or obligations of any other entity.
Make contracts or guarantees, or incur liabilities; borrow money; issue its notes,
bonds, or other obligations, which may be convertible into or include the option to
purchase other securities of the limited liability company; or make contracts of
guaranty and suretyship which are necessary or convenient to the conduct,
promotion, or attainment of the business of a corporation the majority of the
outstanding stock of which is owned, directly or indirectly, by the contracting
limited liability company; a corporation which owns, directly or indirectly, a
majority of the outstanding membership interests of the contracting limited liability
company; or a corporation the majority of the outstanding stock of which is
owned, directly or indirectly, by a corporation which owns, directly or indirectly,
the majority of the outstanding membership interests of the contracting limited
liability company, which contracts of guaranty and suretyship shall be deemed to
be necessary or convenient to the conduct, promotion, or attainment of the
business of the contracting limited liability company; or make other contracts of
guaranty and suretyship which are necessary or convenient to the conduct,
promotion, or attainment of the business of the contracting limited liability
company.
Lend money, invest or reinvest its funds, and receive and hold real or personal
property as security for repayment.
Conduct its business, locate offices, and exercise the powers granted by this
chapter within or without this state.
Select managers or managing members and appoint officers, directors,
employees, and agents of the limited liability company, define their duties, fix their
compensation, and lend them money and credit.
Make donations for the public welfare or for charitable, scientific, or educational
purposes.
Pay pensions and establish pension plans, pension trusts, profit-sharing plans,
bonus plans, option plans, and benefit or incentive plans for any or all of its
current or former managers, members, officers, agents, and employees.
Be a promoter, incorporator, shareholder, partner, member, associate, or
manager of any corporation, partnership, joint venture, trust, or other entity.
Make payments or donations or do any other act not inconsistent with law that
furthers the business of the limited liability company.
Back to top
What is the difference between a Member Manager and an External
Manager?
An LLC can be run by Members or External Managers.
What is a member?
A member is an owner of the company. An LLC can be run by a member (owner)
or several members (owners) of the company. Thus, where a member or several
members run the company, the people who own the company also run the
company. Most Limited Liability Companies are member managed in this way.
What does it mean to have external managers?
If not managed by its members, you will choose to hire an outside person to run
the company who does NOT own a part of the company. This would be termed an
"External Manager." You may have one external manager or several external
managers.
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Additional Definitions
Authorized Representative - One or more persons acting to form a limited liability
company by executing and filing the articles of organization , as authorized by a
member of such limited liability company. The authorized representative may, but
is not required to be, a member of the limited liability company that is being
formed. Capital Account - The agreed value of the initial contributions, increased
by the agreed value of subsequent contributions to capital, if any, and reduced by
distributions of capital, unless otherwise provided in the articles of organization
or the operating agreement.
Contribution - Any cash, property, or services rendered or a promissory note or
other obligation to contribute cash or property or to perform services, which a
person contributes to the limited liability company as a member.
Distribution - A direct or indirect transfer of money or other property or incurrence
of indebtedness by a limited liability company to or for the benefit of its members
in respect of their economic interests.
Foreign limited Liability Company - A limited liability company formed under the
laws of any state other than Florida or under the laws of any foreign country or
other foreign jurisdiction.
Majority-in-interest of the members means, unless otherwise provided in the
articles of organization or operating agreement, members owning more than 50
percent of the then-current percentage or other interest in the profits of the limited
liability company.
Manager - A person who is appointed or elected to manage a manager-managed
company and, unless otherwise provided in the articles of organization or
operating agreement, a manager may be, but need not be, a member of the limited
liability company.
Manager-managed company means a limited liability company that is designated
to be managed by one or more managers.
Managing member means a member appointed or elected as a managing member
of a member-managed company.
Management agreement - If the LLC will be managed by a subset of its members
or by someone who is not a member, there should be a management agreement in
place which spells out the rights and duties of both the members and managers.
Member - Any person who has been admitted to a limited liability company as a
member and has an economic interest in a limited liability company which may,
but need not, be represented by a capital account or, in the case of a foreign
limited liability company, has been admitted to a limited liability company as a
member in accordance with the laws of the state or foreign country or other
foreign jurisdiction under which the foreign limited liability company is organized.
The member need not reside in Florida. See also Management of a Limited
Liability Company.
