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    Posted by Bernie Dietz
    Categories: FAQ

    I have previously provided my Top 5 Secrets Landlords Don’t Want You to Know list and thought I would provide another Top 5 list of the biggest mistake I see potential tenants make when they’re trying to find space for their business.  If you can avoid some or all of these mistakes, you’ll be way ahead.

    The Top 5 Mistakes I see potential tenants make are:

    1. Not forming a LLC or corporation first.  You should go into negotiations with your separate entity already formed and ready to be named as the lessee.  If you can avoid a personal guarantee, you’ll sleep easier at night.
    2. Not knowing what to ask for from the landlord.  Do you want to abate the rent until you open for business?  Do you need financial help with the construction costs?  You need to think through what you will need before you sign the lease, after which it is too late.
    3. Not understanding the terms.  What is a triple net lease?  What services will the landlord provide and which services are you responsible to provide?  If you haven’t negotiated a lot of leases, the terms can be confusing.  Make sure you understand all of them before signing anything.
    4. Not being willing to walk away.  There is a lot of commercial space out there and you should be willing to move on to the next opportunity if you can’t agree on terms that make sense to your business.  Often, an entrepreneur will make changes to his or her business model to fit the lease – that’s backwards.  If you believe there is only one perfect location for your new business, then I would seriously consider a new business. 
    5. Not understanding the costs of build out and start up before signing the lease.  Getting construction sticker-shock after you have signed the lease is a terrible, terrible thing.  Make sure you have a firm handle on the projected costs of getting your proposed location open BEFORE you sign a lease.  Once you’re in, you’re in and the landlord is not going to be sympathetic when you can’t make the rent payment because of your oversized start-up costs.

    Keep in mind that in most commercial lease situations, the landlord and its agent will have much more experience than you.  They do this type of work everyday while most entrepreneurs will only negotiate a handful of leases in their working life.  This makes it crucially important to have experienced help in the form of a real estate agent and/or lawyer on your side to make sure you get the best deal possible.

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    Posted by Bernie Dietz
    Categories: FAQ

    One question I get a lot is: "what is the correct order of things to do when starting a new business?"  While there is no perfect one-size-fits-all answer, there is a generally accepted way of doing things. 

    Here is the order that I typically recommend:

    1. Form your LLC or corporation.  The reason to do this first is that all of your future agreements, whether they are leases for commercial space, contracts with suppliers, or your initial customer contracts, should be in the name of your entity.  Not sure whether you need to form a LLC or corporation?  Then read this article first:
    2. Obtain a tax ID from the IRS.  You’ll need this to open a company bank account and you can’t apply until you have your LLC or corporation approved by the State Corporation Commission.
    3. Open a bank account in the name of your LLC or corporation.  NEVER comingle personal money and business money – it’s a bad idea for many reasons.
    4. Get your county business license.  Every business needs to obtain a business license when starting out – check with your county or city government on how to get this done.
    5. Get your state tax payment information submitted.  If your business involves collecting state sales tax from your customers, for instance, you will need to comply with the Virginia laws on remitting sales tax to the state.

    When you follow the order above, things should flow smoothly as your new business starts. 

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    I have discussed how to form a Virginia LLC and Virginia corporation before, which is definitely a hot topic.  But I also get questions from company owners regarding how to properly "shut down" or dissolve their limited liability company or corporation. The process is similar for both types of entities but has some differences worth noting.

    If you would like to shut down your Virginia LLC, the first step is to wind up the affairs of the LLC.  This involves collecting all of your outstanding accounts receivables (money that is owed to you), paying all of the LLC’s bills (money the company owes to others – wages, vendor invoices, rent, etc.), and distributing the excess (or profits) to the LLC members per the terms of your Operating Agreement.  Once that is done, the LLC files Articles of Cancellation with the Virginia State Corporation Commission.  The Virginia SCC will process the Articles and send back a Ceritificate of Cancellation stating the effective date of termination.  Once you have that, the LLC is done.  Be sure not to do any business under the LLC name after that point.

    If you would like to shut down your Virginia corporation, you start by filing Articles of Dissolution with the Virginia State Corporation Commission.  Once you have filed Articles of Dissolution, the only activity allowed to be done by the corporation is the "winding up" of its affairs.  Like with an LLC above, this means amounts due to the corporation are collected and bills are paid.  Once this is completed, the corporation files Articles of Termination with the Virginia SCC that end its existence.  The Virginia SCC will then return a Certificate stating the effective date of termination to you and the corporation no longer exists.

    The above information just relates to the organizational issues involved with terminating your existence.  There are also tax issues that must be dealt with as part of this process, which a good CPA should be able to help you navigate.

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    Posted by Bernie Dietz
    Categories: FAQ

    Forbes Magazine’s latest issue proclaims Virginia as the #1 state for businesses for the second year in a row.  The article states that Virginia finished in the top 10 in four of the six main categories that Forbes tracks, with a pro-business regulatory environment, strong labor conditions, great growth prospects, and a high quality of life.

    You can read all of the Virginia ranking specifics on the Forbes web site .

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