Business Logo

Your new business needs the right public image. How do you choose the right logo design company to create business logo ideas that will represent your new small business?

Think of your company logo as the visible part of your brand — and the company logo ideas from a business logo design company as fuel for your marketing engine.

Will you use a classic, traditional look or something very modern and trendy. See our business naming tips for more on this.

Logo Design Company

The experts at 99Designs provide affordable business logo design by marshaling a world of creative talent through an easy-to-use website. You get to work with dozens of highly talented people, each of whom will have fresh, unique ideas for your small business logo.

The logo for SohoSpark was generated through 99Designs and my experience working with this company’s website and creative crowd was first rate. The website is easy to use. The dashboard lets you eliminate irrelevant designs quickly and a message view groups design attempts by designer so that you can keep track of what you’ve said to each person. Don’t be fooled by the “99” part of their name. My logo contest generated 434 design entries by 70 designers. That’s a lot of bang for my branding buck!

Before you start: Be prepared to interact with the design community. A lot. I was on the website several times each day, eliminating irrelevant or lesser designs and giving feedback and direction to maximize the effort from the creatives. This is not the kind of project you can launch and then leave for vacation.

Pro Tip: Guarantee your project right away. This shows the creative crowd that you are serious and that their time will not be wasted. I did not do this for the first couple of days and after I did, I noticed a sharp jump in the participation by some very talented artists.

A pleasant surprise was the poll feature that lets you ask your friends and social community to help you narrow down your choices. I used this feature after the qualifying stage but before I had to finalize my finalists for the next round. Having that external input is so helpful to loosen (notice I didn’t say remove) the personal bias from my decision!

Resource: 99Designs

Business Naming

Business naming is not easy but there are some great services available to help. A worldwide audience of creative people act as a giant company name generator that will help you brainstorm company name ideas, marketing slogans, taglines, etc.

Business Naming Services

Here are my favorites:

SquadHelp

For about $200, the squad will generate dozens or hundreds of ideas in just a few days. I used this service for the website you are on now and they created 363 ideas in just three days. That’s a lot of bang for the buck and I got to leverage my time by doing something else while all those names piled up!

NamingForce

Starting around $400, this one is a bit more expensive but they do more work on your new name. Their creatives not only generate name ideas, but will also spend some time voting on them. The result is that you know which names are the most popular — at least among the creative crowd who contribute to such contests. If those opinions are important to you, ante up for the extra time and effort this gang puts in.

How to Name a Business

Business naming should be done with care so that your primary customers both understand and respect your brand. Things to consider when naming a business:

  • age
  • gender
  • income
  • geography
  • culture
  • style
  • clarity
  • ease of pronouncing
  • meaning
  • logo options

For example, if you’re selling products or services to teenagers, then you’re name will have to be trendy and cool. Sounding old or stodgy will be a turn-off for this audience. If you’re selling to middle-aged men, naming a business something professional and solid will put your prospects at ease.

Register Your Business Name

A sole proprietor does not have to register at the state level unless they are using a name other than their own (a DBA). Other organization types like corporations, non-profits, and LLC’s require that you register with the appropriate agency.

Make sure you do a corporate name search to make sure that the name you have chosen is free of legal entanglements. Do this at the country level as a trademark search and also do it at the state level to ensure that you are free of local conflicts. State registered corporations do not have to register at the country level and thus could create a problem for you if you infringe on their brand. For the DIY crowd, here are some search tool examples:

Once you have decided on a business name and business structure, make sure you register it with one of the state agencies.

Business Structure

You do not have a create a formal business structure if your operation is small and your liability risk is limited. If you sell custom cat pillows from home, for example, you don’t need to worry about business organizational structure.

Many of you will grow your business or take on risk in the market, however, so this article will help you with choosing a legal business structure (sometimes called a business type). We will examine the various types of business ownership and help you pick one that is suited for you and also explain the benefits of incorporated business structures.

Those of you that start small and grow at a modest pace will probably end up using one of these types of small business:

  • Sole Proprietorship
  • Partnership
  • Limited Liability Company
  • S Corporation

Other company structure types are better suited for large businesses. If you plan to start off with a big bang or know that you want to get huge, you’ll want to consider the benefits of a larger business structure:

  • C Corporation

Now let’s look at each business structure in more detail.