Membership interest, member's interest, or interest means a member's share of
the profits and the losses of the limited liability company, the right to receive
distributions of the limited liability company's assets, voting rights, management
rights, or any other rights under this chapter or the articles of organization or
operating agreement.
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What is an Operating Agreement and why would I need one for my LLC?
An operating agreement can contain a writing setting out:
The amount of cash and a description and statement of the agreed value of any
other property or services contributed by each member and which each member
has agreed to contribute.
The times at which or events on the happening of which any additional
contributions agreed to be made by each member are to be made.
Any events upon the happening of which the limited liability company is to be
dissolved and its affairs wound up.
It may also contain:
Members and managers name and responsibilities as well as ownership
percentages and signatures.
Profits, losses, distribution of monies, management, banking resolutions, taxes
and other legal agreements regarding internal conflicts as well as general
provisions.
We offer as part of our a la carte service a SAMPLE Operating Agreement. For
complete requirements, please obtain a copy of your state's Limited Liability
Company legislation. There you will be able to determine the guidelines for your
Operating Agreement.
Additional information regarding Limited Liability Company requirements can be
located in Florida Statutes, Chapter 608: Limited Liability Companies.
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What are Articles of Organization?
(1) In order to form a limited liability company, articles of organization of a limited
liability company must be executed and filed with the Department of State by one
or more members or authorized representatives of the limited liability company.
The articles of organization shall set forth the following and additional information
as required:
(a) The name of the limited liability company.
(b) The mailing address and the street address of the principal office of the limited
liability company.
(c) The name and street address of its initial registered agent for service of
process in the state.
(2) The articles of organization are executed by at least one member or the
authorized representative of a member.
Note: Articles of organization are filed quickly and efficiently using our online
system. Since filings are completed with the Division of Corporations
electronically, this cuts the processing time required to form your LLC.
Back to top
How is an LLC classified for Federal tax purposes?
For Federal tax purposes, an LLC business entity must file as either a corporation,
partnership or sole proprietorship.
Federal tax laws will automatically classify and tax certain LLC business entities
as corporations. These entities are:
A business entity formed under a Federal or State statute or under a statute of a
federally recognized Indian tribe if the statute describes or refers to the entity as
incorporated or as a corporation, body corporate, or body politic.
An Association under Regulations section 301.7701-3.
A business entity formed under a Federal or State statute if the statute describes
or refers to the entity as a joint stock association.
A state chartered business entity conducting banking activities if any of its
deposits are insured by the FDIC.
A business entity wholly owned by a state of political subdivision thereof, or a
business entity wholly owned by a foreign government or other entity described in
Regulations section 1.892.2-T.
A business entity taxable as a corporation under a provision of the code other
than section 7701.(a)(3).
Certain foreign entities (see Form 8832 instructions).
An Insurance Company.
If your LLC is not in one of the above categories:
An LLC that is not automatically classified as a corporation can file Form 8832 to
elect their business entity classification. A business with at least 2 members can
choose to be classified as an association taxable as a corporation or a
partnership , and a business entity with a single member can choose to be
classified as either an association taxable as a corporation or disregarded as an
entity separate from its owner, a “disregarded entity”. The Form 8832 is also filed
to change the LLC’s classification.
What is the effect of Not Electing and Entity Classification, the Default Rules?
If an LLC does not File Form 8832, it will be classified, for Federal tax purposes
under the default rules. The default rules provide that if the LLC has at least two
members and is not required to be classified as a corporation, it will
automatically default as a partnership, and be required to file a partnership return.
An LLC that has only a single member and is not required to be classified as a
corporation will automatically default to the classification of disregarded entity.
The disregarded entity files as a sole proprietorship and completes the
appropriate schedules as part of the single owners Form 1040.
Note: The above is a summary of tax information from the IRS website and does
not present complete information. Please consult an appropriate tax professional
if you need clarification or contact the IRS directly for more detail.
Here is the web link to the IRS website for more information on different tax
situations.
http://www.irs.gov/businesses/small/article/0,,id=98359,00.html
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How is an LLC classified for Florida state tax purposes?
A limited liability company that is classified as a corporation for Florida and
federal tax purposes is subject to the Florida Income Tax Code and must file a
Florida corporate income tax return.
