Free accounting software comes in all shapes and sizes.
There’s the simple and intuitive kind with a user-friendly interface.
Then there’s the more comprehensive kind which tends to be a bit dated in terms of front-end design but can do the job almost as well as premium accounting software.
Lastly, most premium accounting software offers a 30-day free trial. That allows you to dip your toes into each of the premium software before having to commit.
Ultimately, whether a free accounting software or a free trial of a premium one is best for you comes down to:
Are you averse to paying for accounting software? Maybe your business is new and you’re trying to minimize expenses as much as possible.
Or do you mainly just not want to get locked into committing to a software choice that you end up not liking?
Fortunately, no matter where you land, in this article we’re going to cover both the best free accounting software and a quick list of premium accounting software that offer free trials.
The Top 6 Free Accounting Software for Small Business
Keep in mind, the list below isn’t in any particular order, as most free accounting software generally offer the same features.
Some do have a paid version you can take advantage of if you end up liking one so much that you want to stick with it but need some more premium features.
However, keep in mind that generally, premium accounting software offers a lot that base-free accounting software doesn’t.
With that said, let’s get to the list:
1. ZipBooks
One of the more recognizable names in the world of free accounting software, ZipBooks offers virtually everything you’d want in a free accounting software for small business purposes.
ZipBooks offers:
Reports
Invoicing
Billing
Expense management
And more
Some features you’ll need to do a little extra leg-work for, such as online payments (can link up Square or PayPal) and payroll, which they offer a paid add-on for $39/Month (which is sometimes discounted).
However, those features aside, ZipBooks can do about everything you’d need a basic business accounting software to do.
TurboCASH offers many of the same features as ZipBooks and then some, such as:
Reports
Invoicing
Purchase orders
VAT
Multiple users/companies
However, what is unique about TurboCASH is:
It’s been around since 1985 (!)
Its large online community, boasting more than 100,000 users across the U.S., Canada, Europe, and Australia.
If you’re new to business accounting, the helpful community itself could be considered a valuable feature.
However, keep in mind that the software is a bit on the complicated side. So, it’s definitely not best suited for new business owners or particularly built for solo business owners, including sole proprietors and freelancers.
Similar to TurboCASH, GnuCash has been around for quite a while.
The software itself is a bit dated not, but it has gotten the job done for thousands of businesses since being founded in 2001.
GnuCash offers features such as:
Reports
Invoicing
Vendor tracking
Job costing
And more
The nice part about GnuCash is that it’s a free download– no strings attached. No using the software from the website via a backend login like most online accounting software does.
You simply click “Download” and you’re good to go and use it to your heart’s content.
CloudBooks, not to be confused with QuickBooks or FreshBooks, is a no-cost accounting software that offers:
Reports
Invoicing
Expense tracking
Time tracking
Multiple users
Estimate calculator
And more
CloudBooks is unique in that while they do have an entirely free version, there are limitations in place.
As opposed to offering a premium version with additional features, the free version of CloudBooks is limited in the number of invoices you can send per month at 5.
If you want to send more invoices than that per month, you can opt-in to the basic paid plan at $10 per month.
One of the most recognizable names in the accounting software space, Zoho has several offerings– and it’s arguably one of the best free options available.
Zoho Invoice is Zoho’s free accounting software offering (while Zoho Books is their paid premium offering), with features such as:
Reports
Invoicing (Up to 5 customers)
Automated workflows
Expense tracking
Time tracking
Client portal
One unique feature of Zoho is that they offer the ability to add users without moving up to their paid tier.
So, if you like the features that Zoho Invoice offers but don’t want to have to pay for a full plan for multiple users, you add another user for just $2 per month (or $20 per year).
Another one of the most recognizable names in the free accounting software space, Wave is a free accounting software with many features.
Those features include:
Reports
Expense tracking
Income tracking
Invoicing
One notable feature that Wave doesn’t offer is direct payments, which they charge a pretty standard 2.9% + $0.30 processing fee for each credit card payment (and 1% per ACH payment).
Wave also doesn’t offer payroll through its free service, which you’ll need to pay between $20-35 monthly for + $4 per employee or contractor included on your payroll.
Earlier, we touched on the fact that free accounting software is often missing useful features that you might need to do your business accounting optimally.
That’s why a nice middle point between:
Finding something free to start off with and
Getting the features you need to properly run your business accounting
can be taking advantage of one of countless premium accounting software’s free trials.
