The oft repeated story of Thanksgiving focuses on the sharing of bounty between the native Americans and the pilgrims.  While that's certainly an important part of the story, another relevant lesson is often overlooked that is described in the following video.  

Best wishes for a happy and meaningful Thanksgiving.

If you've ever scheduled a breakfast, coffee, or lunch meeting with Codiligent you'll find that 95% of the time we'll recommend an independently owned place of business to meet, rather than a national chain.  If fact, if you use our on-line scheduling tool you'll notice that in addition to our office we suggest a variety of possible locations to meet and all of them are small business coffee shops and restaurants.

This is no knock on places like Starbucks or McCormick & Schmick's.  Rather, we simply want to support entrepreneurship and small businesses.  Also, money that is spent at locally-owned businesses more often stays in the community.  

American Express' Small Business Saturday is November 29, 2014.  This is a day to discover and support small businesses.  

Today the Wall Street Journal reported that 2014 has seen one of the highest levels of large company Merger & Acquisition activity in many years.  See:  Deal Boom Feeds on Surging Stocks

Then later today I saw a video interview with the CEO of Axial Market, a website that serves professional deal makers that mostly serves mid-market companies (I know people have different definitions of "mid-market" but I consider that to be about $20 million - $500 million in annual revenue),  In the video the CEO of Axial indicates that they, too, have seen record levels of deal activity (see video below).

Codiligent primarily sells small companies with less than $20 million in annual revenue, but we, too, have seen a high level of activity this year (and anecdotally have heard the same from others that serve small companies).  If you are thinking about selling your business, now would be a good time to consider moving forward.  Don't wait until the market softens and miss the opportunity to maximize your exit.  

Often when we think about the term "entrepreneurship" we think of the glamorous stories of people who have rapidly grown small start-ups into billion dollar companies:  the Facebooks, Nikes, and Spanx of the world.  Because of these high-visibility success stories many people assume that entrepreneurship is on the rise in our country.  Unfortunately, they are wrong.  Entrepreneurship in the US has been in steady decline for the past 4-5 decades. 

Yet, as a society we all benefit from the life-changing innovations and products that entrepreneurs create, not to mention the jobs and tax revenue.  So what can we do to encourage entrepreneurship?  In the following video Cameron Herold suggests how and why we should raise kids to be entrepreneurs. 

There are a variety of pros and cons for which type of legal organization a business founder may want to choose (S Corp, C Corp, LLC, Sole Proprietorship, Partnership) - so I'm not suggesting that there aren't some excellent reasons to choose to organize as a C corporation rather than as a S corporation (I'll cover pros and cons in another blog post).  However, one of the negative consequences of choosing a C corporation is when you are ready to sell the business if the sale is structured as an asset sale you may experience double taxation of proceeds.  The C corporation will sell the assets and it may be taxed on that sale, but then the proceeds will be trapped in the corporation unless they are distributed as dividends to the shareholders of the corporation.  Once they are distributed as dividends the shareholder will be taxed on those dividends at the individual level, as well.

Many people are aware that they may be able to make an S corporation election, whereby they can change the organizational structure from a C corporation to an S corporation.  As an S corporation they will be a pass-through entity, where profits of the corporation will not be taxed inside the corporation and instead will only be taxed on the shareholder's tax return.  So, some owners of businesses that are organized as a C corporation rationalize that when they are preparing to sell they can simply make an S corporation election before they sell and avoid the risk of double taxation.  Unfortunately, that may not be true unless the S corporation election is made well in advance of a business sale.  Generally, if a C corporation is changed to an S corporation a business owner will have to wait for ten years before selling in order to avoid the double taxation of the proceeds of an asset sale (see 26 U.S. Code § 1374 - Tax imposed on certain built-in gains).  Of course, the tax code is ridiculously complex and at Codiligent we are not CPAs, so we'd strongly encourage you to seek expert advice from your CPA and/or tax attorney to verify this and discuss your particular situation.