Successful business people who were once young, brash, and then hit up hard against the walls of their own making are the first to step back and say, “Maybe I don’t know everything there is to know here.”
Indeed, with success often comes humility.
As a successful entrepreneur, Daymond John, Founder of FUBU, says, “As an entrepreneur, you never stop learning.”
A key way to learn about business is to find and spend time with a business mentor.
Business mentorship does not need to involve lengthy discussions. Famously, Mark Zuckerberg once mentioned that comment from Steve Jobs opened the door for Zuckerberg to formalise his vision of what he wanted Facebook to become.
Even though you might spend just a few minutes with a mentor, behind those minutes lies a lifetime of experience.
Here are five ways those few minutes with a business mentor can set you on the path to success:
Harvard? Yale? Oxford? Those second-class institutions can’t hold a candle to the University of Experience!
And, guess what, with a mentor by your side, you get all that experience for free!
Probably, the first lesson any wet-behind-the-ears entrepreneur has to learn well to start on the path to success is to realise they don’t know everything there is to know about business.
Entrepreneurs never stop learning. And the lessons which the vast and extensive experience of a successful mentor can bring are priceless.
Sometimes, those mentors don’t even realise that their advice is so invaluable. They give it as easily as if they were ordering a hamburger at a diner.
That’s how it goes with professionals: They do something so many times until it becomes second-nature, while others stand around and watch in awe.
That vast well of experience also serves as the finest spectacles known to humankind. These spectacles provide for a keen business insight that has no truck with ambiguity.
A mentor who has achieved true success will look at a problem and know its intricacies immediately. They will see things in the problem that others have missed. If you show them a new concept or design and they’ve seen one like that before, which failed, they’ll tell you directly.
Success comes at a price. Mentors have no time to cuddle and coddle. They know the pain of failing at business and want to save others that pain by simply telling them something like it is.
Better the quick slap to the face that wakes the sleeping driver and avoids a car crash.
This doesn’t mean mentors must be haughty or arrogant. Indeed, the best ones are not. They are driven by a genuine desire to assist their proteges.
It does mean, however, that a mentor’s advice, however sparsely offered, should be given the weight it deserves, and often heeded.
A mentor’s job is to get you to stand on your own two feet, not to turn you into an employee.
A mentor understands that you are not an employee. You are an entrepreneur.
Entrepreneurs are made of a special kind of substance — they are difficult to tame, impossible to hold down, filled with high-flown ideas.
An entrepreneur can’t spread their wings if they are constantly held inside the cage or chained to a post.
A mentor’s final goal is to have their protege “outgrow” the mentor’s advice and maybe even become mentors themselves.
Maybe the business idea you had turned out to be a terrible one. Maybe the idea was brilliant, but the market wasn’t ready for it. Maybe both the idea and the business plan are solid, but you’ve had several setbacks and are struggling to find the motivation to continue (much like Mark Zuckerberg was when he received that nugget of advice from Steve Jobs).
An astute mentor will tell you bluntly when an idea should be dumped and a better one discovered.
It doesn’t matter how many businesses you start. What matters is the one that you take to the top.
Getting “back on the horse” doesn’t mean continuing endlessly down a path that leads nowhere. It means knowing when to abandon a faulty course and pick up a new one.
In this sense, a mentor won’t only get you back on the horse. They might get you to choose an entirely different horse as well!
Probably the most rewarding (and mutually beneficial) aspect of mentorship is the long-lasting friendship
based on mutual respect which can form.
This is the greatest payback that a mentor can receive from their protege.
And, knowing you have a veritable friend to talk to, who is deeply interested in your business’s success, is often the only thing needed to guarantee that business’s success.
It tends to be lonely at the top. A mentor can ease that loneliness.
Our head of content, Julia has spent the past 20 years assisting entrepreneurs with all aspects of business launch and growth strategies in various industries around the globe.
Shopify has completely revolutionized e-commerce. Unlike its competitors — WooCommerce, Wix, Squarespace — Shopify stands out from the rest in that it is entirely and completely built around e-commerce only. Instead of being a plugin or add-on, it is the shop and website your e-commerce business runs on. Other tools provide e-commerce as an additional functionality or added plugin. Shopify is e-commerce, and everything about the service is dedicated to getting your business up and selling within minutes. The pricing is highly competitive and scales as your business scales so that you only pay for what you need. Plans for Shopify start from as little as USD29.00 a month for sellers who are new to e-commerce. With just a few clicks, a person can get their e-commerce store going in no time, which makes Shopify an extremely popular choice for e-commerce businesses, powering upwards of 1,000,000 e-commerce websites! Why is it important to integrate Shopify with an accounting tool? Whether you’re using Shopify or some other e-commerce system, integrating that system with your backend accounting system is essential to your own sanity; particularly if you’re selling in large volumes. The reasons for this are as follows: Bookkeeping will be a nightmare Without integrating Shopify with your accounting system, you will need to keep up your bookkeeping manually. Shopify provides an “Export to CSV” option, and the resultant CSV file is massive. Manually inputting all that exported data into your bookkeeping system is a potential minefield of errors. If you’re using Excel for your accounting, you might be able to write some macros to get the data imported automatically, but that’s starting to get really complicated! Most businesses these days use online accounting and bookkeeping software. If you’re a small business, some of that software is even