The Personal MBA: Master the Art of Business
Business Plans (Pessimistic, Realistic, Optimistic)
Plan for Failure¶
Many businesses fail.
What is the survival rate for new businesses?
About half of all new establishments survive five years or more and about one-third survive 10 years or more.
Many businesses are not profitable in their first year(s) of operation.
Plan for Success¶
Profit ~= Income = Revenue - Expenses (ROI)
There is an incentive to re-invest revenue into the business.
Choosing a name
Search result count
(Multi-) state business name registration
Market Share / Market Size
number of customers
marginal customer value (see: Smoothies)
Legal team factors to consider
Already-prepared, already-tested document library
Registering a business
State of incorporation
Types of business entity¶
No liability protection, no double-taxation (“pass-through taxation”):
Limited liability, no double-taxation (“pass-through taxation”):
Types of corporations:
some LLCs and LLPs can be taxed as S corporations
pass-through income taxation (according to shareholder %)
no aliens allowed
one class of stock
health insurance benefits and HSAs must be included as W-2 wages if the shareholder holds greater than 2% of the outstanding shares
taxed separately (business income tax, payroll tax; and then income tax)
(“Tax Rate Schedule” 2015 p.17 )
Corporate income tax rates (2015 Form 1120): 15-35% (*)
Personal Income tax rates (2015 Form 1040): 10-39.6% (*)
>>> ((1.0 * (1-0.35)) * (1-0.396)) 0.3926 >>> ((1.0 * (1-0.15)) * (1-0.10)) 0.765