A limited liability company that is classified as a partnership for Florida and
federal tax purposes is required to file Form F-1065 if one or more of its owners is
a corporation. In addition, the corporate owner of a limited liability company that is
classified as a partnership for Florida and federal tax purposes must file a Florida
corporate income tax return.
A single member limited liability company that is disregarded for Florida and
federal tax purposes is not required to file a separate Florida corporate income
tax return. However, the income of the company is not exempt from tax if it is
owned by a corporation, whether directly or indirectly. In this case, the
corporation is required to file Form F-1120 reporting its own income, together with
the income of the single member limited liability company.
Source: Fl Dept Revenue
Do I need an attorney or CPA to form an LLC?
No. An attorney or CPA is not legally required to form an LLC.
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What are the business activities I can choose for my LLC?
These are broad categories that the IRS provides to help you select what type of
company you are creating. If your company does not fall into any of these
categories choose “other” then tell us specifically what you will be doing in the
blank next to “other.”
Accommodation & food services - providing customers with lodging, meal
preparation, snacks, or beverages for immediate consumption.
Construction - erecting buildings or other structures, (e.g., streets, highways,
bridges, tunnels). The term “construction” also includes special trade contractors
(e.g., plumbing, HVAC, electrical, carpentry, concrete, excavation, etc.)
Finance & insurance - in transactions involving the creation, liquidation, or
change of ownership of financial assets and/or facilitating such financial
transactions; underwriting annuities/insurance policies; facilitating such
underwriting by selling insurance policies; or by providing other insurance or
employee-benefit related services.
Health care and social assistance - providing physical, medical, or psychiatric
care using licensed health care professionals or providing social assistance
activities such as youth centers, adoption agencies, individual/family services,
temporary shelters, etc.
Manufacturing - the mechanical, physical, or chemical transformation of
materials, substances, or components into new products. The assembling of
component parts of manufactured products is also considered to be
manufacturing.
Real estate - renting or leasing real estate to others; managing, selling, buying or
renting real estate for others; or providing related real estate services (e.g.,
appraisal services).
Rental and leasing - providing tangible goods such as autos, computers,
consumer goods, or industrial machinery and equipment to customers in return
for a periodic rental or lease payment.
Retail - selling merchandise to the general public from a fixed store; by direct,
mail-order, or electronic sales; or by using vending machines.
Transportation & warehousing - transportation of passengers or cargo;
warehousing or storage of goods; scenic or sight-seeing transportation; or
support activities related to these modes of transportation.
Wholesale-agent/broker - arranging for the purchase or sale of goods owned by
others or purchasing goods on a commission basis for goods traded in the
wholesale market, usually between businesses.
Wholesale-other - selling goods in the wholesale market generally to other
businesses for resale on their own account.
Other - activity not described above. Describe the applicant's principal business
activity in the space provided.
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE HOMES, CONDOS, TOWN-
HOMES, COMMERCIAL PROPERTIES AT KNOWLEDGEFINANCIALGROUP.COM
What are the different types of employees?
Other
Applies to most employees. Most new companies will designate their employees
in the "Other" category.
Household employees
Employee who performs household services, such as a maid, babysitter,
gardener, or cook, in your home are not subject to social security and Medicare
taxes if you pay that employee cash wages of less than $1,400.
Agricultural Employees
In general, you are an employer of farm workers if your employees:
Raise or harvest agricultural or horticultural products on your farm,
Work in connection with the operation, management, conservation, improvement,
or maintenance of your farm and its tools and equipment,
Handle, process, or package any agricultural or horticultural commodity if you
produced over half of the commodity (for a group of up to 20 unincorporated
operators, all of the commodity),
Or do work for you related to cotton ginning, turpentine, or gum resin products.
What is the difference between a principal address and a mailing address for an
LLC?
The principal address is the physical location in Florida where the company
conducts business. Florida Department of State Division of Corporations
mandates that this be a physical Florida address. A P.O. Box number cannot be
used for this address.
The Mailing address for an LLC can be a P.O. Box and does not have to be in
Florida. What the Florida Department of State does require of this address is that
this be a current and good address where you can be reached at any time.
Can I change the principal and mailing address of my corporation after I have
filed?
Yes, you can update both of these addresses by emailing the Florida Department
of State – Division of Corporations at corpaddresschange@dos.state.fl.us.
The principal address will still have to be a physical Florida address.
