December 2004
Question
I have had a consulting service for the past 3 years which I run out of my home. While completing my taxes this year, I was informed that instead of a corporation (which I currently am) I should think about becoming an L.L.C. Basically, I am the one who provides services, only once have I used another consultant. Which type of business entity is best for a small business that may occasionally use other consultants?
Answer
Anyone who has read this column knows the answer I am going to give, “See your attorney and accountant.” This team will be the best to advise you based on legal liability, tax implications, and other considerations. It appears that someone has already advised you to incorporate your business, though you do not say whether you are a C Corporation or a Subchapter-S Corporation. A limited liability company or L.L.C. has a corporate look but qualifies for other partnership or corporate tax status under federal law at the owner’s election. Under most state laws the L.L.C. is very flexible and may even allow only one member or owner. This may be why the person completing your taxes advised you to check into an L.L.C. I cannot advise you on the type of business entity that is best for you. Speak with your attorney and accountant.
Question
Hello Experts there, I’m a partner of a consulting firm that specializes in management training in Shanghai. All the experts except me are part-time. I gradually realized that our company is acting just like a "broker"; we own nothing but those part-time experts' products and their expertise. Although the business is booming, I'm wondering about the future of the company utilizing this business model. Don't you think it's not a good model for doing consulting business? What on earth are our core competencies? Obviously wisdom of those part-time consultants is not the core competency, am I right? Thank you!
Answer
You say that business is “booming,” so although this isn’t a typical business model your corporate leaders must be doing something right. You are correct in questioning the firm’s core competencies. On the other hand if the firm markets itself as a full-service firm, its “core” competencies must be very broad to fulfill its mission. On the positive side of this model is that if the economy in Shanghai should go sour and there is little need for consultants, your firm has little obligation to the part-timers and can reduce overhead cost very quickly. Come to think about it, this seems like a model that might be very effective in an uncertain economy anywhere.
Question
I earned my Master's degree in I/O in 2001. Since then, I've moved to Charlotte, NC, leaving behind all networking I'd accomplished. While I have a couple of people here that are "connected" I find it very difficult to get started. I have limited experience to begin with, and I can't get anyone to take a chance on me. Obviously, I can learn new things, and I know I would be an excellent addition to a company that allows just a little autonomy. So I guess my question is, how can I convince the hiring people to even interview me? I can't even get in the door! Thanks for your help!
Answer
I have two ideas for you. Both are not typical job seeking methods. First, you already seem to know that networking is the most important thing you must do to get a foot in the door. Perhaps you could use this to your advantage. Instead of trying to get a job, why don’t you build a network first? (Hold on, I’m getting to the job part.) Try this. Set up several appointments with people that you interview regarding the Charlotte area, contacts, and the business environment. Your purpose is NOT to apply for a job, but to meet people and learn about opportunities. As you know networking puts you in a position to know where the jobs are. And while you are networking you are learning about business in Charlotte.
My second idea will take some research on your part and can be done in tandem with the first idea. Select about a dozen places where you would like to work. Get on the net and learn something about each company, including who you want to approach for a job (not necessarily the HR department.) Then write a one page letter (yes, letter, not email, on high quality stationary.) The first paragraph should state what you know about the company. The second paragraph should say something about you. The third paragraph should tell how you could be an asset to the company. End the letter stating that you will call the person on a specific date to schedule a meeting. Make the phone call and meet with the person. Use the meeting to further explore opportunities—not to ask for a job. Good luck in Charlotte. It is a lovely city with many opportunities.
Question
Editors Note: The following comments provide additional comments to a question that appeared in the August 2003 column. The question was, "I would like to know about what options I have for obtaining health insurance for my family. Currently I am using COBRA from my last employer, but I am thinking about taking a 6-9 month contract and was wondering if there are any other options out there for consultants. Is COBRA my best option at this point? I have not started it yet, so it is not a time issue.”
Additional Comments: If one has group coverage under another employer, pre-existing conditions (any illness one has a history of prior to starting with new employer) may be covered under the next employer's plan. (Note that pregnancy at the time of starting new employment is considered a pre-existing condition.) If this person opts for no coverage or an individual plan in the interim, they will then have a 12 month waiting period for pre-existing condition to be covered under any new group plan. Even if one does not now have a preexisting condition, one could develop in the interim and then have to pay premiums on two insurances to get coverage for that condition for the first 12 months of new employment assuming they wanted to get on the group plan. This is an important point ASTD members should be aware of. Thanks.
Editors Note: Thanks to our reader who has added this important information. We encourage you to comment on and add additional information to any responses in this column. ebb