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Raleigh Estate Planning and Corporate Law Attorneys

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    • Lesley W. Bennett
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What Is an Automatic Stay and How Does It Work?

April 6, 2021 By wrlaw

The ongoing coronavirus pandemic has had a devastating financial impact on many individuals and businesses. Due to unforeseen job losses, medical bills, and the general downturn in the global economy, many individuals and businesses were forced to file for bankruptcy. As such, this article explores a key component of bankruptcy – the automatic stay and how it impacts debtors and creditors. 

What is the automatic stay?

Bankruptcy is a process in which a debtor struggling massively to pay off delinquent accounts seeks protection through the formal legal process. In the typical bankruptcy case, the debts are compared with available assets, and the court approves a plan to repay a portion of the debts with the assets and discharges or forgives the remaining debts by “discharging” them. 

The automatic stay is a court-ordered injunction or pause on collection actions, including litigation, against the debtor. It is automatic because it becomes effective immediately when the debtor files the bankruptcy petition. The automatic stay provides the debtor some breathing room to organize its financial affairs and prevents a race to the courthouse by the creditors to collect against the debtor while there are still available funds. By pausing enforcement actions against the debtor, the debtor, with the help of the trustee and approval of the court, has time to develop a plan for repayment of its debts, if possible. 

How long does the automatic stay last?

The automatic stay lasts for the entirety of the case until the debts are discharged. Once the case is over and the debts are discharged, a creditor can resume collection actions on debts not discharged during the bankruptcy. However, a creditor is prohibited from ever attempting to collect discharged debts. 

To prevent abuse of the bankruptcy process, the automatic stay does not last as long for repeat filers. If the debtor had a bankruptcy case pending in the previous year, the stay terminates after 30 days, unless the debtor or someone else involved in the case, like the trustee, asks the court to continue the stay by proving the debtor initiated the current case in good faith. If a debtor has filed three or more bankruptcies within a one-year period, the debtor is likely abusing the process, and the stay will not take effect.

Are there exceptions to the automatic stay?

Congress has decided some actions are so important that the automatic stay does not apply to them. The most common of these enforcement actions include the following:

●      lawsuits to establish paternity or to collect child support or alimony; 

●      criminal proceedings;

●      repayment of loans from certain pensions;

●      evictions by a landlord when the lease has been terminated prior to the bankruptcy filing; and

●      actions by taxing authorities to conduct tax audits, issue deficiency notices, demand tax returns, and make tax assessments. However, attempts to collect the deficient taxes like issuing a tax lien or seizing the property are stayed. 

A creditor can also request relief from the automatic stay, even if the situation is different from the scenarios described above. A creditor does this by filing a motion for relief from the automatic stay, also called a motion to lift the stay. To do so, the creditor must convince the court that there is “cause, including the lack of adequate protection of an interest in property of such party in interest,” that would justify the court removing the protection of the automatic stay from the specific enforcement action involving the creditor. In other words, the court must determine if keeping the automatic stay in place will unfairly prejudice the creditor and provide no financial benefit or harm to the other creditors. Given the broad standard for relief from the automatic stay, a court has wide discretion in making this determination.

If a creditor files a motion for relief from the automatic stay, the debtor or other creditors may oppose the motion, arguing there is no good cause to remove the collection action from the protection of the automatic stay. The court will hold a hearing on the motion, and, if successful, the creditor can continue to pursue the collection action in a different forum like state court. 

How does the automatic stay impact a civil litigation case?

The answer depends on who filed bankruptcy. If a defendant in the case filed bankruptcy, the civil litigation case is stayed, and the plaintiff must wait for resolution of the bankruptcy case before continuing the civil litigation case against the defendant. A defendant usually notifies the court and other parties by filing a notice of automatic stay or similar document. If the potential debt at issue in the civil litigation is discharged in the bankruptcy case, the case against the defendant would not continue even after the bankruptcy is over. 

If there are multiple defendants, the automatic stay generally applies only to the debtor defendant, not the other defendants. However, the entire case could be stayed if the proceeding against the other defendants would impact the bankruptcy estate. 

In certain situations, it may be possible for the bankruptcy court to lift the stay to allow the civil litigation case to continue. For example, in a case where the plaintiff’s claim is covered by insurance, the plaintiff may want to seek relief from the automatic stay if the defendant files bankruptcy. The insurance payment would not be considered part of the bankruptcy estate to be divided among potential creditors, and the plaintiff would be prejudiced by being prevented from seeking recovery of the insurance proceeds.