available for free, such as Wave Accounting. But, whereas accounting and bookkeeping software can save swathes of time once the data is in the system, it can potentially add time if you have to import a lot of data from a CSV file. Often, the CSV file needs to be formatted in a particular way. This requires more of your time and opens the door to even more potential errors. In short, connecting Shopify to an online accounting system is imperative for peace of mind, so you can simply work on your business and let the bookkeeping take care of itself. Shopify fees The problem is made more complex when one adds Shopify fees to each transaction. In some cases, Shopify will charge a small fee per transaction. In your accounting, you could add this as a tax-deductible expense. Manually sifting through fees or figuring them out in an exported CSV file further adds to the potential of human error when updating your bookkeeping software manually. What are the basic requirements to connect Shopify with my accounting software? Fortunately, Shopify connects with many accounting systems to keep the two systems in sync, and automatically update your bookkeeping. Essentially, the main criterion required to connect your accounting software to Shopify is that a “middleware” app has been specifically designed to do this. Most of these apps connect to online accounting services. But there is also a connection for QuickBooks Desktop which can be obtained in the Shopify app store. If a tool doesn’t exist in the Shopify store or made by the accountancy software provider itself, sometimes tools like Zapier can help connect that particular software to your accounting system, but that starts getting a little more complex. How to integrate FreeAgent with Shopify FreeAgent is an extremely popular accounting tool, especially amongst solopreneurs, freelancers, and sole proprietors. It is also very popular with other small businesses. The only drawback to this integration is that it only works with UK VAT rates. So, if you’re selling using another country’s VAT Rates, you won’t be able to use the plugin. The plugin works by importing the data daily to FreeAgent. FreeAgent then automatically generates invoices for any items sold. FreeAgent connects directly with Shopify. All that is required is to visit the FreeAgent App page on the Shopify Plugins store and then add the plugin to your Shopify store. Simply click the “Add app” button to begin the integration. If you are not logged in, Shopify will prompt you to log in. You’ll be asked to confirm the connection, and to review the various permissions that are required for this integration: You will then be taken to FreeAgent’s website and asked to log in. On FreeAgent’s page, you will be asked to confirm that Shopify can access your FreeAgent data: After accepting all the permissions, you’ll be taken back to Shopify’s page to configure all the settings so that FreeAgent knows how to handle any purchases made. These configurations include: Setting the to start the configuration from Setting up the VAT rates and sales categories Reviewing the contact name to use for any invoices created in FreeAgent Specifying the spending categories for Shopify fees and card fees Confirming that you don’t have foreign tax rates applied. And, voila! Your data will be automatically imported and synced! How to integrate QuickBooks Desktop with Shopify QuickBooks Desktop can sync with Spotify using the QuickBooks Desktop plugin available in the Shopify App Store. All order information from Shopify is synced once a day, and all information is pulled into QuickBooks Desktop, including customer details, line items, taxes, shipping, etc. The tool has the added benefit of handling multi-currency orders without a problem. And it can also sync data from multiple Shopify stores into one QuickBooks Desktop file for syncing. To connect QuickBooks Desktop to Shopify, visit the plugin page above, install it, and then follow the prompts. It should be noted that the syncing tool provided here is not made by QuickBooks, but by a third-party company called Parex Technologies. How to connect QuickBooks Online with Shopify QuickBooks also doesn’t provide an in-house solution to link Shopify with their accounting software. So, again, we’ll have to resort to third-party solutions. There are several on the market. One of the solutions can be found on the Intuit (the makers of Quickbooks) App page, made by a company called Bold Commerce. Unfortunately, this particular app has some pretty dismal reviews, so we’re not going to recommend it. On the Shopify app store, however, there’s an app by Parex, which also makes the QuickBooks Desktop Sync tool for Shopify. Parex’s QuickBooks Cloud sync tool has excellent reviews: The app costs USD10/month, with a 7-day free trial. Adding the app follows a similar procedure compared to the first one we covered (FreeAgent). You will be prompted to grant the appropriate permissions on both websites (QuickBooks and Shopify), and then you’ll need to configure how you want Shopify’s data to be pulled into QuickBooks. Other providers to connect QuickBooks Online to Shopify As with all tools created by third parties, you’ll have to make a call as to which one you want to use. Here are some other options for connecting QuickBooks Online to Shopify: io Quickbooks Sync by Bold (has a free tier) QuickBooks Online Sync (USD99.00/month—great reviews, but what a price!) How to connect Xero with Shopify Xero also does not provide its own in-house connection to Shopify, but it does recommend some apps on its webpage that can do the job. The three recommended apps to connect Xero to QuickBooks are: A2x Amaka Parex Bridge All of the apps have incredible reviews (4.8 to 4.97 stars). A2x for Shopify A2x for Shopify automatically posts Shopify data to Xero. It reconciles payouts, fees, refunds, and adjustments so that these don’t need to be entered manually. To get started, visit the A2x website, open an account and then install the app. They have a free trial period for you to test the app. Amaka Amaka summarizes all daily transactions from Shopify into one invoice and automatically categorizes and groups those transactions to make use of Xero’s powerful reporting capabilities. The tool also takes care of payment fees and taxes. To get started, you will first need to create an account at Amaka. Then click the New Integration button. There will be several authentication and permission screens that follow, both for Shopify as well as for Xero. You will need to grant permission for the Amaka app to