Sole Proprietorship

A sole proprietorship is the simplest business structure. It’s basically just you, the owner. You get all the money and have all the responsibility.

Setup Chores

There aren’t any .You just start doing business and, voila!, you are a Sole Proprietor. Examples of this business structure: freelance designer, writer, consultant. You still need to get the correct license or permit, if your state or county requires one. You just don’t need fancy paperwork and a corporate seal to be legit.

Do you want to be Cat Customs instead of Sally Smith? No problem. Just file a DBA (doing business as) form with the state and your local bank. This will keep you from being arrested when you cash checks (so awkward).

Tax Implications

Legally speaking, you and your business are the same thing. You will report income and loss using the Schedule C on the standard Form 1040. You have to withhold and pay all income taxes including self-employment taxes. Gotcha: You can’t wait until the end of the year to do this. The IRS expects you to make quarterly estimated tax payments based on your projected income (or last year’s numbers).

Advantages

  • Easy to start — Little paperwork and
  • Total control — You get to make all the decisions
  • Easy tax prep — Simpler forms and the lowest business tax rates

Disadvantages

  • Personal liability — It’s all you, baby. No corporate shield to hide behind.
  • Limited fundraising — No stock to sell. Banks get nada if you fail, so loans are tough.
  • Pressure — Success or failure is all about you. This is the other side total control.

Partnership

A partnership is a single business where ownership is shared by — surprise! — two or more people. All partners contribute to the money, property, labor or skill of the business and they all share the profit or loss.

Making decisions with multiple owners can be a challenge, so discuss the big rocks up front. You may think that you are highly compatible already, but these early discussions of principles, core values, and methods will bring differences to light. Decide together how you will:

  • Make decisions
  • Divide profits
  • Resolve conflict
  • Handle ownership changes
  • Dissolve the partnership

Put these principles down in your partnership agreement. You don’t have to make a legal agreement, but do it anyway. You take a huge risk operating without one. If your would-be partner doesn’t see the need, then think twice about going into business with them.

Partnership Types   

There are three general types of partnership arrangements:

  • General Partnerships — Management duties, risk, and profits are assumed to be equal among partners. Anything different can be detailed in the partnership agreement.
  • Limited Partnerships — allow limited liability for partners as well as limited management input. Attractive to investors of short-term projects.
  • Joint Ventures — Limited time and for a single project. Partners can continue after the project but must file as a general partner.

Setup Chores

Register your business in your state, usually through the Secretary of State.

You’ll also need to establish your business name. For partnerships, your legal name is the name given in your partnership agreement or the last names of the partners. If you choose to operate under a name different than the officially registered name, file a DBA.

Obtain the necessary business licenses and permits. Regulations vary by industry and geography.

Tax Implications

Most businesses will need to register with the IRS, register with state and local revenue agencies, and obtain a tax ID number or permit.

A partnership must file an “annual information return” to report the income, deductions, gains and losses from the business’s operations, but the business itself does not pay income tax. Instead, the business “passes through” any profits or losses to its partners. Partners include their respective share of the partnership’s income or loss on their personal tax returns.

Partnership taxes generally include:

  • Annual Return of Income
  • Employment Taxes
  • Excise Taxes

Partners are responsible for several additional taxes, including:

  • Income Tax
  • Self-Employment Tax
  • Estimated Tax

Partnerships must furnish copies of their Schedule K-1 (Form 1065) to all partners by the date Form 1065 is required to be filed, including extensions. Partners are not employees and do not get a Form W-2. See the IRS Guide to Partnerships.

Advantages

  • Inexpensive — Easily formed business structure with few startup expenses
  • Shared Commitment — Each partner is equally invested. They can pool resources to obtain capital.
  • Blended Strength — Benefit from the strengths, resources and expertise of all partners
  • Performance Incentive — May offer employees the opportunity to become a partner, attracting highly motivated and qualified staff

Disadvantages

  • Personal Liability — Partners have shared among the owners for their own actions and also for the debts and decisions made by other partners.
  • Conflict — Partners must learn to compromise and resolve disputes well.
  • Shared Profits — Joint owners share the successes and profits of their business. Inequity in contribution of effort or resources can cause discord.

