Selling a turn-key business

Posted on April 27, 2011 by Frank Nagy

There are many steps to start a business. Preparing a business plan, opening a bank account and advertising are just the beginning of many steps to lay the ground work for a successful business. However, when it comes time to sell a business, the same work and preparation needs to be applied to assure a smooth sale. There are a variety of options which must be considered and evaluated, prior to getting to the closing table.Find out if you can sell your business. Many parts of a business can be attractive to buyers. Verify that your business has had a solid history of profitability or if losses, explain why. Make sure that any intellectual property rights, long-term contracts with clients, or exclusive distributorships are assignable to the new owners of the business.Value your business. There are three types of business valuation to determine what your business is worth. Balance sheet value, income approach and market approach. For the balance sheet value, you determine the business asset’s book value to reflect the cost it would take to replace the assets in their current condition. When applying the income approach, you take in consideration your company’s earnings utilizing a capitalization rate, discount rate or multiplier. Market value approach deals with researching the sale prices businesses in a similar industry and in a specific geographic area. When valuing your business, its best to sit down with you CPA and have him confirm the accuracy of your calculations.Hire a business broker. The business broker you hire should be a Certified Business Intermediary (CBI) designated by the International Business Broker Association. A licensed CBI has met certain educational requirements and ethical standards which would provide him with the knowledge and experience to market your business. Professional business broker would also provide the expertise to help you evaluate offers and guide you through the sale process.

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Starting a successful forex trading company

Posted on April 20, 2011 by Frank Nagy

The forex (Foreign Exchange) market is the largest and the most liquid financial market with the daily volume of more than $3.2 trillion. Banks worldwide trade on this market by buying and selling world currencies taking the profit from the exchange rates difference. The Forex trading can yield high profits, but it is also very risky. By utilizing various trading strategies and leveraging your initial capital, the forex market is where huge profits can be made.Identify a trading style that you are comfortable with. Some traders like to carry trade. Carry trading involves owning a currency and earning the interest rate (swap rate) associated with that currency. Another type of trading is called Support / Resistance. In this trading strategy the support level is the lowest price a currency can trade at over a period of time while the resistance level is a price at which a currency can trade. Bollinger Bands are one of the most popular trading styles. This style was invented by John Bollinger in the1980s. The trading style evolved from the concept of trading bands, and can be used to measure the relative height or depth of the currency being traded.Choose the right leverage. In forex, leverage is a dollar amount that is provided to an investor by the broker that is handling his or her forex account. It differs from a stock margin account since this type of leverage does not carry any interest. To trade $100,000 of a particular currency, the typical margin deposit would be 1%. The investor will only have to deposit $1,000 into his forex account. With that degree of leverage, the profit potential can be as high as 100 times as well as the potential loss.Set your stop loss price. A stop loss price is the currency price in which you are willing to sell or get out of the trade in the event that it is losing money. To avoid loosing all your investment, start by limiting your loss at 5 percent per trade. By setting a certain percent it keeps you in the game until another trading opportunity comes your way.

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Changing board members of a corporation

Posted on April 13, 2011 by Frank Nagy

Every profit corporation must consist of two sets of documents: Articles of incorporation and the bylaws. The articles of incorporation are recorded in the state in which the corporation is incorporated in. It discloses to the public the name of the corporation, address, registered agent, the amount of authorized shares issued and the names of the board of directors. The bylaws are not recorded in the state but rather drafted and approved by the organizing board members. It gives instructions on how the corporation is to be run and the functions of each board member.Organize a special board meeting. The formal process is to mail a letter to each board member stating the date, time and meeting place where the meeting will be held. Also, include the general purpose of the meeting. In this case, to change a board member.Announce to the board the candidate(s) who intend on serving on the board as well as any members who will be stepping down from serving. A two thirds majority is typically required by the board to approve the new member(s) unless the bylaws will stipulate otherwise.File a Resignation of Directors/Officers with the state’s division of corporations identifying the board member(s) who have resigned. File an Articles of Correction with the new board member(s).