You can also update the officer and director after your initial filing
KNOWLEDGEFINANCIAL.COM -- BUY AND SALE
HOMES, CONDOS, TOWN-HOMES, COMMERCIAL
PROPERTIES AT KNOWLEDGEFINANCIALGROUP.
COM
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HOMEOWNERS IN FORECLOSURE
Let Us Help You Sell Your Real Estate Property Now.
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SOUTH FLORIDA HOMEOWNERS WHO ARE THINKING
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SOUTH FLORIDA HOMEOWNERS WHO ARE THINKING
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LET US HELP YOU.
CALL US AT: 786-7096577--
VISIT: WWW.KNOWLEDGEFINANCIALGROUP.COM
YOUR PROPERTY WILL BE MARKETED IN 13
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''IF YOU NEED HELP TO SELL YOUR REAL ESTATE
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AT:
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Help.
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Business Cycle: What Is the Business Cycle?
Definition: The business cycle describes the phases of growth and decline in
an economy.
The goal of economic policy is to keep the economy in a healthy growth rate --
fast enough to create jobs for everyone who wants one, but slow enough to
avoid inflation.
Unfortunately, life is not so simple. Many factors can cause an economy to spin
out of control, or settle into depression.
-----------------
The most important, over-riding factor is confidence -- of investors, consumers,
businesses and politicians.
The economy grows when there is confidence in the future and in policy
makers, and does the opposite when confidence drops.
===========
The 4 Stages of the Business Cycle
There are four phases that describe the business cycle. At any point in time
you are in one of these stages:
--------------------------
Contraction - When the economy starts slowing down. It's usually
accompanied by a bear market.
Trough - When the economy hits bottom, usually in a recession.
---------------------------
Expansion - When the economy starts growing again. It's usually
signaled by a bull market.
Peak - When the economy is in a state of "irrational exuberance." This is when
inflation rears its ugly head.
============
Who Determines the Business Cycle Stages?
The National Bureau of Economic Research (NBER) analyzes economic
indicators to determine the phases of the business cycle.
The Business Cycle Dating Committee uses quarterly GDP growth rates as the
primary indicator of economic activity.
The Bureau also uses monthly figures, such as employment , real personal
income, industrial production and retail sales .
=====
What Causes the Business Cycle?
The business cycle is affected by all the forces of supply and demand. When
consumers are confident, they buy now because they know there will be future
income from better jobs, higher home values and increasing stock prices.
Even a little healthy inflation can trigger demand by spurring shoppers to buy
now before prices go up. As demand increases, businesses hire new workers,
which further stimulates more demand. This is the Expansion phase.
If demand outstrips supply, then the economy can overheat. In addition,
investors and businesses compete to outperform the market, taking on more
risk to gain some extra return.
This combination of excess demand, and the creation of risky derivatives,
created the housing asset bubble in 2005.
If demand isn't cooled down with higher taxes (fiscal policy) or higher interest
rates (monetary policy), then the Peak is not far off. You can always recognize
a peak by two things:
First, the media is saying that the expansion will never end. Second, it seems
everyone and his brother is making tons of money from whatever the asset
bubble is.
--------------
In the Contraction phase, confidence is replaced by fear or even panic.
Investors sell stocks, and buy bonds, gold and the U.S. dollar.
Consumers lose their jobs, sell their homes, and stop buying anything but
necessities. Businesses lay off workers, and hoard cash. Confidence must be
restored for the economy to enter a new Expansion phase.
In addition to demand, the business cycle is also heavily dependent on the
availability of capital. This is known as liquidity, and is itself dependent upon
interest rates.
Too much capital will turn a healthy expansion into a peak, at which point
greed will bid up the price of assets, often causing inflation. At this point, a
stock market correction may indicate that assets are overvalued, creating fear
and a contraction.
=============================
The History of Recessions in the United States:
The history of recessions in the United States since the Great Depression
show they are a natural, though painful, part of the business cycle.
Note: On July 31, 2013 the Bureau of Economic Analysis BEA revised all GDP
statistics from 1929. It also made revisions in 2014, back through 1999. The
most recent stats are given below, with the original stats in parentheses. This
helps you see how difficult it is to grasp that we're in a recession even as it's
happening.
-----------------
2008-2009 Recession
The worst recession since the Depression. The economy shrank in five
quarters, including four quarters in a row. Two quarters shrank more than 5%,
including Q2 2008 which fell a whopping 8.9%, more than any other recession
since the Great Depression.