access your Shopify account as well as your Xero account. After clicking Save + Continue, the integration is live and ready to start syncing! Parex Bridge for Xero Parex Bridge provides daily syncing between Shopify and Xero. It syncs Shopify orders, products, and customers. You can configure Parex Bridge to run entirely automatically, or choose a manual option so that it runs only when you trigger it through the click of a button. Refunds and order cancelations are all dealt with by the app. Partially paid orders are also handled appropriately. Customers can be imported individually, or you can choose for them to be synced to a single customer such as “Shopify.” The tool also deals with Tax and Shipping costs appropriately. To configure Parex Bridge for Xero, visit the Parex Bridge page on the Shopify App Store and click “Add App.” If you are not logged in to Shopify, you will be prompted to log in. Like all the other apps in this article, you will need to authenticate and accept permissions as necessary, both on Xero’s side and Shopify, so that the two systems can communicate with each other. Once you have authenticated, you will be prompted to fill in some settings, such as the Xero account you want to log Shopify purchases in, how to handle Gift Card purchases, and any Xero prefixes you want to use if you are connecting more than one Shopify store to Xero. There are also options to configure how to handle Shopify PayOuts and how to handle Xero products when syncing orders. You will then need to select the package that matches your needs: The available packages for Parex Bridge for Xero are: Silver – USD10.00/month, for up to 100 orders a month. Gold – USD20.00/month, for between 101 and 1,000 orders a month. Platinum – USD30.00/month, for stores with up to 10,000 orders a month. (You will be charged an additional USD10.00 for every additional 5,000 orders.) How to integrate FreshBooks with Shopify Like FreeAgent, FreshBooks has created its own app to connect directly with Shopify. Unfortunately, it does not have great (or many) reviews. The app can be installed directly from the Shopify App Store. Also, like the FreeAgent app, this one doesn’t cost anything (although you do need a FreshBooks subscription to use FreshBooks). To install, click Add App from the Shopify page, authenticate, and accept the permissions on both Shopify and Freshbooks for the app to access your accounts. The app gives you several options when syncing client data. These are: Syncing orders to a new client with the name “COMPANY+NAME” Syncing all orders to an existing client Creating a new client for each order processed You can see these options below. The screenshot above also shows the option to sync data on a schedule, or every time you click the Sync Manually button. For every order in Shopify, an invoice is generated in FreshBooks. Inventory data is pulled from Shopify, and the Shopify products will be considered the Master Source of data. Which will then update/modify FreshBooks’s data These products can be synced manually or automatically with FreshBooks. How to integrate Wave Accounting with Shopify Wave’s free accounting software is only available to US and Canada-based customers. Unfortunately, Wave’s in-house Shopify syncing feature came to an end on Dec. 31, 2020. But there is still an app on the Shopify App Store called “Sync to Wave.” This app is not reviewed by Wave itself, and it has very few reviews. (And the reviews are not great.) To connect this tool, click Add App, authenticate and accept the required permissions, then configure the settings. Sync to Wave offers the following functionality: Sync orders from Shopify to Wave as accounting transactions. All line items, shipping fees, and applicable taxes are synced. Any new sales taxes created in Shopify will be automatically added to Wave. Gift card payments can be synced. Shopify PayOuts can be synced. The app also supports multiple stores. Another option for Wave syncing with Shopify is Zapier. But this requires a lot more individual setup compared to a dedicated app. How to integrate Zoho Books with Shopify Zoho Books connects to Shopify by means of its in-house integration platform, Zoho Flow. The major drawback with it is that it requires configuring each aspect of Shopify to Zoho Books, rather than being a one-click, “black box” solution that takes care of everything for you. Although the potential of this integration method is vast, we feel that the setup is clunky. Also, the Standard tier of Zoho Flow—USD10/month—is limited in the number of actions it can carry out a month before you need to upgrade to a higher tier. That higher tier is a whopping USD24/month which we felt was a little hefty if all you want to do is integrate Shopify with Zoho Books and not use any of Zoho Flow’s other features. Zapier is another option when it comes to integrating Zoho Books. But that has similar issues to Zoho Flow, because both those services are an all-in-one integration service, and not “Black Box” services which take the complexity out of connecting Shopify to an accounting system. Overall, we were disappointed with Zoho Books’s offering. Which is the best accounting software to integrate with Shopify? Based on the above factors, we gave each of the accounting tools above a star rating out of five according to how we felt they dealt with integration. We compared all factors, including: Pricing Reviews from users Functionality FreeAgent lost points because: The reviews are bad They only support UK tax, which really sucks FreshBooks equally lost stars because of the negative reviews. Wave only has a third-party app and the reviews are not great. We felt Zoho was too complex to be user-friendly, and too expensive. We’re not fans of Desktop apps, but we couldn’t find anything that worked against QuickBooks Desktop, so it also gets a five-star. Xero is the clear winner, though, with some excellent third-party tools that are highly reviewed and extensively used. (We gave it a bonus star.) Here’s our subjective review of how well each of the above accountancy tools integrates with Shopify: FreeAgent QuickBooks Desktop QuickBooks Online Xero FreshBooks Wave Zoho App available? (several apps available) Built in house? Has all major features? Good reviews? (excellent and many reviews) N/A Overall Rating ★★ ★★★★★ ★★★★★ ★★★★★ Bonus star: ★ ★★★ ★★ ★ About author Julia Richards Our head of content, Julia has spent the past 20 years assisting entrepreneurs with all aspects of business launch and growth strategies in various industries around the globe.