If you’re not really concerned with paying for accounting software so long as you know it does what you need it to do, and you mostly just don’t want to get hooked into some paid plan before you figure out if the software works for you, you’re in luck.
Some of the best premium accounting software have generous 30-day free trials you can use to try each software and find which works best for you.
Those companies include (click on the links below to go to their free trial page):
Keep in mind, being premium accounting software, all of the above options offer virtually the same features.
However, there are some small differences between the services that you’ll want to check out, mostly in terms of user interface and extra features.
For example, FreshBooks can serve as a great dual business + personal accounting software, something you don’t need but might want while QuickBooks is great if you also need a place to keep track of your company inventory.
Ultimately, though, you can’t really go wrong with any of these options, so give them a try and see which feels/works best for you.
Which free accounting software is the best fit for you?
There are a ton of different free accounting software options out there, from truly free to free but limited and finally free trials on premium software.
Which works best for you depends on several factors, including:
Which less standard features you need
How the user interface feels
And how tech-savvy you are
At the end of the day, there’s no way to know which free accounting software solution will work best for you.
However, they’re free! You can try several out before committing to one that you like.
So, consider which features are critical for you and your business and make a shortlist of a few that seem like they’re a good fit on paper.
From there, you can expedite the decision without the whole process being too time-consuming (because let’s face it, you probably have better things to do than wade through accounting software!).
Want to know the steps to franchising your business? Franchising offers a big potential return on investment, but it also comes with a big cost. Read on to learn more.
What is franchising and how does it work?
Thanks to fast-food restaurants in the 1950s like McDonalds, franchising is a household term.
How does it work? Franchising is a legal structure that allows businesses to sell the right to open their own franchised locations of that business.
With franchising, you can elicit the help of eager franchisees to help grow your business, with the potential to significantly increase the rate of that business’ growth.
In exchange for being able to open a franchise, franchisees will pay you a franchise fee along with ongoing royalties based on sales from each of their locations.
However, to franchise your business, you’ll have to create the legal documents and operational guidelines necessary for those franchisees to operate– and that’s no small task.
Not to mention, the training, systems, supplier connections, and support they’ll need to run their business (just to name a few things).
But before you do all that, the first step is to create your Franchise Disclosure Document (or FDD).
Your FDD details 23 different sections or pieces of information related to the business that helps disclose to the franchisee the information they need to make an informed decision about becoming a franchisee.
Once they’re ready to get started, to sell a franchise you need to provide them a franchise agreement (best prepared by your attorney) to make the sale official.
That all sounds great and everything, but making the move into franchising is an enormous undertaking. So, you shouldn’t take it lightly.
First, let’s talk about the pros and cons of franchising so you can better understand why you might want– and not want– to open your business up for franchising.
Pros and cons of franchising
Franchising has both big pros and big cons, both of which you should be aware of when considering whether to franchise or not.
Here are the pros and cons of franchising:
Con: It’s expensive
You’re going to need a lot of extra cash– or funding– to go into franchising.
That’s because franchising requires legal prep, systems set up, supplies, and everything else needed to set up your franchising program and help your franchisees get off the ground and stay in business.
At the end of the day, franchise experts suggest you have $500,000-1,000,000 before considering going into franchising. Anything less is a risk to your primary business.
Pro: But the payoff is (potentially) huge
With that said, the payoff for franchising is enormous; there are few ways to multiply your business revenue as effective as franchising.
It will do much more than help you get a return on your investment. After the first few years, franchising could be a huge portion of your annual revenue for the remainder of the life of your business.
Con: It takes (a lot of) time
Franchising isn’t just monetarily expensive, it’s time expensive too.
From the day you launch your franchising program and get your first franchisee, it can be years before you see any real return.
If you’re not willing (or able) to invest 3-5 years in franchising before seeing a profit, you’re probably not in a position to pull the trigger yet.
However, if you understand that franchising is a long-term endeavor and you have the capital and business stability to invest fully in it now knowing you may not see a return for several years, it’s worth considering.
Pro: Franchising can put you on the map (literally)
A successful franchise business can single-handedly exploded your number of locations, especially if you snag a few great franchisees in key markets.
More than just the revenue, the want franchising can expand your business into new markets you otherwise might never have entered makes it an invaluable vehicle for exponential business growth.
How to franchise your business
Now that we’ve covered the big pros and cons of franchising, let’s talk about how to do it in detail.
There are essentially 7 steps to franchising any business. They are:
1. Create a Franchise Disclosure Document (FDD)
First, you’ll need to create your FDD, which we touched on earlier.