The recession ended in Q3 2009, when GDP turned positive, thanks to
economic stimulus spending. The recession was also the longest since the
Depression, lasting 18 months.
-----------
2001 Recession
It lasted eight months (March-November 2001). It was caused by the Y2K scare,
which created a boom and subsequent bust in Internet businesses. It was
aggravated by the 9/11 attack.
The economy contracted in two quarters: Q1 -1.3% (-.5%) and Q3 -1.1% (-1.4%).
Unemployment reached 5.7% during the recession, but rose even further to
6% in June 2003. This often happens in recessions, as unemployment is a
lagging indicator .
Most employers wait until they are sure the economy is back on its feet again
before hiring permanent employees.
-------------
1990-1991 Recession
This recession was eight months (July 1990 to March 1991). It was caused by
the Savings and Loan Crisis in 1989. GDP was -3.5% (-3%) in Q4 1990 and
-1.9% (-2%) in Q1 1991.
---------
1980-1982 Recession
This was technically two recessions: the first six months of 1980 and 16
months from July 1981 - November 1982. It was partially caused by the Iranian
oil embargo, which reduced U.S. oil supplies driving up prices.
--------
1973-1975 Recession
This recession lasted sixteen months (November 1973-March 1975). OPEC is
blamed for quadrupling prices for a few months in 1973. It alone didn't cause
such a deep recession.
Several factors contributed. First, President Nixon instituted wage-price
controls. This kept prices too high, reducing demand . Wage controls made
salaries too high, which forced businesses to lay off workers.
Second, Nixon took the U.S. off of the gold standard in response to a run on
the gold held at Fort Knox. However, this created inflation, as the price of gold
skyrocketed to $120 an ounce and the dollar's value plummeted. The result
was stagflation and three consecutive quarters of negative GDP growth :
1974 Q3 -3.9% (-3.8%), Q4 -1.6% (-1.6%), 1975 Q1 -4.8%(-4.7%). Unemployment
reached a peak of 9% in May 1975, two months after the recession technically
ended.
-------------
1970 Recession
This recession was relatively mild, lasting 11 months. GDP was down for two
quarters:Q1 -.7%, Q2 .7%, Q3 3.6%, Q4 -4.2%. Unemployment peaked at 6.1%
in December 1970.
1960 Recession
Starting in April 1960, the recession lasted 10 months. GDP was -1.9% (-2%) in
Q2 and -5% (-5.1%) in Q4. Unemployment reached a peak of 7.1% in May 1961.
President Kennedy ended the recession with stimulus spending.
----------
Recession of 1957
It was eight months (August 1957-April 1958). GDP was - 4.2% in Q4 1957 then
immediately plummeted 10.4% in Q1 1958. Unemployment didn't reach its peak
of 7.1% until September 1958. It was caused by a contractionary monetary
policy .
--------------
Recession of 1953
Beginning July 1953, this recession lasted 10 months, a result of the end of the
Korean War.
Unemployment didn't reach its peak of 6.1% until September 1954, two months
after the recession ended. GDP was down 6.2% in Q4 of 1953.
------------
1949 Recession
This 11 month recession began in November 1948 and lasted until October
1949, when unemployment reached a peak of 7.9%. GDP fell .5% for the year.
This was another natural down cycle, caused by the economy adjusting to
peace-time production.
------------
1945 Recession
This recession lasted only eight months, between February and October 1945.
However, it seemed to last longer, since GDP plummeted 10.6% in 1946.
This was a natural result of the demobilization from WWII, as the huge demand
for military weapons were no longer needed. Government spending dropped,
although business spending was robust.
============================
Recessions vs. Depressions
What’s the Difference between a Recession and a Depression?
Recession and depression are two terms thrown around quite a bit by the
media when economies turn south.
The difference between the two terms is enormous considering that there have
been more than 15 recessions in the U.S. since the Great Depression. But
economists don't universally agree upon the definitions of the two words.
===========
What is a Recession?
Recessions are commonly defined as two consecutive quarters of gross
domestic product (GDP) contraction and/or a 1.5% drop in unemployment
within a year.
These factors are usually followed by declines in employment and
consumption, as well as investment, government spending and net export
activity.