In any “best of” survey, it’s important to remember the factor of weight variables. Every person’s circumstances are different. Therefore, certain factors might have more weight to you than to someone else. We’ve gone through what is generally perceived as the four best states to form an LLC in, and assigned values to different factors without weight variables. This gave us a uniform ranking, determining which is the best theoretical state to open and run an LLC in. This article is meant to be a guide, allowing you to get a quick glance at the four best states in the USA to open an LLC in. But you should definitely research more deeply into each aspect below. We have provided applicable links wherever possible. How we chose the states The tumultuous year of 2020 changed everything. Previously, it had always been a given that the “best” states to start a business were Delaware, Nevada or maybe even Wyoming. But we simply couldn’t ignore the elephant in the room, which was how “lockdown-friendly” that State has been in the last year. This is no comment on whether lockdowns are right, wrong, merited, ethical, or any of that. It is simply a statement of fact: Government enforced lockdowns affect a business’s ability to operate, so we simply could not ignore this fact when choosing the “best” state for business this year. We also couldn’t only consider lockdowns when choosing the states. That would add a weight variable that would not apply to many people, such as those whose businesses can operate entirely remotely. So, we took the middle ground and chose: Delaware—because Delaware will always have a place in any “best of” article for setting up a business in the USA. Nevada—because…same. Nevada has been flexing its muscles to compete with Delaware for some time, and is gaining traction. South Dakota—because it was the only state in 2020 whose unemployment rate improved in all of the USA. Its governor has been anti-lockdown from the beginning. Florida—because it has been pro-business for most of the pandemic, allowing small businesses to continue to operate, and is continuing to do so while many other states remain in lockdown or with other restrictions in place. Again, we must reiterate that this is not a political comment on the use of lockdowns. We have no opinion on the matter in this article other than what environment each state government is providing for its local businesses. Let’s do this thing! Privacy For various reasons, members and managers of companies might not want their name on the public record. This can provide an additional buffer against frivolous lawsuits aimed at individuals, as well as allow entrepreneurs freedom to run multiple businesses in stealth mode—a common requirement for tech startups. In Delaware, if you use a registered agent, then no information on the members (owners) and managers needs to be listed on the company’s Certificate of Formation. Also, the Delaware Division of Corporations does not store any information regarding LLC members and managers. Once the business has been formed in Delaware, your registered agent will then provide you with a Certificate of Incumbency, which authorizes you to do business on behalf of that business. But this certificate does not need to be filed with any public authority. It must be noted that this level of privacy in Delaware exists only when you register through an agent. Delaware, like many other states, requires the organizers of an LLC to be filed publicly. To ensure privacy, this organizer can be your registered agent. Nevada has a convoluted method of keeping names out of the public record. Nevada is one of those many states where members’ names do need to be filed in the Articles of Organization. But the workaround to this is to assign a “Nominee Director” or “Nominee Manager” to act as the public face of the company. This “in-name-only” person will have no control over the business, but will be publicly associated with it. When we get to the Sunshine State, things get a little more complicated, and less private. Florida requires a business’s address to be a matter of public record as per the Florida Public Records Act of 1909. If you’re a one-person show, or just starting out, that’s usually your personal address. No privacy. To get around this, you would need a registered agent, as in Delaware. But this option doesn’t keep your personal name out of the public record, which would be exposed whenever you file your annual reports. Because Florida law requires the name of a manager or member to be filed along with the company’s annual reports. The only way around this is a tangled solution where you actually need to form two LLCs, using the name of one as the manager or member of the other. Confused? Yeah, it’s complicated. That’s why Florida gets a three-star rating for member privacy. South Dakota does not require member and manager names on the public record. It does require the “organizer(s)” of the LLC to be named in the Articles of Organization. South Dakota’s annual reports also require the names of directors and governors. Delaware Nevada South Dakota Florida Member Privacy ★★★★★ ★★★★★ ★★★ ★★ Piercing the corporate veil The “corporate veil” is a term used to describe the legal distinction between members of a company, and the company itself. It is an essential concept when it comes to the separation of liability, a major reason for forming LLCs. If a corporate veil is successfully pierced through litigation, a member becomes personally liable for the LLC’s debts, which can be catastrophic for personal wealth. The Nevada Corporate Veil has traditionally been the stuff of legends. And when it does get pierced (an extremely rare occurrence in Nevada), it is big news. Delaware is equally robust in keeping the corporate veil in place. To determine fraud in Delaware, the “person behind the curtain” must have committed particularly egregious acts. Florida actually has quite a strong reputation for not piercing the corporate veil. Judges require that malicious acts be deliberate and not merely as a result of negligence before piercing the veil. We found little information regarding South Dakota’s treatment of the corporate veil. Specifically, we found nothing negative in this respect. Indeed, as you will see later on in this article, South Dakota’s legal climate is one of the best in the country. So we’re going to give them the benefit of the doubt in the matter of piercing the corporate veil. Delaware Nevada South Dakota Florida Strength of Corporate Veil ★★★★★ ★★★★★ ★★★★ ★★★★ Taxes Delaware is often cited as a tax haven because it doesn’t charge corporation tax on companies which don’t physically do business there. That’s great if you don’t live in Delaware, not so great if you do. But there’s another crucial issue to know about this: There is a difference between “registering” and “filing” a business. In the USA, “filing” a business means to incorporate it. “Registering” a business means the procedure you go through when you want to do business in other states. Let’s say you sell flowers and you live in California. You have a flower shop in California. Well, even if you file in Delaware, you will still need to register the business in any state that you wish to do business in. That means double paperwork. And it also means fees for registering in the foreign state. So, yeah, “no taxes” is not entirely true. Nevada is actually on the opposite side of the pendulum: To make full use of tax benefits from Nevada, the business must actually reside in Nevada or conduct its primary business in Nevada. That means zero corporation tax, zero, franchise tax, zero capital stock tax, etc. But, yeah, you have to be domiciled in the state to benefit from these tax savings. Want to move to Nevada? (Also, keep in mind that zero state tax does not mean you are free from federal corporate tax which is levied at 15% for the first $50,000 of