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What is an S Corp?

An S Corporation is a type of business corporation.

An S Corp passes all their finances — corporate income, losses, deductions, and credits — through their shareholders. Because S Corp shareholders report the income and losses of the company on their own personal tax returns, the company isn’t subject to double taxation.

S Corp Structure

Shareholders

The shareholders of an S corp are the owners. They’re the ones who “hold” shares of stock.

Depending on how much stock they own, they have varying degrees of influence on the corporation — but they don’t make the decisions or run the day-to-day. Instead, they elect the company’s directors, who take care of all of that. They also vote to remove directors, when it seems like ...

Taking on full-time staff is a super scary proposition.

It's one thing to have to cut a check to a freelancer, but it's a whole other thing to know that someone's entire livelihood rests squarely on your shoulders.

Startup Founders have far more options and flexibility than we used to, which means the question of taking on full-time staff should be weighed much differently than it used.

Have Founders always been debating this question?

Not nearly as much as we have in the last decade.

The world of employment has undergone a massive change as the gig economy and freelance marketplace has exploded. Nowadays, more people are considering themselves "mercenaries" who can float between gigs which also means employers have to re-consider how th...

Becoming a Founder is often the first time our lives where the advice of others — even our parents — may not necessarily be useful advice.

That isn't to say getting feedback on our idea isn't important, it just means that we have to be hyper-aware about how we get feedback and who we're asking to evaluate our idea.

My (Insert Smart Person) says this is dumb. Is it?

The first mistake we make in letting others evaluate our idea is determining whether they are in fact qualified to be making this evaluation.

Let me put it this way: I'm Wil Schroter, Founder & CEO of Startups.com. I've started 9 startups and helped over 1 million Founders on our platform. If you come to me with an idea about how to take a screen-printing business to market, I'...

A great startup idea is nothing without a great co-founder. Finding the right partner is instrumental to your success: “teams with more than one founder outperformed solo founders by a whopping 163%” says the First Round Capital Ten Year Project report.

However, you can’t just take the first person who likes your idea and call her your partner. Being co-founders is like being married.

How to find the right co-founder

My co-founder Diana and I realized we’d make perfect co-founders after going on an adventure of a lifetime in South East Asia. A few years ago I became obsessed with doing the Pinnacles hike on Borneo, Malaysia. Diana, who at the time was my climbing buddy, agreed to come.

It took three planes, a bus, a kayak and a three-hour ...

If you’re bootstrapping your SaaS, you should drop your free tier.

By doing so, I was able to double the revenue growth rate of my Slack app Smooz, while reducing the amount of work required to maintain my app and support my customers.

“Drop your free tier” should be for bootstrapped SaaS apps what “Charge more” is to consultants: a reflex, a sanity check, a default choice.

There may be exceptions, but only for well thought-out reasons. Instead, focus on attracting paying customers. This article is based on hard-learned lessons, from the mistakes I made while launching and growing Smooz. Recently, several entrepreneurs asked my opinion about their pricing structure, and were about to fall into the exact same traps that I fell into.

Why we f...

In our work with startup founders, we’ve come to discover that convertible debt is a confusing subject for many. It’s a complicated and nuanced topic, but here are the three things you need to know up front:

Trust us, there is far more to convertible debt than knowing these three things, and we’ll cover them in subsequent posts, but let’s first arm you with the basics.

Delay Your Valuation

For many founders, the most meaningful characteristic of convertible debt is around valuation; specifically, the fact that you don’t need one.

If you are trying to raise $50,000 in seed stage capital, chances are you don’t have a lot of traction, and that can make valuation painful. Imagine that the investor values your idea in its current state at $...

Over the past few years, we’ve worked with thousands of startups at every imaginable stage. After a while, you start to pick up on trends and commonalities – including common pain points. One of the most universal? Convertible debt.

Chances are, you feel a headache coming on at the mere mention of convertible debt – we’ve been there. This common struggle motivated us to create a comprehensive series of posts cutting through to the core of what convertible debt can mean for your company. We’ve culled through our most trusted resources and our own experiences to bring you the type of easily digestible, practical information you’ve been looking for.

1. Convertible Debt Simplified
   Let’s boil this down to the essentials. We’ve laid out the basic c...

Paul Teshima, Co-Founder & CEO at Nudge Software, sat down with us to give some great advice on scaling business, based on his own personal journey as an entrepreneur.

1. When in Doubt, Sell Something

You never know what customers really want until they purchase a product and see its value. As a startup, you’ll want to attract a type of luck referred to as Motion Luck.

Motion Luck happens when you’re out there doing things. The more you get out into your industry and try to sell products, the greater the chance (or luck) of selling your product becomes.

That is why it’s important as a startup to harness motion luck – to sell your product and scale your business.

2. Culture is Built Through Storytelling

You won’t be able to execute your str...

I consider myself a highly productive guy, despite many, many challenges to the contrary.

I’ve got crazy ADHD. I run a company with over 150 people who need my attention all day long. I am responsible for being the CEO of the company, writing copy, managing our financials, new product strategy, acquisitions, and about 90 other things. I also have 2 little kids and my family lives in 2 cities that we travel back and forth from constantly. It’s nuts.

My life is defined by distraction. Yet the reason I can constantly stay on top of so many things isn’t because I’m always getting lots of stuff done simultaneously – it’s because I focus on getting just one thing done every day.

One thing. Every day. That’s it.

You and I are probably looking at t...

Most Founders have a "certain set of skills" that apply to one aspect of their startup, whether it's deep product knowledge or incredible domain expertise from their previous job.

Unfortunately, in a startup, we sorta need to be a jack of all trades because we're often the only person doing all the work!

Let's assume that you could only invest the bare minimum in the various aspects of your startup operations.

Here's the least you'd need to know.

What about finance? Do I need to know the numbers?

At the very least a Founder should understand how an income statement works.

That simply means "here's where we're making money, here's where we're spending it, and here's how much we're making (or losing)." If you didn't understand a balance s...