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How to convert from a corporation to an LLC

Posted on April 11, 2011 by Frank Nagy

There are various reasons why a corporation may need to change in to a single member LLC. The main reason is if there is only one shareholder/owner of the corporation. Another reason is for tax planning purposes. A corporation in its self pays taxes on net income. If there is any dividend paid to its owner, taxes will be required to be paid by the owner’s on his personal tax return. This results in “double-taxation”. Notify the state your corporation is registered in that you intend on converting your corporation in to an LLC. For example, in Florida a corporation is required to file a Certificate of Conversion for Other Business Entity into Florida Limited Liability Company. You will be required to provide the name of the corporation, directors and registered agents as well as the proposed name of the LLC, its managers and members. In most states, there will be a fee to covert the corporation into an LLC. In Florida, for example the conversion fee is $25 and to file the Articles of Organization (for the LLC) is $125.Go to the IRS web site and download form 8832 Entity Classification Election. Complete the form with your LLC name, address and contact information. In line 6, in most cases, you would elect to be treated as “A domestic eligible entity with a single owner electing to be disregarded as a separate entity.” Determine your corporate status of ownership by following the instructions on page 3 of the form. If you have any doubts, contact your CPA.Draft a limited liability company operating agreement. The operating agreement is similar to corporate bylaws accept that it outlines who the managers and members are, their functions and capital contributions. You can download a simple single-member LLC from any business supply company for a small cost. Notify your accountant on the change in your business status. Ask him to advise you on the various tax saving strategies available to single-member LLCs.

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Forming a Delaware Corporation

Posted on April 9, 2011 by Frank Nagy

With flexible corporate bylaws, shareholder/directors privacy as well as no state income tax, Delaware is a preferred location when converting a corporation in that state. More than 850,000 business entities are registered in Delaware including more than 50% publicly traded companies. Converting and registering a Delaware corporation can be accomplished by Internet or fax through a registered agents located in the state. Have your board members approve that the corporation will be re-domiciled to Delaware. Re-domiciled simply means that the corporation will cancel its registration from its current state in which it is incorporated in and “re-registered” (re-domiciled) in Delaware. Obtain a registered agent located in Delaware. The Delaware registered agent is appointed by the corporation to receive service of process when the corporation is involved with a lawsuit. The Delaware registered agent’s address is where the state will send the yearly renewal documents of the corporation.Complete the Certificate of Conversion from a Non-Delaware Corporation to a Delaware Corporation. The conversion filing fee in the state of Delaware is $164 for the first page and $9 for each additional page. In addition to the conversion fee, you will need to pay a Certificate of Incorporation fee in the amount of $89 for the first page and $9 for each additional page. Provide a copy of the conversion certificate to your bank for their records. For new bank accounts, some banks require an original Certificate of Conversion. This document can be obtained by the State of Delaware Division of Corporations. The fee is $50 per certificate.

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Creating a limited partnership forinvesting purposes

Posted on April 7, 2011 by Frank Nagy

There are many applications for a using a limited partnership. Some people use limited partnerships for holding personal assets such as bank accounts, vehicles and even furniture. Businesses use limited partnerships to hold equipment machinery and real estate. Creating a limited partnership used for investing is not complicated or burdensome. However, it does take some preliminary planning to do it correctly so that you don’t violate any tax or securities laws.Draft a limited partnership agreement. You can download this agreement on the web or purchase it from an office supply store for less than $200. If you are not comfortable with drafting the agreement yourself, you might be better off hiring an attorney to prepare it. A limited partnership agreement will address who will invest, how much, what you will invest in and how it will operate.State who the primary investors in your limited partnership will be. If you are the sole investor, indicate that you will be the limited partner as well as the general partner. The general partner is responsible for running the partnership and accomplishing its purposes.Decide on the amount of the initial capital investment into the limited partnership. Once the partnership has been funded, the general partner will work with the funds to accomplish the partnerships’ purpose. Set up a capital account for each investor. The capital account is an accounting term used to show how much each investor has invested, any withdrawals made by the investor as well as any distributions to the investor. Outline your investments. If you will be investing in real estate, state the type of properties, location and price range. For stocks, bonds and other marketable securities identify the industries you will invest in and how long will you hold the security. If you investing in securities address they type of trading strategies you intend on using such as buy and hold, day-trading or growth and income.File the limited partnership with your state. In Florida, a certificate of limited partnership must be filed along with a $965 filing fee and a $35 registered agent fee. Obtain an EIN number from the IRS. This tax ID number will be used to file for your annual partnership return as well as for the purpose of opening investment and trading accounts.