-----------------
Notably, the National Bureau of Economic Research (NBER) uses a much
more ambiguous definition in the U.S., calling a recession "a significant decline
in economic activity spread across the economy, lasting more than a few
months, normally visible in real GDP, real income, employment, industrial
production, and wholesale-retail sales."
--------------------
What is a Depression?
Depressions are commonly defined as a 10%+ decline in real GDP or a
recession lasting longer than two years. These periods are characterized by a
significant shortfall in the ability to purchase goods relative to the amount that
could be produced using available resources and technology - or potential
economic output.
-----------
The causes of depressions, such as the Great Depression, are highly debated.
Economists like Ben Bernanke insist that the U.S. Federal Reserve didn't take
decisive action to stimulate the economy, despite interest rates nearing zero
percent at the time.
The lack of action by the central bank led to a lack of liquidity in the system that
exacerbated the problems.
====
Recessions vs. Depressions
The difference between recessions and depressions is largely a function of the
length and severity of a decline. Recessions tend to be short contractions that
are expected alongside a business cycle, while depressions are prolonged
contractions that are atypical. The causes of these depressions remain largely
debatable among economists.
Over the years, the severity and length of many recessions has been
dramatically reduced, while depressions have been few and far between. In the
late 1800's, many of the recessions affecting the U.S. saw double-digit
declines, while more recent recessions since the Great Depression have rarely
seen a decline of more than 4-5% of GDP.
-------------
Impacts on Global Economies
Recessions and depressions have a number of implications for international
investors. Slower economic growth means a broad contraction across many
industries.
But ironically, lower interest rates at central banks to counteract the slowdown
could have a bullish effect on the stock market, since it's cheaper for investors
to borrow money and purchase more stock.
-----------
Just because there's a bear market doesn't mean there isn't a way for investors
to profit. Short selling stocks - that is, borrowing stock and selling it with an
agreement to repurchase it in the future - enables investors to profit from
downside movement.
Meanwhile, certain asset classes tend to outperform in recessionary
environments, such as precious metals like gold.
Finally, investors can take action to hedge their portfolio against such declines.
Diversifying into precious metals like gold can help reduce overall risk, while
purchasing protective puts (put options on existing long stock positions) can
help limit downside risk.
------------
Key Points to Remember
Economists don't agree on universal definitions for a recession or a
depression, but there are some commonly used definitions of both terms.
Recessions are generally considered to occur when there are two
consecutive quarters of negative GDP growth and/or a 1.5% drop in
employment within one year, while depressions are considered to be a 10%+
decline in real GDP and/or a recession lasting two or more years.
Recessions and depressions have a number of implications for international
investors, but investors can take many actions to protect themselves.
Definition: The business cycle describes the phases of growth and decline in
an economy.
The goal of economic policy is to keep the economy in a healthy growth rate --
fast enough to create jobs for everyone who wants one, but slow enough to
avoid inflation.
Unfortunately, life is not so simple. Many factors can cause an economy to spin
out of control, or settle into depression.
-----------------
The most important, over-riding factor is confidence -- of investors, consumers,
businesses and politicians.
The economy grows when there is confidence in the future and in policy
makers, and does the opposite when confidence drops.
===========
The 4 Stages of the Business Cycle
There are four phases that describe the business cycle. At any point in time
you are in one of these stages:
--------------------------
Contraction - When the economy starts slowing down. It's usually
accompanied by a bear market.
Trough - When the economy hits bottom, usually in a recession.
---------------------------
Expansion - When the economy starts growing again. It's usually
signaled by a bull market.
Peak - When the economy is in a state of "irrational exuberance." This is when
inflation rears its ugly head.
============
Who Determines the Business Cycle Stages?
The National Bureau of Economic Research (NBER) analyzes economic
indicators to determine the phases of the business cycle.
The Business Cycle Dating Committee uses quarterly GDP growth rates as the
primary indicator of economic activity.
The Bureau also uses monthly figures, such as employment , real personal
income, industrial production and retail sales .
=====
What Causes the Business Cycle?
The business cycle is affected by all the forces of supply and demand. When
consumers are confident, they buy now because they know there will be future
income from better jobs, higher home values and increasing stock prices.
Even a little healthy inflation can trigger demand by spurring shoppers to buy
now before prices go up. As demand increases, businesses hire new workers,
which further stimulates more demand. This is the Expansion phase.