Limited Liability Company

A limited liability company (LLC) is a hybrid business structure that combines two others: It provides the limited liability features of a corporation plus the operational flexibility and tax benefits of a partnership.

In an LLC the owners are called members. Depending on the state, the members can consist of a single individual (one owner), two or more individuals, corporations or other LLCs.

Unlike shareholders in a corporation, LLCs are not taxed as a separate business entity. Instead, all profits and losses are “passed through” the business to each member of the LLC. LLC members report profits and losses on their personal federal tax returns, just like the owners of a partnership would.

Setup Chores

Business Name. States are picky about you set up your LLC business name:

  • Must be different from every existing LLC in your state
  • Must include “LLC” or “Limited Company”
  • Must not include restricted words like “bank”

Articles of Organization. This simple makes your LLC legit and includes information like your business name, address, and the names of its members. Typically filed with the Secretary of State but this may vary from state to state. Expect a filing fee.

Operating Agreement. Recommended for multi-member LLCs but not always required. This document structures your finances and organization. It also lays out percentage of interests, allocation of profits and losses, and member’s rights.

Licenses and Permits. Obtain proper business licenses and permits. These vary by industry and geography.

Business Announcement. Some states require you to publish a business formation statement in your local newspaper.

Tax Implications

An LLC is not a separate tax entity, so taxes are passed on to the members and paid through their personal income tax. While the federal government does not tax income on an LLC, some states do, so check your state rules.

How the IRS treats your LLC for tax purposes depends on the elections made when you set it up. Depending on your classification, you may file your taxes as a sole proprietor (Schedule C), a partnership (Form 1065), or a corporation (Form 1120). See the IRS.gov LLC explanation for details. Talk to your state tax agency about what classifications they will recognize for your LLC.

Advantages

Limited Liability. Members are protected from the actions of the LLC such as massive debt or lawsuits. Members are not necessarily shielded from wrongful acts, including those of their employees.

Simpler Records. The ease of operation is a big plus. Less registration paperwork and smaller start-up costs.

Profit Sharing. LLC members distribute profits as they see fit. Each member can contribute different levels of money and effort, so the members decide as a group who has earned what percentage of the profits or losses.

Disadvantages

Dissolution Events. If a member leaves, some states dissolve the LLC and the remaining members must shut down the business. Members can decide if they want to start a new LLC or part ways. You can protect against this automatic headache by adding provisions to your operating agreement to prolong the life of the LLC after a member leaves.

Self-Employed Taxes. Members of an LLC are considered self-employed and must pay the self-employment tax contributions towards Medicare and Social Security.

S Corporation

An S Corporation (or ‘S Corp’) is a corporation with the Subchapter S designation from the IRS. This legal entity is separate from the owners, which limits their financial liability. This protection does not necessarily shield you from all litigation such as an employee’s tort actions in a workplace incident.

Profits and losses pass through to your personal tax return, which eliminates tax on the business itself. To keep you from gaming the system, however, a shareholder who works for the company must pay him or herself a reasonable compensation. Otherwise, the IRS might reclassify any additional corporate earnings as wages. That will hurt!

Setup Chores

Before you form an S Corporation, determine if your business will qualify under the IRS rules. Then you file as a corporation. After you are considered a corporation, all shareholders must sign and file Form 2553 to elect your corporation to become an S Corporation.

Next, obtain the proper business licenses and permits. Regulations vary by industry and geography.

You can request S Corp status for your LLC by asking for a special election from the IRS on Form 2553. This must be done early in the tax year in which the election is to take effect. If you get the S Corp election, your LLC remains a limited liability company but is taxed as an S corp.

Tax Implications

All states do not tax S corps equally. Most follow the federal rules and tax the shareholders accordingly. However, some states tax S corps on profits above a certain limit. Other states ignore the S corp election and treat the business as a C corp, which has sizable tax ramifications. Some states tax both the S corps profits and the shareholder’s profits.

Advantages

  • Tax Savings — Your wages as a shareholder employee are subject to employment tax. The remaining income is paid to the owner as a “distribution,” which is taxed at a lower rate, if at all.
  • Business Expense Credits — Some expenses you incur can be written off as business expenses.
  • Legal Separation — The business has its own life separate from its shareholders. If a shareholder leaves or sells their shares, the S corp continues relatively undisturbed.