An FDD is required by law to provide potential franchisees the information they need on your business.
Make sure that when you’re creating your FDD you:
Include the ability to purchase multiple franchises, often referred to as multi-unit, and
Make sure the FDD is multi-state, meaning it’s valid for all U.S. states where a franchisee may want to open a franchise
2. Register your FDD
Now that you have your FDD completed, you’ll need to register it in certain states so that it’s valid.
Certain states are considered “franchise registration states”, such as New York and California, while others have instated similar franchise guidelines that require registration.
For more information, check out the latest information on all 50 states from this spreadsheet resource by the International Franchise Association.
3. Write your operations manual
Once your FDD is done, you’ll need to create the operations manual which all franchisees will follow to run their franchise.
This manual should be extensive, including everything from:
Training guidelines to
Serving instructions
Recipes
Operational conduct
And anything else relevant in terms of running of the franchise location and adhering to brand conduct guidelines
Make sure not to skimp on this and invest the time necessary to create something that will clearly lay out what is required of your franchises.
4. Create your franchise company
Franchises must create separate franchise entities from their main business (for example: Barron’s Burgers vs. Barron’s Burger Franchising, Inc.).
Along with this, you’ll need to create a separate business bank account for this new entity, which is what will be used in the creation of your FDD.
5. Draft your franchise development plan
Now that the real technical stuff has been taken care of, it’s time to cover two more vitally important steps that will influence the success of your franchise.
First, you’ll want to create your plan for how to franchise will grow, develop, and support its franchisees.
Your franchise program will only be as successful as the time and effort you invest in it (if you’ll excuse a tired old phrase), so take time to think about:
How will you support your franchisees?
What new systems do you need in place?
How can you streamline preexisting processes to help with the implementation of your new franchise program?
What kind of budget are you setting for the next 1-5 years for franchising?
And how will you market your franchise? (More on that in the next point.)
6. Create your franchise sales strategy
Next, and an easy step to gloss over, you’ll need to sit down and create a comprehensive franchise sales strategy.
The last thing you want to do is invest all this time and money in setting up your franchise only to have a subpar marketing strategy to go along with it.
And yet, it’s the easiest thing to forget about in the larger scheme of things.
Take time thinking about how you’ll reach out to potential franchisees, whether through digital advertising or organic reach, both, or something else altogether, and what percentage of each.
Consider recently successful franchises and study how they had such explosive growth and you could take from that to improve your own marketing plan.
What documents do you need to franchise your business?
Now that we’ve covered the steps to getting your franchise started, you might be wondering a little bit more about the documents we mentioned earlier.
When it comes down to it, there are really just two primary documents you’ll need to draft to get your franchising journey started (besides the typical business documentation you already have):
Operations/Franchise manual
Franchise Disclosure Document (FDD)
Of those two, it’s the latter that has strict requirements.
There are 23 separate items, or pieces of information, you must include in your FDD to provide to prospective franchisees.
Those are:
Franchisor and all parents/affiliates: Parent companies, etc.
About your business: How long have you been around, where do you operate, who are your competitors, and any other detail you feel would be important such as special documentation or requirements necessary for you to operate your type of business.
Bankruptcy: You must list if you or any other executive has filed for bankruptcy while working at the company.
Litigation: Any and all litigations regarding your company must be listed.
Initial fees for starting a franchise with you
Other fees: Deposits, etc.
Initial investment: An estimate of what is required to get started
Restrictions (on suppliers/vendors): What vendors must be used for certain supplies? Etc. List them all along with any necessary instructions.
Expectations/Obligations: What do you expect from franchisees? What do you commit to providing to them?
Financing opportunities: If you’re offering any sort of financing to franchisees to get started, list it.
Training: How will franchisees be trained? What programs will you offer?
Territory: Are they receiving a protected territory? This must be clearly outlined along with all other relevant details.
Trademarks: List all trademarks associated with the franchise system and whether they’re filed with the U.S. Patent and Trademark Office, along with all other relevant information.
Copyrights, patents, etc.: List all along with proprietary information.
Obligations to participate: What obligations are you setting forth for franchisees to participate in the franchise on a day-to-day basis?
Selling restrictions: How much control do you have over what a particular franchise sells? What may or may they not sell? This needs to be outlined in detail.
Transfer/Renewal/Termination: All relevant information related to this and any disputes must be mentioned in its own section as well.
Public figures: Have you hired any celebrity or equivalent to advertise your product? List them here.