If the debtor is a plaintiff in a civil litigation case, the automatic stay would likely not impact the case. The automatic stay prevents collection actions directed against the debtor. The bankruptcy trustee would likely be motivated to continue the case to obtain more money for the bankruptcy estate to be split among the applicable creditors. 

What happens if a creditor violates the automatic stay?

Given the policy reasons for the automatic stay, violations of the stay are not taken lightly by the bankruptcy court. Collection actions in violation of the automatic stay are unenforceable, and, depending on the case, a creditor could be required to pay the debtor punitive damages, compensatory damages, and attorney’s fees. 

As seen above, the interplay between bankruptcy and civil litigation can be challenging to navigate. One of our experienced tax and business attorneys will be able to advise you on the impact of bankruptcy on your case and the next steps to avoid violating the automatic stay. 

Where Should You Form Your New Business?

March 22, 2021 By wrlaw

Starting a new business is an exciting and stressful endeavor. While a new business owner visualizes boundless opportunities, he or she also confronts a seemingly endless list of decisions to make and tasks to do – product designs, marketing strategies, financing, office location, insurance, and more.

To reduce the risk of personal liability, a business owner may want to form a limited liability company, limited partnership, or corporation. Deciding how to form your business is a critical inquiry, but few business owners take time to consider another key question: where to form it. While it may seem trivial, the impact is real: choosing the right state to form your business entity can save you substantial administrative burdens, money, and time. Not to mention, it can reap tremendous rewards from a taxation standpoint.

Delaware or Bust?

The Advantages of Forming a Business in Delaware

For various reasons, many business owners choose to form their entities under Delaware State law, even if they live (and run the business) in a different state. Delaware is viewed as a business-friendly state with a well-developed body of corporate law, making it attractive to investors. Specifically, its Court of Chancery is a respected, specialized court that focuses solely on business issues. Delaware’s Secretary of State’s Office prides itself on its service and how easy it is to file formation documents on its website. Delaware also provides certain privacy protections not found in other states. Most notably, Delaware does not require an LLC to list its members or managers in its formation document or require annual filings by the LLC. The filing fees may be but are not always, less than other states. 

As such, it’s not hard to see why Delaware is the leading state for publicly-traded corporations listed on U.S. stock exchanges. It is also the leading state for out-of-state incorporations, where a business based in a different state incorporates in Delaware. Nonetheless, a Delaware formation presents some challenges, especially if the business owner lives and works in another state. 

Drawbacks of Forming a Business in Delaware

At the outset, filing fees can be more expensive in Delaware than in other states: Delaware charges $90.00 to form an LLC, and while it does not require annual reports from LLCs every year, it charges an annual tax of $300. Other states charge far less. For example, Mississippi only charges $50 to form an LLC and $25 to file an annual report.

The filing fees are a small matter, however, compared to some of the other potential drawbacks. Administratively, a non-resident entity formed in Delaware faces double fees and paperwork. Specifically, when a non-resident business owner forms in Delaware, he or she must register the business as a foreign entity in the owner’s home state, then register an agent for service of process (someone to accept service of a complaint in a lawsuit), in both states. This can cause substantial logistical hurdles and present potential legal pitfalls.

Further, while Delaware is a business-friendly state, a company that forms there agrees to submit to Delaware law, even regarding its internal operations and affairs. For instance, Delaware law would apply to disputes between shareholders and directors. However, Delaware law would likely not apply to disputes between employees and/or outside actors, especially if the company conducts business outside of Delaware. 

A Practical Example

To illustrate, consider the example of Tim, a former mechanical engineer who opens a florist shop in North Carolina. 

Tim wants to protect himself from personal liability, so he decides to form an LLC called “Dogwood Bloom, LLC.” His friend tells him all the biggest businesses in the U.S. are formed in Delaware, so Tim decides to file his Certificate of Formation online with the Delaware Secretary of State’s Office. He pays $50 to a registered agent in Delaware to accept service. Tim is impressed with how easy it is to form his LLC, and he thinks the $90 filing fee and $50 service of process payment are a small price to pay for the protection an LLC affords. 