If demand outstrips supply, then the economy can overheat. In addition,
investors and businesses compete to outperform the market, taking on more
risk to gain some extra return.
This combination of excess demand, and the creation of risky derivatives,
created the housing asset bubble in 2005.
If demand isn't cooled down with higher taxes (fiscal policy) or higher interest
rates (monetary policy), then the Peak is not far off. You can always recognize
a peak by two things:
First, the media is saying that the expansion will never end. Second, it seems
everyone and his brother is making tons of money from whatever the asset
bubble is.
--------------
In the Contraction phase, confidence is replaced by fear or even panic.
Investors sell stocks, and buy bonds, gold and the U.S. dollar.
Consumers lose their jobs, sell their homes, and stop buying anything but
necessities. Businesses lay off workers, and hoard cash. Confidence must be
restored for the economy to enter a new Expansion phase.
In addition to demand, the business cycle is also heavily dependent on the
availability of capital. This is known as liquidity, and is itself dependent upon
interest rates.
Too much capital will turn a healthy expansion into a peak, at which point
greed will bid up the price of assets, often causing inflation. At this point, a
stock market correction may indicate that assets are overvalued, creating fear
and a contraction.
=============================
The History of Recessions in the United States:
The history of recessions in the United States since the Great Depression
show they are a natural, though painful, part of the business cycle.
Note: On July 31, 2013 the Bureau of Economic Analysis BEA revised all GDP
statistics from 1929. It also made revisions in 2014, back through 1999. The
most recent stats are given below, with the original stats in parentheses. This
helps you see how difficult it is to grasp that we're in a recession even as it's
happening.
-----------------
2008-2009 Recession
The worst recession since the Depression. The economy shrank in five
quarters, including four quarters in a row. Two quarters shrank more than 5%,
including Q2 2008 which fell a whopping 8.9%, more than any other recession
since the Great Depression.
The recession ended in Q3 2009, when GDP turned positive, thanks to
economic stimulus spending. The recession was also the longest since the
Depression, lasting 18 months.
-----------
2001 Recession
It lasted eight months (March-November 2001). It was caused by the Y2K scare,
which created a boom and subsequent bust in Internet businesses. It was
aggravated by the 9/11 attack.
The economy contracted in two quarters: Q1 -1.3% (-.5%) and Q3 -1.1% (-1.4%).
Unemployment reached 5.7% during the recession, but rose even further to
6% in June 2003. This often happens in recessions, as unemployment is a
lagging indicator .
Most employers wait until they are sure the economy is back on its feet again
before hiring permanent employees.
-------------
1990-1991 Recession
This recession was eight months (July 1990 to March 1991). It was caused by
the Savings and Loan Crisis in 1989. GDP was -3.5% (-3%) in Q4 1990 and
-1.9% (-2%) in Q1 1991.
---------
1980-1982 Recession
This was technically two recessions: the first six months of 1980 and 16
months from July 1981 - November 1982. It was partially caused by the Iranian
oil embargo, which reduced U.S. oil supplies driving up prices.
--------
1973-1975 Recession
This recession lasted sixteen months (November 1973-March 1975). OPEC is
blamed for quadrupling prices for a few months in 1973. It alone didn't cause
such a deep recession.
Several factors contributed. First, President Nixon instituted wage-price
controls. This kept prices too high, reducing demand . Wage controls made
salaries too high, which forced businesses to lay off workers.
Second, Nixon took the U.S. off of the gold standard in response to a run on
the gold held at Fort Knox. However, this created inflation, as the price of gold
skyrocketed to $120 an ounce and the dollar's value plummeted. The result
was stagflation and three consecutive quarters of negative GDP growth :
1974 Q3 -3.9% (-3.8%), Q4 -1.6% (-1.6%), 1975 Q1 -4.8%(-4.7%). Unemployment
reached a peak of 9% in May 1975, two months after the recession technically
ended.
-------------
1970 Recession
This recession was relatively mild, lasting 11 months. GDP was down for two
quarters:Q1 -.7%, Q2 .7%, Q3 3.6%, Q4 -4.2%. Unemployment peaked at 6.1%
in December 1970.
1960 Recession
Starting in April 1960, the recession lasted 10 months. GDP was -1.9% (-2%) in
Q2 and -5% (-5.1%) in Q4. Unemployment reached a peak of 7.1% in May 1961.
President Kennedy ended the recession with stimulus spending.