Financial performance: You’re not required to include Financial Performance Representations, but whether you are or aren’t you must list that here
Outlets: List al corporate and franchised outlets over the past 3 years along with projections for the future.
Financial documentation: Statements, etc.
Contracts: List all contracts that the franchisee must sign for you, the franchisor.
Receipts: Include two copies of the receipt page, which is the signature page confirming the proper delivery of the FDD.
Remember, an FDD is required by law, so take every precaution to make sure you’ve filled out your FDD and can check off all 23 individual points.
Take your business to the next level with franchising
Franchising your business is a huge step forward that has a big price with even bigger potential returns.
Take the time to heavily consider the cost of franchising your business, whether you’re truly ready, and whether you’re prepared to make the time and financial investment necessary to create a successful franchising program with your business.
Frequently asked questions
What is franchise tax?
Franchise tax is not a tax charged to franchises, but rather a tax paid by some businesses for the privilege to operate in a particular area (in most cases, a particular state). Franchise tax is paid in addition to federal and state income taxes.
How long will it take to franchise my business?
Typically, it can take anywhere from 90-120 days. This all depends on various factors unique and not unique to your business, including local state regulations, requirements, and your own team.
How much does it cost to franchise a business?
The initial fees to start your franchise– drafting your operations manual, creating your FDD, and the legal infrastructure and systems your franchise system will require– will likely cost anywhere from $20,000 – 30,000.
However, keep in mind that the cost to franchise your business is in reality much higher when you factor in the time and monetary investment necessary to market to, train, and support franchisees, from several hundred thousand to several million over 3-5 years.
Looking for a good payment processing solution for your business that caters to both retail and online sales?
When it comes down to it, there really isn’t a whole lot to choose from that cover both types of transactions. At least, the best options are leagues better than the rest.
Which is ironic, since every ecommerce– and many other– businesses online needs one to operate.
That’s why most businesses that need a digital payment processor look to one of two big hitters: Stripe and Square.
Which is better? Where do they each excel, and which is best suited for your business?
Below, we’ll dive into the details and cover everything from pricing to features and deliver the final verdict on which is likely a better fit for your business.
But first, check out the 10,000-foot overview below if you want to get a quick comparison summary:
Stripe Overview
Stripe is known as being a super developer-friendly payment processor.
It isn’t the easiest to set up if you’re new to ecommerce or digital sales in general.
However, Stripe does offer a comprehensive set of features that allow you to do just about anything you’d want with a digital payment processor.
Best for: Those who are a bit more tech-savvy and want more robust developer features.
Square Overview
Square is an easy-to-use digital payment processor and point-of-sale (POS) system. Meaning you can take payments at a physical store and also accept payments online using the square platform.
If you’re not tech-savvy and need a solution that’s easy to use right out of the box, Square makes it about as easy as can be to get set up and start taking payments.
They offer a free website with Square payment processing already built-in, simple and straightforward POS terminals as well as their Square Reader for accepting in-person payments, and other ready-made solutions.
Best for: New or solo business owners who aren’t tech-savvy and want something simple and easy + brick and mortar businesses needing an easy to use point-of-sale system.
Before we dive into the details, it’s worth mentioning that both Stripe and Square:
Offer competitive transaction fees
A comprehensive service that does the job it’s supposed to
And great customer support
No matter which you go with, both will be able to do the job if all you’re looking for is a dependable digital payment processor.
However, each has a niche that allows them to expand beyond that central service to offer more.
With that quick summary out of the way, let’s dive into the details.
First, let’s start with pricing.
Stripe vs. Square: Pricing
In terms of pricing, Square and Stripe couldn’t be more similar, though there are some notable areas where they differentiate that are worth noting.
Here’s the breakdown:
Stripe pricing
Both Stripe and Square are equal in terms of online credit card transaction fees at 2.9% + 30 cents per transaction.
Similarly, in-person transactions are virtually equal at 2.7% + 5 cents for Stripe and 2.6% + 10 cents for Square.
However, where Stripe differs is in ACH and recurring transactions.
Stripe charges 0.8% per ACH debit transaction, at a $5 cap, while charging just 2.9% + 30 cents per recurring transaction.
Square pricing
While similar in online credit card and in-person transactions, Square differs from Stripe in recurring and most notably ACH transactions.
Square has a higher percentage on recurring transactions, though a lower flat fee on top of it at 3.5% + 15 cents per transaction.
However, where Square stands out most is in ACH transactions, as they don’t charge a fee, unlike Stripe.
Pricing: the verdict
All-in-all, the pricing grid for both Stripe and Square is incredibly similar.