However, since Dogwood Bloom is based in North Carolina and conducts business there, Tim must also:

  • Pay $250 to apply for a Certificate of Authority with the North Carolina Secretary of State (the application must contain the business name, the state of formation, the period of duration, the principal office, the officers, and the name and address of a registered agent located in North Carolina);
  • Hire a registered agent for service of process in North Carolina;
  • File an annual report in North Carolina for Dogwood Bloom and pay $200 for the annual report fee; and
  • Pay $300 in annual taxes to the State of Delaware.

Tim would have saved himself significant administrative headaches by forming his LLC in North Carolina, where he lives and conducts 100% of his business. Tim is not planning on seeking millions in initial funding from angel investors throughout the U.S., and he is likely not going to be sued by shareholders for breaching a fiduciary duty he owed to the shareholders based on his position as an officer in the company. As such, there are few practical advantages to forming his entity in Delaware. 

Final Thoughts

For small business owners like Tim, it is wise to form where you live and operate. The advantages of forming a business in Delaware will likely not outweigh the increased fees and administrative headache of forming in Delaware but operating elsewhere. Of course, this may change as the business scales. In this case, it’s advisable to reach out to one of our business formation attorneys to discuss your options. 

What Is A “S Corporation”?

March 15, 2021 By wrlaw

Selecting an entity type for your new business venture can feel overwhelming. From an LLC to a C-Corporation or S-Corporation, the options all present their share of pros and cons, risks and benefits. 

One entity type that has risen in popularity among small and medium-sized businesses is the S-Corporation – a twist on the traditional C-Corporation. S-corporations are entities that pass corporate income, losses, deductions, and credits to their shareholders for federal tax purposes.

The shareholders within an S-Corporation report their income and losses on their individual tax returns and are assessed tax at their separate rates. This enables S-corporations to avoid double taxation, to which typical corporations are subject.

As such, many business owners choose S-Corporations over C-Corporations for these massive tax savings. Many start as an LLC, then reorganize as an S-Corporation to gain some additional administrative and tax benefits. 

Here, we will break down some of the specifics of the S-Corporation: what it is, how to qualify, and some pros and cons.

How Do You Qualify as an S-Corporation?

According to the IRS, to qualify for S corporation status, an organization must meet the following requirements:

  • It must be a domestic corporation.
  • It must have only allowable shareholders, which:
    • Can be individuals, certain trusts, and estates, and
    • May not be partnerships, corporations, or non-resident alien shareholders
  • Have no more than 100 shareholders
  • Have only one class of stock
  • Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).

To become an S corporation, the corporation must submit Form 2553 Election by a Small Business Corporation, which is available on the IRS website. This document must be signed by all the organization’s shareholders. 

In North Carolina, S-Corporations are taxed under Subchapter S in the Internal Revenue Code.

North Carolina S-Corporations 

An S-Corporation is considered separate from the organization’s owners and stockholders. Under North Carolina law, there is no organizational or administrative difference between an S-Corporation and a C-Corporation. An S-Corporation is simply a designation for tax purposes. Those seeking limited liability and a more formal corporate structure can benefit from organizing as an S-Corporation. 

A few practical differences apply:

  • A C-Corporation must declare profits and losses and pays taxes on profits. Shareholders also pay income tax on what the corporation pays them. This is known as “double taxation.”
  • An S-Corporation files a K-1 tax return but doesn’t pay income tax. Shareholders declare their share of the profits on their individual tax returns.

However, there are also several administrative similarities:

  • Both types of entities require filing of articles of incorporation or a certification of incorporation.
  • Shareholders comprise and are owners of both types of corporations, and are charged with making all management decisions.
  • The organizations provide liability protection for their shareholders.

S-Corporation Designation Pros and Cons

Before you decide how to organize your business, it is vital to consult an experienced attorney who can help you determine which designation is best for your purposes. However, in general, there are a few pros and cons to the S-Corporation designation.

Pros:

  • The corporation is an entity separate from its shareholders, so it will continue beyond the incapacity or death of one or more of the shareholders.
  • The setup makes it simple to issue fractional stock ownership shares.
  • The purchase, sale, and gifting of stock make it possible to transfer ownership without disturbing the entity’s ability to conduct business. 
  • The requirement to separate the corporation’s finances and records from its stockholders’ reduces the risk of unrecognized equity distributions.
  • With a few exceptions, the organization pays no income taxes, and corporate profit and loss are not passed to the shareholders.
  • It is simple to run an S-Corporation from an administrative and tax perspective.
  • Annual stockholder meetings open the door for continued communication and collaboration internally.
  • S-Corporations tend to have good access to credit and loans.
  • Earnings are not subject to self-employment tax so long as stockholders receive adequate compensation for their business management efforts.