net, and increases in amount for anything higher.) Florida also has numerous tax advantages—both at the individual and business level. It is particularly friendly to small businesses and medium-sized businesses because there is zero state-level corporate tax for LLCs. Only C Corporations (usually “big companies”) pay corporate tax, so it’s ideal for small businesses. But even so, Corporate Tax for C Corps is as low as 5%, or 0% if the company’s profit is less than $50,000. Florida also has no personal income tax. So, for small LLCs, you won’t be taxed at state level for the company profits, and you won’t be taxed personally at state level for dividends pulled from the company. And then there’s South Dakota, arguably the most tax-friendly state for businesses in the USA. It has zero corporate tax and zero personal income tax. Motor vehicles are also free of sales tax. Delaware Nevada South Dakota Florida Tax Friendliness Ranking ★★★ ★★★★ ★★★★★ ★★★★★ Government Interference in Business’s Rights Okay, this is the dreaded “lockdown” section. I think we’ve mentioned that this isn’t a political comment, but we’ll mention it again: This isn’t a comment on the ethics or morals of lockdowns! We are looking at this purely from a business perspective, and how your business might fare in the future if the state you are in is eager to close up small businesses or not. Florida initially went into lockdown but the governor quickly retracted and opened up businesses and reduced restrictions much earlier than the rest of the country. South Dakota has been called “America’s Sweden” with its governor refusing to lock down since the beginning of the pandemic, even keeping the Sturgis Motorcycle Rally, which many businesses were grateful for. Delaware’s response was a lot more stringent than Florida and South Dakota. “Non-essential” businesses were ordered to close in March of 2020, for approximately two months. And schools were to remain closed through 15 May. For any business owner, having kids at home instead of at school can be a little bit harrowing. It was actually only in June that some businesses could reopen. But then all the bars were closed indefinitely on 30 June 2020. Schools were finally allowed to reopen in August 2020. Then the governor ordered another lockdown from 14 December through 11 January. And so it went. Only now is the state starting to reopen slowly. Overall, not the greatest scene for business, especially small businesses and those in the hospitality sector. Nevada responded similarly, with initial lockdowns being extended, closing all non-essential businesses. On 8 April, 2020, golf courses were ordered to close, as well as tennis and basketball courts, same for real estate open houses. In one particularly business-hostile move, the governor threatened to close down businesses where a recent COVID outbreak was suspected to originate. Although no further state-mandated lockdowns ensued, this was floated later in the year. Delaware Nevada South Dakota Florida Government Interference in Business’s Rights ★★ ★★ ★★★★★ ★★★★★ Legal Climate Delaware’s most appealing trait for business filings has always been its Chancery Court. This is a special court that deals specifically with business matters, and its judges are experts at business. Delaware has built a strong reputation over the decades as a state where business disputes get handled rapidly and fairly in the Chancery Court. No other state has such a court. Although Nevada has effectively been waging an all-out war with Delaware in its fight to get to the top of the “Most Appealing State to Start a Business In” ladder, its arsenal has consisted mostly of tax benefits and incentives. (For example, there is no corporate income tax, personal income tax, or franchise taxes in Nevada.) But Nevada does not come close to Delaware’s legal climate. The U.S. Chambers Institute for Legal Reform (ILR)—an organization tasked with reducing the cost of legal action in America, particularly as a result of “frivolous” lawsuits—ranked Nevada’s legal climate at a scathing #29. But Florida ranks even worse, at a dismal #46. South Dakota—which is really starting to grow on us, the more we learn about it—comes in at #10, although it held the top spot in 2017. Delaware Nevada South Dakota Florida Legal Fairness ★★★★ ★★ ★★★★ ★★ So, which is the most business-friendly state? There are exceptions to all rules. And “best of” articles can only provide guidelines. Also, some people weight certain factors higher than others. The state you live in (or if you live outside of the USA entirely) can also play a major role in determining the best place to register your company. That being said, here is how the four states covered above faced off against each other in 2021, weight variables aside. Delaware Nevada South Dakota Florida Overall Rating 3.8 ★★★★ 3.4 ★★★ 4.2 ★★★★ 3.6 ★★★ Errata We’ve done our best to provide a thorough and accurate breakdown of the above states. If you see any errors, please let us know and we will be happy to correct them. About author Julia Richards Our head of content, Julia has spent the past 20 years assisting entrepreneurs with all aspects of business launch and growth strategies in various industries around the globe.
Before anything else: This is not legal advice! Company formation in Europe is an intricate subject. If you are looking to optimise your tax structure by forming a company in one of the European member states, we suggest getting expert advice while doing it. Tax optimisation and company formation Depending on what type of business you’re planning on running, you might want to consider registering your company in a Europen country other than your home country. The main reason for doing this is to save on corporate taxes. There are jurisdictions where corporate tax is extremely low. Places like Malta, Ireland, Gibraltar, Hungary, Lithuania and other jurisdictions offer some of the lowest corporate taxes in Europe. But there is more to know about this. If it was just as simple as registering a company in Hungary to save on tax when you’re located in England, then everyone would do it. You’re (probably) always going to pay some tax Forget everything you’ve read about “not paying any tax”. It’s likely not going to happen. Pressure from bodies such as the OECD (Organisation for Economic Co-operation and Development) make reducing one’s taxable footprint to zero almost an impossibility. A lot of developing European countries offer excellent tax advantages for companies, but remember that a company is a separate legal entity to an individual. Once you take that money out of the company you are then taxed on that income personally by whatever regime you are currently registered under — more often than not, where you’re physically located. Setting up a company in, say, Hungary so you can pay lower corporate tax doesn’t mean you will have access to that money personally. The money belongs to the company which is a separate legal entity. Once you take the money out in the form of a salary or dividends, you will be taxed on it by your local authorities. What works for big corporations might not work for small ones “Base erosion” and “profit shifting” — which are basically methods of “eroding” one’s taxable base and “shifting” one’s profits into more advantageous tax regimes — are common practices amongst large megacorps. Just witness the number of tech companies who have made Ireland their home, or the huge number of banks that are based in Luxembourg. But, for smaller businesses, such intricate manoeuvres are cumbersome and often bring little return when comparing the costs required to set it up. Either way, if you’re planning on moving anyway, then Ireland has extremely favourable corporate tax rates (12.5 per cent, which is staggeringly low for Europe), as do Hungary, Romania, Lithuania, Estonia and a few other countries. Where is the work actually