The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurship, start-ups and general business topics.
When closing a small business, there are many things to consider. On a federal level, typically a business must file an annual return for the year it goes out of business. Depending on the business structure or whether the business had employees, there are a number of tax forms that typically must be filed with the IRS before a business is deemed closed by the federal government. Not to mention state tax requirements…..but once the fiscal responsibilities have been met and the entity has been formally dissolved, one step that is frequently overlooked is canceling the EIN.
Many business owners think that once all final tax filings have been made, the IRS will automatically close or discontinue the entity’s EIN, but just as the title of this article implies the EIN for the business is never discontinued, reassigned or reused. Regardless of whether or not an EIN was ever used, the number is PERMANENT. An EIN cannot be canceled by the IRS; however, the business account associated with the EIN may be closed. If the EIN is needed in the future, it will still belong to the business entity even after the account is closed.
To close a business account with the IRS, a written letter is required to be sent to: Internal Revenue Service, Cincinnati, OH 45999. The letter must state the reason for closing the account and include the EIN, the complete legal name of the entity, and the business address. If a copy of the EIN Assignment Notice is available, be sure to include it with your letter. For entities that are deemed liable for business taxes or have been notified that business tax returns are due, the appropriate tax returns will need to be filed before the EIN account can be closed. To be absolutely sure that all necessary filings have been made to close your business with local, state, and federal tax agencies, Harvard Business Services strongly suggests that you seek the assistance of a qualified tax professional.
Yesterday on the CBS Sunday Morning Show there was a fascinating segment on the wellspring of creativity in America. This piece struck a chord for me because creativity is what the entrepreneurial spirit feeds on. New businesses are formed every day because someone like you has a creative idea as well as the drive to make it a reality. Below is an excerpt from the transcript:
A new idea . . . a new approach . . . a new technique . . . creative breakthroughs can come like a bolt of lightning, or in the whisper of a muse.
Or, sadly, not at all. Many of us would welcome any sign of creative inspiration.
"Creativity is the ability to give the world something it didn't know it was missing," said Daniel Pink. "Create something fundamentally new, like the iPod. You have tens of millions of people now who carry around an iPod. Eight years ago I don't think they knew they were missing an iPod."
Even without your iPod, author Daniel Pink's views may be music to your ears. A former speechwriter for Vice President Al Gore, Pink now writes about creativity, and believes we all have at least some potential.
"You have it 'cause you're a human being," Pink said. "Now when I say everybody's creative, doesn't meant that everybody is a budding Picasso or a budding Edison or a budding Toni Morrison. But the human species is defined by its ability to create."
And he thinks this country's got a pretty good track record of doing just that:
"What's happened the last 10 years that has changed the lives of people all over the world? The iPhone: USA. Twitter: Started by a guy from Nebraska. Facebook: Started by a guy from Florida who went to Harvard and dropped out."
And not just because America is a rich country with more time to think and create. Pink also credits what's been a nurturing environment.
"In this country failure is less stigmatized than in other countries," he said. "If I start a business and it fails, I don't shame my entire family, okay? In fact, the bankruptcy code in this country affords me, quote, 'a fresh start.'"
"What the American experience offers when it comes to imagination is that we're a melting pot of so many different types of people," said Walter Isaacson, who runs the Aspen Institute, a think tank in Washington. He has written biographies of two creative geniuses, Albert Einstein and Benjamin Franklin.
"You see it at the founding of our republic," Isaacson said. "You've seen that great Industrial Revolution where people were inventing the telephone, the telegraph, the light bulb, and everything else, the phonograph. You've seen the push that came because of the Internet and the digital revolution. And now we're looking for what's going to be the engine or the driver of a new creativity."
The challenge for the U.S. is how to keep up that momentum.
One way to make a point in a media interview is to quote or paraphrase a quote from an authority figure. A favorite quote many business clients have deployed is President Harry Truman’s “The buck stops here.” Another unfortunately-relevant Truman line is getting some exposure these days: “It’s a recession when your neighbor loses his job; it's a depression when you lose yours.” A popular quote to paraphrase is John F. Kennedy’s line from his inaugural address: “Ask not what your country can do for you, but ask what you can do for your country.” I have heard that one altered to accommodate everything from a NASA moon mission, “With this mission we are asking not what we can do for the moon but what the moon can do for us,” to the release of a debut CD by a new singer-songwriter: “I don’t want to know what the audience can do for me, I want to know what I can do for the audience.”
Several weeks ago in this space I listed some great quotes from uber investor Warren Buffett, the Sage of Omaha. A businessman quoting Buffet to help make his own point instantly wraps his message in Buffet’s credibility (and his uncanny knack for cogent expression).
Today, I’d like to cite another highly successful business figure who has a huge list of great quotes that resonate in interviews: Oprah Winfrey (who recently made headlines with the announcement of the end of her long-running talk show). Communication, after all, is Oprah’s business, so it is only natural that over the years she has given us many rich quotes. Here are a few of them:
“Real integrity is doing the right thing, knowing that nobody's going to know whether you did it or not.” Not a bad quote to cite in this era when the actions of some traders have spread tarnish far and wide in the business world.
“The big secret in life is that there is no big secret. Whatever your goal, you can get there if you're willing to work.” A well-worded endorsement of the work ethic.
Sometimes a journalist sees a business interview subject through the green eyes of jealousy (especially in these days of tightened news budgets, deferred raises and the other afflictions of an advertising-starved media). This one helps level the field: “Though I am grateful for the blessings of wealth, it hasn't changed who I am. My feet are still on the ground. I'm just wearing better shoes.”