Cons:

  • Lenders may require personal guarantees from officers to give credit (this then erodes the liability shield).
  • Conflicts among stockholders could stunt progress and growth.
  • Restrictions on the sale of stock may prevent minority stockholders from recovering a return on their investment.
  • Stock ownership can be divided among many different parties who are not as active in managing the business’ day-to-day affairs.
  • Corporation-paid stockholder benefits may become too costly.
  • Employee benefits are taxable income to stockholder employees with two percent or more stock ownership. 
  • If the corporation owns appreciated assets and it is subsequently dissolved, it will pay substantial taxes on the appreciation amount.

Contact Our Experienced Business Law Attorneys.

If you find yourself in need of advice on how to organize your business, our attorneys are experienced in helping founders organize as S-Corporations and are here to help. 

At Wilson Ratledge, we assist businesses in taking steps to keep them financially secure, while protecting them from legal pitfalls. For assistance growing your business or navigating a deal, contact one of our experienced North Carolina business attorneys today at 919-787-7711 or via our contact form below.

How to Prepare Your Business Finances for an Economic Turndown

February 24, 2021 By wrlaw

As COVID-19 continues to rage, many small businesses are still struggling. From figuring out how to pay your employees to keeping your customers safe, you are likely still harboring countless concerns you never would have imagined just a year ago. Luckily, there are steps your small business can take to manage during these unprecedented times. Read on for ways your small business can sustain itself during the current economic downturn and prepare yourself for future times of uncertainty.

Get organized and then scrutinize your business expenses. 

One of the first things a small business looking to prepare its finances for a downturn should do is evaluate all current business expenses. This means getting organized and assessing where you stand and what exactly you pay for every month. To do this, make a list of each of your company’s monthly expenses. Common expenses include:

  • Operating costs, such as your rent, mortgage, and utilities; 
  • Supplies and equipment; 
  • Employee payroll expenses; 
  • Insurance costs; 
  • Marketing budget; 
  • Machinery, including company cars or trucks; and 
  • Anything else you pay for on a monthly basis. 

Once you create this list, you should carefully review it to see where you can cut costs. For example, can you negotiate with your landlord for a lower monthly rent, at least temporarily? You might be able to reduce other expenses, such as payroll costs, through a tool like a Paycheck Protection Program (PPP) loan. 

Seek assistance from government programs.

Small businesses can, and in many cases, should, consider turning to government programs for financial help. Many of these programs were recently launched to help small businesses during the COVID-19 outbreak. The CARES Act includes provisions to assist small businesses, including the Paycheck Protection Program (PPP), which provides loans to small businesses that need help keeping employees on their payroll.

Once a business receives a PPP loan, that money can be used to pay qualifying expenses, such as payroll costs. The program was designed to provide direct relief to small businesses and incentivize them to keep their workers on staff. If certain requirements are met, PPP loans are eligible to be forgiven in full.

The CARES Act also includes tax relief for small businesses that may help to cut your tax liability. These include delaying estimated tax payments and employer payroll tax payments, and a tax credit for employee retention. Speak with a tax advisor to determine which provisions apply to your business and how you can take advantage of any new tax provisions to save cash when tax season comes around. 

Reevaluate your payroll expenses.

In addition to seeking a PPP loan, there are other ways to reduce your payroll expenses. Payroll is one of the largest expenses of most small businesses. Whether you have one employee or many, there are ways you can cut back on payroll expenses without having to resort to laying off your staff. Of course, layoffs are sometimes necessary to cut expenses during an economic downturn. However, before doing so, review these alternatives. Not only will you keep your employees happy, but you will also likely save time and money in the future when you do not have to hire and train new staff. Consider: 

  • Eliminating overtime hours;
  • Cutting back on employees’ hours; 
  • Closing on holidays to avoid paying employees time and a half; 
  • Reducing pay (while this is unpopular among employees, it is often preferred over layoffs); or 
  • Hiring 1099 independent contractors instead of full-time employees to save on costs such as benefits afforded to full-time employees.

Focus on customer service and retention.

As a small business, your customers are your most important asset. During an economic downturn, many businesses lose customers and, therefore, a significant income source. Small businesses that focus on their customers and on delivering exceptional customer service, even during tough times, are more likely to survive a downturn than those that try to cut costs and cut back on the customer experience. 