being done? This is the fundamental question to be answered when you’re looking to optimise your tax by forming a company in another European state. There are exceptions to every rule, especially in legal matters. But, generally speaking, you or your company will be taxed wherever the work is actually being done. That’s most often the case for service companies. If you’re selling a product, it’s a little different. Companies that sell a product must often follow numerous tax laws based on where the product is sold, and to where it is being delivered. In many cases, it does make sense to start a company in one of the lower-tax countries if you are selling a product across Europe. Dividends Dividends are taxed according to extremely complicated laws. Each European Member state has its own “withholding rate” for dividend payments for foreign individuals. The country you are personally registered in for tax then has its own taxation tables for dividends on the individual level. Let’s follow that closely. There are three steps here: Corporate tax (domicile of the corporate entity) Withholding tax (domicile of the corporate entity) Personal income tax applied to dividends (domicile of the individual) Almost all European Member states have withholding taxes for dividend payments (nominally, Estonia and Latvia do not, but they levy a 20 per cent corporate tax when dividends are distributed). These withholding rates vary from member state to member state and can be mitigated by existing Double Taxation Treaties so that you are not taxed in two jurisdictions for the same income. It is advisable to talk to a tax adviser about the best possible option for optimising your dividend payments. What type of business do you run? If you’re a one-person show, you’re unlikely to achieve many benefits from forming a company in a different European country because your money will need to stay locked in that company for you to benefit from the corporate tax savings. If, however, you are planning on moving soon, or if you spend a tremendous amount of time in that country then, yes, registering a company in that jurisdiction might reduce your taxable footprint. Again, it depends greatly on the type of business you’re running. Romania might have stunning tax savings on both a corporate and an individual level, but it is a developing economy and the purchasing power of local consumers is not that strong. If you are planning on moving to Romania, Hungary, Lithuania or some other low-tax jurisdiction and do your business primarily in another country (e.g. via the internet) then a world of options opens up to you to optimise your taxable footprint through registering a company there. About author Julia Richards Our head of content, Julia has spent the past 20 years assisting entrepreneurs with all aspects of business launch and growth strategies in various industries around the globe.
With the Bank of England warning that the UK has hit its deepest recession in 300 hundred years, some people might think that starting a business at this time is the silliest thing to do. These people are misinformed. Some of the largest names in business began during a recession. The success of a business has little to do with the current state of the economy. The only important things to know when running any business are: What is in demand How to pivot if that demand suddenly sinks. The hospitality and travel industries were hit hardest, and yet Airbnb reported spectacular profitability in the middle of this crisis. Airbnb is definitely doing something right to convince people to book rooms despite all supposed reasons not to. Starting a business — understanding demand Let’s look at the restaurant industry. What is the demand that restaurants fill? Perhaps it’s a demand for tables and a specific type of cuisine. Perhaps it’s a demand for not having to cook at home, or for being well served. During the COVID lockdowns, not all those demands could be met. But some of them could, perhaps with slight alterations. Restaurants could offer a premium takeaway service and thereby fulfil some of the demands above. If they’re a posh restaurant, and part of their offering is the sense of fine dining, they could get a brochure put together which shows people how to replicate that experience in their own homes. (Candles, anyone? Champagne?) The trick is knowing how to pivot. The other trick is to be creative. Creativity is what makes entrepreneurs successful No one can predict the future. No matter how good your business plan is, you can’t plan for the unforeseen and the unprecedented. If anything, COVID has resulted in such a different world to what was in place before that it is unlikely that the world will change so drastically again in the near future. COVID took everyone’s footing away from under them, and everyone had to learn how to stand. Well, we’re standing now. And people know how to weather the storms a lot better than before. Even so, creativity and the ability to pivot are essential traits of any entrepreneur. Even if you hadn’t known what the essential tools were for your business before COVID-19, you would go and discover them when the time arose. Entrepreneurs must be able to work under pressure and solve problems to survive. Today, it’s COVID-19 and a bumbling, fumbling, blind government with no sense of how to tackle a crisis. Tomorrow, it could something else. The top entrepreneurs don’t blame others. They look at a problem and tackle it head-on — creatively. Less competition The other reason to start a business after COVID-19 is because you will likely have less competition. Part of the character of an entrepreneur is a sense of boldness and an ability to spot an opportunity looming, no matter how faint. As the famous saying goes: Luck is merely a seized opportunity. (Did we just make that up? I think we did.) Be bold. Be an entrepreneur. Now is the time to start your business. Why is now the time? Simply because it is now. The entire ethos of successful entrepreneurs is to mould the environment to their needs, not vice versa. It’s that attitude which leads to disruptions in the market. Successful entrepreneurs don’t wait for greener pastures. They sow seeds and turn those pastures green themselves. If the ground is rocky, they plough harder or seek better ground. What you must do when starting a business, post COVID-19 As a result of this new footing we have found, business persons are much more aware of certain essentials which must be in place for any business to succeed. These essentials were previously considered “nice-to-haves” — such as video conferencing tools, remote-working tools, cloud-based solutions — but are now considered to be utterly crucial to a business’s survival. So, starting a business after COVID-19 means you’ll be going into the world of business with your eyes open. Can you imagine having started one just before the crisis, only to realise belatedly that you should’ve spent a bit more dough on work-from-home solutions? The key things to have in place when starting your business in a post-COVID-19 world are: Funding Excellent marketing A great product Top-notch service A smoking-hot social media presence Digital marketing galore The right software for your business Buying power If “consumer buying power” is a concern, it shouldn’t be. The main thing is to deliver value with your product or service. If you bring value to people and save them a bit of time or a bit of hassle, they will be happy to pay for what you have to offer, even during tough times. When to start a business is not as important a question as How to start a business. If you do it right, you can start a successful business any time you choose to. About author Julia Richards Our head of content, Julia has spent the past 20 years assisting entrepreneurs with all aspects of business launch and growth strategies in various industries around the globe.