Harry Truman’s “The buck stops here” was four words long; Douglas MacArthur’s “I shall return” was three words long. Oprah came up with a terrific three-word grabber: “Dwell in possibility.”
A funny quote is often an effective quote. Here’s a fine one: “There's no easy way out. If there were, I would have bought it. And believe me, it would be one of my favorite things!”
While Oprah was talking about taking personal time, this quote works well for any sort of business readjustment or even reassessment: “If you don’t recharge a battery, it dies.
Oprah clearly loves what she does, so this quote might be a good one if you do, too: “The best way to succeed is to discover what you love and then find a way to offer it to others.”
For the businessman explaining a daunting challenge to the media, Oprah’s got this, gem: “Challenges are gifts that force us to search for a new center of gravity. Don't fight them. Just find a different way to stand.”
This one says it all about the nature of business today: “One of life's greatest risks is never daring to risk.”
An element of Oprah’s prescription for success: “Do the one thing you think you cannot do. Fail at it. Try again. Do better the second time.”
One of my favorites: “You can have it all. You just can't have it all at once.”
And here’s a final one that’s especially relevant this time of year: “Cheers to a new year and another chance for us to get it right.”
If you’re just starting a business now, or thinking of it, your timing couldn’t be better. Starting a small LLC during an economic slump greatly increases your chances of success in so many ways. If you already run a successful small business, 2010 will challenge your ability to adapt.
For a start-up, you succeed or you die. That’s a strong incentive. During boom times you can always go back to your old profession or find another job even better than the last one. Any business – fundamentally -- is only successful if the “money in” is greater than the “money out”. The more “money in” compared to the “money out” is the primary measurement in business success. That may seem simple, but it can become foggy in boom times when “early losses” can be tolerated for future success. If you keep it simple and work out of your home, how much do you really need to successfully take care of the “overhead” including the home and family expenses?
Actually, the list of advantages to starting a private little LLC now could go on and on. The internet advantage, the small computer advantage, the smart phone advantage, the low overhead advantage, the overnight shipping advantage, the changing climate advantage… the list goes on and on. It all boils down to this: because you can take advantage of being small, you have the advantage over businesses that have been successful and are established for a decade or more.
In contrast, successful small business owners that have been through the tough times in the beginning and then experienced growth and expansion due to increased demand and excellent performance in their field are vulnerable right now -- perhaps more vulnerable than any period in the past 80 years.
Established small businesses have acquired increased administrative costs, increased government fees and expenses, increased energy costs, increased medical insurance costs, increased payroll costs, increased rent costs, increased insurance costs etc. etc. etc. The bottom line is, the bottom line isn’t what it used to be, and all indications are that this trend will continue. When the “money-in” becomes LESS than the “money-out” the small business has a problem.
The government term for a small business in this situation is “Too Small To Save”. Doesn’t that make you feel special? Seven hundred and eighty five BILLION dollars for failing bankers and insurance companies to give multimillion dollar bonuses to themselves and nothing for small companies hit hardest by the fraud the government and the bankers perpetrated upon them and the whole global economy.
All last year, our congress dished out billions to a few big companies and became fixated on taking over our health care industry, even while they run V.A. hospitals so badly already. Only one thing is certain about the new health care plan, it will cost small businesses more and it will introduce new taxes that will become part of our increasing costs of providing our goods and services to our customers.
Almost as bad as what Congress DID last year is what they DIDN’T DO. Congress ignored working on a new tax law. This is important because many current tax incentives for small businesses expired on December 31, 2009. At the last minute they threw some extensions into the Health Care bill, but the House and the Senate couldn’t agree upon it so, officially, many incentives that have kept American small businesses competitive in a global marketplace and growing for the past three decades expired December 31, 2009.
Currently, successful companies that want to stay successful will be the ones proactively raising their prices, producing less more profitably, investing in energy efficiency, doing more with fewer people and testing new products and services that afford them a higher margin.
In either situation, start-up or established company, small businesses are the backbone of the American economy and the American economy fuels the world economy. When it comes to ending the recession and returning to prosperity everyone’s counting on you!
Your name: Heidi Lowe
Name of your business: Heidi Lowe Gallery
Your background: Started my own jewelry business at the age of 13, received a Bachelor of Fine Arts in Jewelry and Metalsmithing at Maine College of Art, then received a Master of Fine Arts in Metals at State University of New York, New Paltz, interned at Leo Koenig Gallery in NYC
Your chief characteristic: busy, creative, and determined
Your regular reads: The Week, New York Times Magazine, Design Sponge, Art and Business Books
Clients, Customers, Constituents: Conscientious buyers, people who support local and handmade art
How long have you been in business? 4 years
Where do you do business? Rehoboth Beach, Delaware
Your concrete inspiration: Making the world more beautiful
Your big dreams: To make a living doing what I love
Your first success: At 13 years old I started my first jewelry business, a month later the stores reordered
The status of your business: Better every year
The future of your business: To fully support me and many other artist's creative endeavors
Your greatest challenge in business: Pricing
Business pet peeve: People who drop the ball
Your favorite entrepreneurs, pioneers, mavericks, artists, and heros from real life and history: My mom, Charles Flynne, Peter Korn
The greatest rewards of your entrepreneurship: Getting to see my ideas and visions realized
Your idea of happiness in business: All the parts working together
Your present state of mind: Contemplation and Growth
Your business advise: Be happy where you are, it is constantly changing
Your favorite motto: "Each of us must be the change we want to see in the world." Mahatma Ghandi
Your favorite business book: The Alchemist
Your one sentence business story: I have created a well-rounded life - making, teaching, and showing art which all come together to form a "career."