Reach out to your customers to show that you care. Post on all of your social media channels to stay in front of your customers and engage with them, even if you cannot reach them in-person at this time. Provide them with information and resources to help them and you develop a connection that will keep them loyal. Even if they are not in the position to spend money now, they will likely line up to spend their cash at your business, in the future. 

Consult with an experienced business attorney for more help

Lastly, reach out to an experienced business attorney for detailed guidance on what your small business can do to weather this downturn. If you follow the guidance above, when this pandemic ends, you will not only have kept your business afloat, but you will have set yourself up for success. 

To get your business in that position, you do not have to go it alone. Business attorneys, consultants, accountants, and financial experts have worked with companies through downturns and economic difficulties many times before and can offer a new perspective and advice on maximizing your operations.

What is an “Accredited” Investor? Do I Need One for My Business?

February 11, 2021 By wrlaw

If you are looking to grow your small business and take it to the next level, you are probably ready to seek funding from an outside source. The catch, though, is that raising money usually requires compliance with federal and state securities laws, which can be burdensome and costly. Luckily, there is a (legal) way around these securities laws, and that’s where accredited investors come in. 

Here, we discuss what an accredited investor is, how accredited investors can help your small business grow, and some ways a business formation attorney can assist you with vetting and procuring accredited investors. 

Do I need to register my transaction with the SEC?

First of all, it is key to note the default rule: generally, offered investments or securities must be registered with the U.S. Securities and Exchange Commission (SEC) and your relevant state securities commission. However, there are exemptions to this rule, including if the investment is offered only to investors that qualify as “accredited investors.” 

What does it mean for an investor to be “accredited”?

An “accredited” investor is a legal entity or a person that fits certain criteria. Legal entities that might be accredited investors include banks, broker-dealers, and trusts with assets over $5 million. 

An individual accredited investor is someone who:

  • Earned more than $200,000 (or $300,000, jointly with a spouse) in each of the previous two years and who expects to earn the same or more for the current year; or 
  • Has a net worth (individually or with their spouse) of over $1million (not including a primary residence). 

Accredited investors are allowed to invest in securities that are not registered with the SEC. The SEC created this exemption to allow sophisticated investors to weigh the risks as to whether to invest. Normally, a registered offering requires a company to make burdensome disclosures and provide information to investors. In theory, this is to protect someone from investing in a business in an industry unfamiliar to the investor.  

Because the SEC believes accredited investors are sophisticated enough to handle their own financial analysis, they are provided less protection. In other words, a company does not have to follow the rigid SEC disclosure guidelines to offer the investment. 

Does it matter whether an investor is accredited? 

A small business owner needs to know whether a potential investor is accredited. While non-accredited investors can still make certain investments, only accredited investors can participate in non-registered securities offerings. If you are offering your investment to more than one investor, all investors must be accredited to fall under the SEC’s exemption from registration.

What are some smart ways to vet an investor?

If your small business is interested in selling investments to an accredited investor, you must vet every potential investor. The burden is on you, the small business, to take the necessary “reasonable steps” (according to the SEC) to verify that all of your investors are accredited. If you do not, you might be out of compliance with the securities regulations and could face fines and other penalties from the SEC, so it is important that you carefully do so. 

This begs the question: how can a small business vet potential investors? 

While you can do this on your own, a small business attorney will help the process immensely by:

  • Preparing an accredited investor questionnaire, which will ask your potential investors for personal and financial information; and 
  • Reviewing the financial documents provided by investors, including their W-2s, tax returns, bank statements, and anything else that will prove their income and/or net worth. 

Because the onus is on the small business to ensure that the investors are accredited, this determination should be handled with care. Your business attorney can assist you throughout the entire process to ensure things run smoothly and that only the proper investors take part in your offering. 

Can a business formation attorney help me find accredited investors?

To find accredited investors, small businesses should look to their peers for referrals, consider joining investment clubs or search crowdfunding sites that may provide leads. Do not count out family and friends, either, as, depending on their income and net worth, they may qualify as accredited investors themselves and could also invest in your small business.

The best way a business formation attorney can help during this investment process is through vetting your investors, confirming they are accredited, and preparing the necessary legal documentation. While there are few SEC requirements for investments offered to accredited investors, any investor interested in providing your small business with funding will want to review documentation about the business so that they can gain a full picture of what your company is about. A business formation attorney can help prepare these documents. 

If you are interested in seeking capital from accredited investors for your small business, reach out to a business attorney to discuss your options and begin the funding process. 