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Making money with real estate notes

Posted on April 5, 2011 by Frank Nagy

A real estate note is considered owner financing. Owner financing is where the seller of piece of real estate holds a mortgage note for the buyer/borrower. The buyer makes loan payments to the seller instead of making it to a bank. Real estate notes can vary, but always include the interest rate, payment amount, and terms which the buyer of the real estate must pay the seller. Download a real estate promissory note from the web. You can also purchase a promissory note from your local office supply store. There are various kinds of promissory notes to choose from. Be sure to locate one specialized for real estate. If you are not comfortable with preparing one yourself, contact a real estate attorney to help you.Negotiate the down payment with your buyer. Encourage him to put as much down as possible since that will provide further assurance that the buyer will be less likely to walk a way from paying the note.Discuss the interest rate that you will charge your buyer. If the buyer has less than perfect credit, you might want to offer an interest rate of 7 to 10% to compensate for the risk. Outline the terms. Typical real estate notes are amortized for 30 years but have a balloon payment in 3 to 5 years. What this means is that the loan payments are calculated based on a 30 year loan but the loan is actually is due in 3 to 5 years. This is a great way to get your investment back in the event you wish to use those funds for other purposes. Include the legal description of the property you are selling. A legal description is the unique wording the county uses to describe your property. You can find the legal description on your deed.

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Issuing Preferred Stock

Posted on April 3, 2011 by Frank Nagy

When a small business incorporates, they issue common stock to its investors. Common stock represents a percentage of ownership in the company. Common stock shareholders are entitled to voting rights regarding company issues such as stock splits and appointing board members and officers. Preferred stock is another category of stock in which investors can also own. Unlike common stock, preferred stock entitles the holders to have “preferred” treatment in the event that the company needs to liquidate. Another words, investors of preferred stock are paid first before common stock holders. Preferred stock holders do not have any voting rights which makes issuing preferred stock a more attractive choice when raising capital.Organize a meeting with the company board of directors and approve the issuance of preferred stock. A two thirds majority vote is typical unless the corporate bylaws say other wise. Decide on the amount of dollars that need to be raised through the preferred stock offering. Outline the use of proceeds from the preferred stock offering and show the investors how you intend on compensating them for their risk. Choose a dividend rate that the company can afford to pay to its preferred stock holders. The rate should be competitive to what a bank would offer in a CD. Decide whether to structure the dividend to be Cumulative or Non-Cumulative. Cumulative simply means that if the company skips any dividend payments, it gets accumulated and paid to the shareholder once the company resumes paying the dividends. Non-Cumulative do not make up any missed dividend payments. Prepare an offering memorandum which contains all the details of the preferred stock offering such as share price, dividend, redemption and the risks. The memorandum should also contain a subscription agreement which explains how investors can purchase the stock.Distribute the offering memorandum to friends and business associates. Address any questions they might have with regards the company and to owning preferred stock.

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Alternative Investments

Posted on March 30, 2011 by Frank Nagy

Traditional investments include cash, bonds and of course, stocks. Alternative investments are typically higher risk because of the trading styles, limited regulations and lack of liquidity. Alternative investments also have high minimum investment amounts and charge a higher fee to manage portfolios. Four common types of alternative capital investments are venture capital funds, hedge funds, managed futures accounts and real estate investment trusts, or REITs.Venture capital or VC funds are similar to hedge funds, but the main investment of the fund is ownership in emerging and growth companies. Managers of venture capital funds look for accredited investors who purchase shares in the fund itself. Once the fund accumulates the necessary capital to acquire its company purchases, the fund begins operations. The life of a typical venture capital fund is 10 years, after which the focus shifts to liquidating the investments and allocating the profits to the venture capital investors. Venture capital funds are not liquid. They are meant to be buy-and-hold investments. Since emerging and growth companies are highly risky, venture capital funds may invest in a dozen or more companies with only one to two companies generating a positive return on investment.Hedge funds are funds that invest in a range of investments including equities and commodities. The objective of managers of hedge funds is to offset potential losses by hedging their investments using various trading styles. Hedge funds are typically available to accredited investors. An accredited investor is a person who has an income of $200,000 per year or has a net worth of $1 million. This investor criteria provides the hedge fund with an exemption from security regulations governing leverage, derivative contracts and short selling. Performance fees charged by fund managers range from 20 percent to 35 percent and management fees may be upward of 2 percent per year. There is no public market for hedge funds. Accredited investors purchase hedge funds through registered commodities dealers.Managed futures accounts are managed and operated by a licensed money manager or commodity trading advisor CTA on behalf of the account holder

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