Few things strike more fear into the hearts of business owners and sole proprietors like a message from HMRC that they are about to be investigated. The time to purchase tax investigation insurance for your business is before receiving such a letter because the tax investigation cover would probably not be valid for any notices of investigation that came prior to its purchase. But, do you actually need tax investigation protection? Is it worth investing in tax investigation insurance for my business? In 2010, HMRC introduced a state-of-the-art data mining and analysis system called Connect, in order to facilitate the discovery of fraudulent or undisclosed financial activity. The database cross-references business data with personal data and compares that data to numerous other sources in order to discover discrepancies. In 2016, HMRC upgraded the system so that it now obtains financial information from British Overseas Territories as well as sixty or so other countries that comply with international regulations for the sharing of financial data. The data which Connect correlates is fairly extensive, including: Adverts on the internet for sites like Zoopla and Rightmove eBay and other online marketplaces Insurance companies Capital gains data In short: The HMRC is cracking down severely on any possibility of tax evasion. With such a wide net, there is always the possibility of the wrong fish getting caught. What types of tax investigations does the HMRC carry out? The term “investigation” is fairly broad and encompasses a plethora of potential inspections and enquiries that HMRC might want to carry out in your business, or even regarding your personal taxes. Here is a summary of some of the most common ones: IR35 Investigation by HMRC It is the bane of all sole proprietors, but also of limited companies composed of only one or two people: Being caught inside IR35. If HMRC determines that you have a “high risk” of being considered inside IR35, the chances are very high that it will conduct such an investigation into your business. You are likely to have to pay much higher taxes on income earned for contracts in which you were deemed to be in IR35. HMRC Employer Compliance Review The HMRC might conduct an Employer Compliance Review if it believes you, as an employer, are not fulfilling all the required tax payments and contributions required of you. The number of things an employer can be liable for is fairly extensive. PAYE & VAT Compliance If there is any discrepancy with your PAYE payments or information given to HMRC when running payroll, the HMRC might run an enquiry into this in your business. The same goes for discrepancies regarding VAT payments. And so on… There can also be enquiries and investigations into: Income tax self-assessment returns. Corporation tax assessment returns. Partnerships and Directors. What does tax investigation insurance cover offer? It can be quite costly to have to pay an accountant to pore over your accounts in order to provide HMRC with the data it needs to exonerate you from any liability connected to their enquiry. These are costs which you must pay, even if you are found to be fully in compliance. Additionally, if HMRC deems that litigation must be pursued, there are costs involved in this as well. A worthwhile tax investigation insurance will cover all these costs. Please check with your insurance provider or accountant, what their insurance covers specifically. How can tax investigation cover help me during an investigation and what does it protect against? The best tax insurances will offer not only financial benefits but also expert lawyers and accountants who will defend your case in front of HMRC. Ideally, whatever tax insurance protection you purchase would come with a specialist dedicated precisely to your case. Although the HMRC is a government department, and we are all brought up to believe that our government is our friend, it is also true that it operates much like a business — an uncompromising business with all the powerful machinery of law behind it. A recent study showed that the HMRC now collects an additional £10 billion in revenue every year, compared to only half a decade ago. That additional income is not because the economy is suddenly doing better. That income is because laws are getting tighter, and compliance is being enforced with a digital hand. An HMRC investigation can last as long as 16 months, even if you were not at fault. That kind of constant inspection can put a lot of burden on a business person’s shoulders. For how long will tax investigation insurance keep my business protected? Again, this depends on the specific insurance provider. At Start My Business, your tax investigation insurance would cover you for as long as you keep paying your premiums. How much does tax investigation insurance cost? It can cost as little as a few pounds a month for extensive coverage. If you are paying more than that for your tax insurance, you could probably get a better price elsewhere. The insurance we offer at Start My Business would cover legal costs of up to £100,000 if we ever had to go to court for you. About author Julia Richards Our head of content, Julia has spent the past 20 years assisting entrepreneurs with all aspects of business launch and growth strategies in various industries around the globe.
Successful business people who were once young, brash, and then hit up hard against the walls of their own making are the first to step back and say, “Maybe I don’t know everything there is to know here.” Indeed, with success often comes humility. As a successful entrepreneur, Daymond John, Founder of FUBU, says, “As an entrepreneur, you never stop learning.” A key way to learn about business is to find and spend time with a business mentor. Business mentorship does not need to involve lengthy discussions. Famously, Mark Zuckerberg once mentioned that comment from Steve Jobs opened the door for Zuckerberg to formalise his vision of what he wanted Facebook to become. Even though you might spend just a few minutes with a mentor, behind those minutes lies a lifetime of experience. Here are five ways those few minutes with a business mentor can set you on the path to success: 1. Experience is the most expensive university Harvard? Yale? Oxford? Those second-class institutions can’t hold a candle to the University of Experience! And, guess what, with a mentor by your side, you get all that experience for free! Probably, the first lesson any wet-behind-the-ears entrepreneur has to learn well to start on the path to success is to realise they don’t know everything there is to know about business. Entrepreneurs never stop learning. And the lessons which the vast and extensive experience of a successful mentor can bring are priceless. Sometimes, those mentors don’t even realise that their advice is so invaluable. They give it as easily as if they were ordering a hamburger at a diner. That’s how it goes with professionals: They do something so many times until it becomes second-nature, while others stand around and watch in awe. 2. Telling you like it is That vast well of experience also serves as the finest spectacles known to humankind. These spectacles provide for a keen business insight that has no truck with ambiguity. A mentor who has achieved true success will look at a problem and know its intricacies immediately. They will see things in the problem that others have missed. If you show them a new concept or design and they’ve seen one like that before, which failed, they’ll tell you directly. Success comes at a price. Mentors have no time to cuddle and coddle. They know the pain of failing at business and want to save others that pain by simply telling them something like it is. Better the quick slap to the face that wakes the sleeping driver and avoids a car crash. This doesn’t mean mentors must be haughty or arrogant. Indeed, the best ones are not. They are driven by a genuine desire to assist their proteges. It does mean, however, that a mentor’s advice, however sparsely offered, should be given the weight it deserves, and often heeded. 