Contact Our Experienced Business Law Attorneys

Starting a business is thrilling. However, failing to abide by the proper legal and corporate formalities can land you in trouble, especially when it comes to financing. At Wilson Ratledge, we assist business founders in taking steps that help their businesses thrive, from their initial founding throughout their first few rounds of funding and beyond. For assistance setting up your business or navigating a relationship with an investor, or for questions regarding your entity, contact one of our experienced North Carolina business attorneys today at 919-787-7711 or via our contact form below.

Venture Financing Tips for Startups

January 20, 2021 By wrlaw

Do you run a small start-up and hope to grow your operations with outside financing? If so, you likely already know that pitching your business to a venture capital (VC) firm is one way to land that funding. After meeting with a VC, your first step will be to put together a pitch deck – the slide presentation that describes your business and convinces investors why they should provide you with funding. 

Your pitch, which might last ten minutes or an hour, is what the VC will use to decide whether or not it will invest in your business, so nailing that pitch is crucial. Here, we discuss five tips to help you deliver the most compelling pitch possible and land you the funding your start-up needs to grow. 

1. Prepare an Effective Pitch Deck.

Your deck needs to be highly effective. Anyone can put together a presentation, but you only have a limited amount of time to convince a VC why it should invest their money in your start-up. As a high-level overview, all pitches should include:

  • The problem your business aims to solve 
  • Your solution to that problem
  • The details about your product or service 
  • Your target audience 
  • Your strategy 
  • Your financials
  • Your exit plan 

This might seem like a lot of information to include, but you should still be sure to limit the number of slides (some VCs suggest not going beyond ten slides, so try to keep it between ten and twenty, at most). Remember that your slides should serve only as a guide as you present. They should not include every word you plan to say. Do not overwhelm your investors with text and information – the focus should be on you and what you have to say about your business. That is what makes for the most effective deck. 

2. Nail the Elevator Pitch.

When you begin your pitch, get straight to the point. Your first slide sets the stage for the presentation, and you need to convey immediately why your start-up exists and why the VC should want to hear more from you.

Start your presentation with an elevator pitch – a thirty-second overview of your target market, its problem, and the solution your start-up provides. VCs like it when start-ups cut right to the chase. They do not want to spend half the presentation trying to guess what your business is. Tell them right away with a concise elevator pitch and get them hooked from the beginning. 

3. Highlight Your Team.

As the leader of your team, you will prepare and present the pitch to investors. Sometimes, other members of your team might accompany you on the pitch. But even if they are not there in person, be sure to highlight each of your key team members during your presentation. Your idea and business matter, but without the right people, your business will never succeed. That is why VCs are particularly interested in getting to know your key people. 

Share the names and roles of your key people, but take it a step further and share a little bit more about them. Perhaps your marketing manager is a whiz at a specific type of internet marketing. Include this insight in your presentation and the VCs will get a better picture of the talent that your team brings to the table. 

While it is important to share the team members you do have and their skillsets, it is also important to let VCs know what you do not know or have. If you lack the talent in a specific area, do not be afraid to share that during your presentation. VCs are quick to figure things out, so it is best not to hide anything. It is ok not to know everything or have the resources to hire every necessary employee yet – that is why you are seeking funding, after all, to grow your business.

4. Be Specific About Your Financing Needs.

Do not beat around the bush when it comes to how much funding you are seeking. Clearly spell out how much, if any, has already been invested and how much more money you need to grow your business. 

When figuring out how much funding to request, first determine what you think you need to meet your goals. Then, ask for double that amount. For example, if you think you will need one million to take your business to the next level, ask for two million. That will serve to cover all the unexpected issues that are sure to arise and will prevent you from having to go back to the VC for a second round of funding. The worst thing that can happen is that the VCs say no or offer you less money, so it is worth the shot. 

5. Practice and Prepare for Questions. 

Finally, practice your pitch on friends, family members, and colleagues. Go through the whole presentation and ask them to provide you feedback and to ask questions. This will help you figure out if a certain part of your presentation is confusing or needs more detail.

While they will not ask all of the same questions a VC will ask, your friends and family will raise good points that investors will likely raise, too. Not only will practicing help you anticipate questions the VCs will ask, but it will boost your confidence, get some of your nerves under control, and prepare you for the real deal.

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  • Tax Issues
  • Estate Planning and Trusts
  • Workers’ Compensation Defense