Friday, September 16, 2011

Legal and Financial

This should have been the first post. Really it should have. Because before you can get a commercial real estate agent, before you can choose an architect, before you can do ANYTHING, you need a company, and you need some money.

You have to come up with a name. Do not choose your company name to be "Bikram Yoga (insert name of city here)" Bikram doesn't want you to do that, and besides, it is simply better for a wide variety of reasons to have a company name that is unique. So, pick something, anything. We chose a name that has special meaning to me and to Bill, and confuses most everyone else on the planet: Extra Feinschmecker, LLC.

We also chose to be an LLC. Talk to a financial expert to understand your options for organization creation - you can be an LLC, a corporation, a partnership (or LLP) or a sole proprietorship. Your finance person can help you to decide. We did the paperwork through They were REALLY helpful and very easy and I would recommend them, especially if this is your first time forming a company. They provide support to all 50 states, and they will walk you through the process. If you have an accountant, that person can probably do the same thing for you, but because we were in Texas, I was from California, and we were registering in Alabama, it was just easier to go through Legal Zoom. We also used them to create our DBA. BUT we have since re-registered with the state and eliminated the LZ annual fee to be the person to take the company's mail. LZ can explain all that.

If you are married, like I am, and your spouse is a business partner, but not YET a certified Bikram yoga instructor (somebody has to make money in this family, and it ain't me yet!), you can be the only manager named in an LLC. Since we are married, the company automatically is owned by him too, but we are satisfying the rule that states that only certified teachers are owners. Bill will get there soon, just not yet. If you are not yet married, and you have a business partner, well, then you have to figure that one out for yourself.

Then we created a DBA (Doing Business As). This is the name that you will have on your checks, on your door, on your business cards. We chose "Bikram Hot Yoga Mobile." This was recommended to us by wonderful friends in the Bikram world as the "Hot Yoga" in the name will allow us to be included when someone googles, "hot yoga" instead of Bikram. Frankly, the Bikram name is completely unknown down here in the south, but people might know what hot yoga is. It was a smart decision.

Do your DBA before you open your bank account. I didn't and our checks have only the Extra Feinschmecker name on them, and so for every check I write, I have to add "Bikram Hot Yoga Mobile" on it. Pain in the you know what. If you do the DBA first, you can add that name to your checks. But if you open your checking account before the DBA, that's okay, just bring the paperwork in, because you will be depositing checks written as Bikram Hot Yoga and you don't want to hold up the line trying to explain why those checks go into an account with a different name.

Make sure you file all the appropriate information with the state. Bikram Yoga is a service and thus does not require sales tax be paid to the state, city, county etc, but any product that you sell, like water, clothing, electrolytes will require you to collect and pay sales tax. In Alabama, our sales tax is 10% (yikes!!), but that is divided up between a lot of organizations. When we first started, I went to the government offices and had the clerk there help me fill out all the paperwork. Even still, I ended up having to pay a $100 fine for making a mistake initially. Moral is, make sure you are paying your taxes correctly and thoroughly.

Make sure you get a resale certificate. You can take this document to Sam's club and register as a wholesaler and then buy, sans tax, your water and other items that you plan to sell. You will also need this number/certificate to register with your wholesale vendors (Shakti, yogitoes, etc). We are very honest about this. A lot of people load up their carts at Sam's with personal items, toilet paper, computers and TV's, and they don't pay sales tax. I don't think that's right, so we only utilize the sales tax benefit on the items that we will re-sell (and collect tax on then).
Bank account. We were blessed enough to have the money we needed to do our own buildout, so we did not need to have a top notch business plan or raise money (we did, however create an internal document that was really helpful). We are SO LUCKY!!! Good luck with that. Unfortunately I can offer you no guidance on how to beg, borrow or steal money, but I can say that in these times, finances are tight. We spent a lot of money to bring yoga to this town, but we are confident we will, eventually, in the future make it back and then some. But it will be a while.

Our one year anniversary is in October, and although we are covering all of our costs, we haven't yet made a profit. Meaning, all I have been paid so far is less than $5. On two occasions, I took money from the cash register to go across the street and get an ice cream cone. Some say that it's sweet payment! But even better than that, I have also been paid the satisfaction of knowing we are healing bodies. The money will come!

1 comment:

Anonymous said...

THis info has been Great ...THanks for sharing