Disadvantages

  • Process Discipline — Requires director and shareholder meetings, minutes, updates to by-laws, stock transfers and maintenance of records.
  • Compensation Requirements — A shareholder must receive reasonable compensation. Otherwise, the IRS might reclassify your distributions as wages, resulting in a big audit bite.

Other Business Structures

The details above will give you a business structure for most small businesses. If you need information about alternative business types, click on these links to read more:

Need Business Structure Help?

If you don’t have a personal attorney, the experts at Legal Zoom can help you navigate the business structure maze and get your company set up.

Test Your Business Idea

I recently shared an idea with friends over lunch and they immediately spotted a big hole in my super smart theory. It doesn’t mean I won’t pursue the idea. It does mean that as I move forward, my strategy will be better and I will avoid some open manholes because the early draft of my idea was scrutinized by others.

Most business startups do not succeed. You’ve heard this before but probably dismissed because, well, in your own mind it doesn’t apply to you. Maybe yes, maybe no. It is valuable to study why small businesses fail. You can study the carcasses of others to avoid a similar fate.

But what if there was a way to tip the scales in your favor? What if you could avoid spending a ton of time, energy, and money only to see your business become a statistic? Well, you can.

Getting out of your own head is crucial to minimizing your failed attempts. Putting your precious business idea to the test will help you do that. There are many different ways to do this. Some of them will take only a few minutes to try. Do you have the patience to do some testing first? I hope so. Hubris has been the downfall of many would-be business owners who were ‘too smart’ to test their ideas!

Business Basics

  • Create something people want
  • Prove that enough people want it
  • Prove that you can reach those people
  • Prove that your message is effective

For some of you, a negative rule carries more weight than the positive version. For you I will restate the same basic principles above but in reverse language and reverse order. Here they are in the voice of your prospect:

  • I won’t care if you don’t speak to my issues
  • I won’t hear if you miss my channel
  • I won’t matter unless you find many of me
  • I won’t buy unless I really want it

The following list, digested from over a dozen of the best sources, summarizes how you can test your idea before betting the farm on it.

Testing Your Idea

Method Description
Wait Give your idea time to percolate in your mind. If you stew on it for a few weeks and still believe that the world needs it, start testing.
Find similar products You want to find competitors for two reasons: You want to know that there is a legit target market and that those people will spend money.
Attack yourself This is a variation on the differentiation exercise. Imagine a competitor enters the market to compete with you. How would they take ground from you? Would they be similar or different?
Test with Facebook Facebook’s Ad manager can tell you how big of a target market you have for a certain topic in a specific geography.
Invite scrutiny Do you want to succeed or do you want to be right (in your own head, anyway)? Hubris can take down the best minds. You must love winning more than you love your new idea. If it can survive the analysis of other bright minds, you may have a winner.
Engage a mentor or critic Get honest, been-there and done-that feedback from someone in the industry you’re targeting. Their blunt critique might hurt but it could save you much time, money, and heartache.
Enlist a focus group Your friends and family will probably not give you objective feedback. Gather people who are potential customers and ask them to be blunt.
Buy Google Adwords Build a sign-up page and then run some Adwords tests. A small investment yields big results by proving that people want your stuff.
Check Amazon Best Sellers Is there a category for your product? Is there healthy competition?
Check Google Trends See the trend of others who are looking for your product concept.
Test on Craigslist If you make your offer on CL and get sufficient interest, you may be on the right track.
Read Negative Reviews Look at reviews for similar services and read the lowest ratings. You may spot problems in your own thinking ahead of time.
Write about it If you write up your idea in a blog post, people will give you feedback. Some of it will be helpful.
Use Crowdfunding Sites like KickStarter and IndieGoGo allow entrepreneurs to raise funds and build a relationship with buyers. If your campaign goes bust, you have problems that need to be solved.
Build the MVP Minimum Viable Product – the simplest version of the product that you can actually sell. Technically this is not a pre-launch test, but shipping a minimal product can saves you money and allows you to get real-world feedback so that (if you’re listening) your product can become successful.
Want more step-by-step wisdom on this topic? Pat Flynn’s new book Will it Fly? is a must-read. Let the master of SmartPassiveIncome show you how it’s done.