----------
Recession of 1957
It was eight months (August 1957-April 1958). GDP was - 4.2% in Q4 1957 then
immediately plummeted 10.4% in Q1 1958. Unemployment didn't reach its peak
of 7.1% until September 1958. It was caused by a contractionary monetary
policy .
--------------
Recession of 1953
Beginning July 1953, this recession lasted 10 months, a result of the end of the
Korean War.
Unemployment didn't reach its peak of 6.1% until September 1954, two months
after the recession ended. GDP was down 6.2% in Q4 of 1953.
------------
1949 Recession
This 11 month recession began in November 1948 and lasted until October
1949, when unemployment reached a peak of 7.9%. GDP fell .5% for the year.
This was another natural down cycle, caused by the economy adjusting to
peace-time production.
------------
1945 Recession
This recession lasted only eight months, between February and October 1945.
However, it seemed to last longer, since GDP plummeted 10.6% in 1946.
This was a natural result of the demobilization from WWII, as the huge demand
for military weapons were no longer needed. Government spending dropped,
although business spending was robust.
============================
Recessions vs. Depressions
What’s the Difference between a Recession and a Depression?
Recession and depression are two terms thrown around quite a bit by the
media when economies turn south.
The difference between the two terms is enormous considering that there have
been more than 15 recessions in the U.S. since the Great Depression. But
economists don't universally agree upon the definitions of the two words.
===========
What is a Recession?
Recessions are commonly defined as two consecutive quarters of gross
domestic product (GDP) contraction and/or a 1.5% drop in unemployment
within a year.
These factors are usually followed by declines in employment and
consumption, as well as investment, government spending and net export
activity.
-----------------
Notably, the National Bureau of Economic Research (NBER) uses a much
more ambiguous definition in the U.S., calling a recession "a significant decline
in economic activity spread across the economy, lasting more than a few
months, normally visible in real GDP, real income, employment, industrial
production, and wholesale-retail sales."
--------------------
What is a Depression?
Depressions are commonly defined as a 10%+ decline in real GDP or a
recession lasting longer than two years. These periods are characterized by a
significant shortfall in the ability to purchase goods relative to the amount that
could be produced using available resources and technology - or potential
economic output.
-----------
The causes of depressions, such as the Great Depression, are highly debated.
Economists like Ben Bernanke insist that the U.S. Federal Reserve didn't take
decisive action to stimulate the economy, despite interest rates nearing zero
percent at the time.
The lack of action by the central bank led to a lack of liquidity in the system that
exacerbated the problems.
====
Recessions vs. Depressions
The difference between recessions and depressions is largely a function of the
length and severity of a decline. Recessions tend to be short contractions that
are expected alongside a business cycle, while depressions are prolonged
contractions that are atypical. The causes of these depressions remain largely
debatable among economists.
Over the years, the severity and length of many recessions has been
dramatically reduced, while depressions have been few and far between. In the
late 1800's, many of the recessions affecting the U.S. saw double-digit
declines, while more recent recessions since the Great Depression have rarely
seen a decline of more than 4-5% of GDP.
-------------
Impacts on Global Economies
Recessions and depressions have a number of implications for international
investors. Slower economic growth means a broad contraction across many
industries.
But ironically, lower interest rates at central banks to counteract the slowdown
could have a bullish effect on the stock market, since it's cheaper for investors
to borrow money and purchase more stock.
-----------
Just because there's a bear market doesn't mean there isn't a way for investors
to profit. Short selling stocks - that is, borrowing stock and selling it with an
agreement to repurchase it in the future - enables investors to profit from
downside movement.
Meanwhile, certain asset classes tend to outperform in recessionary
environments, such as precious metals like gold.
Finally, investors can take action to hedge their portfolio against such declines.
Diversifying into precious metals like gold can help reduce overall risk, while
purchasing protective puts (put options on existing long stock positions) can
help limit downside risk.
------------
Key Points to Remember
Economists don't agree on universal definitions for a recession or a
depression, but there are some commonly used definitions of both terms.
Recessions are generally considered to occur when there are two
consecutive quarters of negative GDP growth and/or a 1.5% drop in
employment within one year, while depressions are considered to be a 10%+
decline in real GDP and/or a recession lasting two or more years.
Recessions and depressions have a number of implications for international
investors, but investors can take many actions to protect themselves.