3. Teaching you to stand on your own two feet A mentor’s job is to get you to stand on your own two feet, not to turn you into an employee. A mentor understands that you are not an employee. You are an entrepreneur. Entrepreneurs are made of a special kind of substance — they are difficult to tame, impossible to hold down, filled with high-flown ideas. An entrepreneur can’t spread their wings if they are constantly held inside the cage or chained to a post. A mentor’s final goal is to have their protege “outgrow” the mentor’s advice and maybe even become mentors themselves. 4. Getting you back on the horse Maybe the business idea you had turned out to be a terrible one. Maybe the idea was brilliant, but the market wasn’t ready for it. Maybe both the idea and the business plan are solid, but you’ve had several setbacks and are struggling to find the motivation to continue (much like Mark Zuckerberg was when he received that nugget of advice from Steve Jobs). An astute mentor will tell you bluntly when an idea should be dumped and a better one discovered. It doesn’t matter how many businesses you start. What matters is the one that you take to the top. Getting “back on the horse” doesn’t mean continuing endlessly down a path that leads nowhere. It means knowing when to abandon a faulty course and pick up a new one. In this sense, a mentor won’t only get you back on the horse. They might get you to choose an entirely different horse as well! 5. Friendship Probably the most rewarding (and mutually beneficial) aspect of mentorship is the long-lasting friendship based on mutual respect which can form. This is the greatest payback that a mentor can receive from their protege. And, knowing you have a veritable friend to talk to, who is deeply interested in your business’s success, is often the only thing needed to guarantee that business’s success. It tends to be lonely at the top. A mentor can ease that loneliness. About author Julia Richards Our head of content, Julia has spent the past 20 years assisting entrepreneurs with all aspects of business launch and growth strategies in various industries around the globe.
It has been said that there are only two things needed when starting a business: A great idea, and an accountant! An accountant’s duties are often misunderstood by laypeople. Accountants work in the realm of compliance, mainly, making sure that you fulfil your fiscal obligations to the government. But great accountants also offer others services. Here are five ways that an accountant can help your business. 1. Second opinion for your business idea A “side benefit” of being an accountant is that they gain vast experience of all sorts of different businesses. A car mechanic only learns about cars. A painter only learns about paints and brushes and types of canvases. But all these businesses have one thing in common: They must file their taxes. And they need an accountant. As a result, accountants are often the “secret sauce” of excellent business consulting because they work with so many different businesses in different fields. Indeed, the most valuable business consulting one could have is that of how to manage one’s accounts. Accountants have extensive experience in seeing what has worked for clients in different industries (and at different times) and so can bring a wealth of advice to the table when you bring them a business idea. 2. Review your business plan (forecast and financial model) As experienced “number crunchers”, accountants can think with figures and can see meaning in those figures that many of us can’t see. The challenge for many accountants has been to communicate these intricate significances to other people who are not so mathematically inclined. Financial Models are an invaluable tool in getting everyday Janes and Joes (such as you and me) to understand their financial position. Financial forecasts are also crucial in determining a business’s viability, and there is no one better suited to putting together a meaningful forecast than the “Number Crunchers” themselves. Proper financial planning and understanding are essential if you plan on putting together an effective business plan in order to take out a business loan or get funding from investors. 3. Advising on legal structure Accountants are, in a sense, “mini lawyers” and must understand fiscal law like the back of their hands. As such, accountants are great assets when it comes to structuring a business entity so that its taxable footprint is as small as legally possible. There are limits to this, of course. And lawmakers have gotten wise to all the “tricks” that many businesses have adopted to minimise their tax payouts. But there are perfectly legal ways for a business or individual to optimise their tax structure. Doing so efficiently requires an in-depth understanding of tax law for that specific country. An accountant is an invaluable aid in these cases. 4. Manage your bookkeeping and accounting An accountant is not a bookkeeper. It’s important to understand that difference. A bookkeeper is responsible for filing and administrative tasks, keeping your books in order. Hence the term “book-keeper”. An accountant is responsible for ensuring your company stays compliant with fiscal regulations and that you fulfil your filing obligations each year. As the world of accounting has grown more competitive, accountants have additionally expanded into offering services such as financial advice and tax consulting. These are not, technically, accounting duties, although they do fall within the same umbrella of financial services. In either case — whether from a compliance view or an advisory view — a knowledgeable and experienced accountant’s skills are utterly invaluable when it comes to ensuring that your business uses its pennies wisely as well as pays up all its dues to the relevant fiscal authorities. Although bookkeeping services have mostly been overtaken by software tools these days, some accounting practices still offer this service to their clients even though it is not particularly profitable for them. They do this because it ends up saving time in the long run, both for the client and the accountant. 5. Financial advisory functions Many accountants have had to pivot in recent years in order to remain profitable. Online tools such as Xero, Quickbooks, FreeAgent and others have taken away many of the duties of traditional bookkeepers and accountants. Some of these tools also offer automatic filing services for individuals and businesses. As a result, many accountants have expanded the service they offer to include financial advisory functions. This is different from tax advice. Financial Advisory functions refer more to what to do with one’s money and, often, even where to invest it. It’s important to not confuse the two trades: An accountant is not automatically a financial advisor, and vice versa. But many accountants have trained up and learned some of this trade in order to offer more value to their clients. It’s convenient (and also advantageous) for an accountant to be able to offer financial advice in terms of investment and, to some degree, portfolio management. No matter where revenue comes from, there are (almost always) taxes to be paid. An accountant who is also an experienced advisor can assist in structuring your business’s wealth in such a way that its tax liabilities are minimised. About author Julia Richards Our head of content, Julia has spent the past 20 years assisting entrepreneurs with all aspects of business launch and growth strategies in various industries around the globe.