However, if you have a large number of recurring transactions, Stripe is the marginal winner.
Similarly, if you process a large number or size of ACH transactions, Square is the obvious choice.
Stripe vs. Square: Features
Next, let’s dive into both Stripe and Square’s features and see where each excels (and which has the features most relevant to you).
Here’s where each stands out:
Stripe features
While both Stripe and Square offer comparable digital payment services, when you look a little more closely, they diverge in a few key areas.
Unmatched developer tools
When it comes to Stripe, their stand-out characteristic is their unmatched developer features.
Stripe gives developers and business owners who want (or need) to customize their payment gateway the tools to do exactly that, with things like custom checkout options and UI tools.
This first point is the most notable differentiator for Stripe, and it’s a big one, but Square has a few other notable features aside from this.
Such as…
24/7 Phone support
One surprising feature Stripe offers that Square doesn’t is full 24/7 phone support for all customers.
In an age where most modern digital-focused startups seek to nudge customers with sophisticated AI chatbots to their knowledge base of common questions and answers, Stripe goes the opposite direction and offers unrivaled support to its customers in the form of (gasp) real live people.
A diverse range of payment methods
Another place where Stripe is the clear winner is in payment methods.
Stripe has gone out of its way to offer an extensive list of payment options, from various credit cards to countless digital payment methods, ACH, and digital wallets such as Apple and Google Pay.
Square features
So, where does Square stand out from Stripe?
Where Stripe is perfect for developers and power players who want more and diverse features to let them create things like custom checkout experiences, Square is the king of ease of use (among other things).
Super user friendly
Where Square makes a name for itself is in how easy it is to use.
While Stripe gives users numerous toys to play with to customize and build out, Square’s service is clearly built for the opposite: to offer the best out-of-the-box and user-friendly experience possible.
Everything from their payment gateway templates to their free and ready-made online store makes getting started a breeze for any business owner who is new to accepting digital or in-person payments, all while doing so safely and professionally.
Free POS software
To bounce off the first point, Square also makes getting started with in-person payments simple and easy.
How? By offering free point-of-sale (POS) software that is plug-and-play ready.
This pairs nicely with the ease of setting up digital payments with Square, making for an all-in-one digital + physical payment system that can be set up within a single day.
Did we mention their USB and full terminal devices are stylish? Definitely not your typical retail checkout terminals.
Verdict: Stripe vs. Square– Which should you choose?
So, which should you choose: Stripe or Square?
The question mostly comes down to two things:
How tech-savvy you are, and
Whether you need a point-of-sale (POS) system
If you need a digital payment processor with a POS system, Square makes getting set up to take in-person payments incredibly easy and efficient.
If you’re in need of a dependable digital payment processor with lots of potential, especially if you are or have a developer, Stripe has the most robust features.
Stripe is also ideal if you need to set up a way to collect recurring payments from your customers.
However, if you’re not tech-savvy and aren’t looking to do anything custom– in other words, you just need a reliable way of accepting payments online and/or in person, and to do it easily right out-of-the-box– Square is a perfect fit.
Minority business loans and other unique programs exist for minority-owned businesses throughout the U.S. While many of these programs are state or community-specific, there are some large-scale programs as well. Read on to find out more.
What are minority business loans?
According to the U.S. Census Bureau, more than 1 million businesses in the U.S. are now owned by minorities, roughly 17% of all U.S. businesses.
In total, minority-owned businesses account for about $1.8 trillion in annual revenue and employ over 6 million workers throughout the country.
However, despite the considerable growth in minority-owned businesses, it remains unfairly difficult for minorities to obtain traditional loans, even when comparing equal credit and other financial determinations.
Fortunately, several organizations and programs have stepped up to help bridge that gap and make it easier for minority-owned businesses to get the funding they need to build and grow.
Minority business loans are one such umbrella of programs, which refers to any loan program specifically designed for minority-owned businesses.
In addition, later we’ll also break down some additional resources that minority-owned businesses can take advantage of to obtain funding and grow their business.
Minority business loan options
Several minority business loan options are available, from SBA loan programs to other major loan programs as well as state and local programs.
Here are just some of the programs available to minority-owned businesses:
1. SBA 8(a) Business Development Program
One of the most notable minority-based business funding programs, the SBA’s 8(a) Business Development Program was created for minority and disadvantaged businesses.
Technically not a loan program, 8(a) participants enjoy several benefits related to easier access to business funding.
Most notably, members of the 8(a) program have access to an annual pool of federal contract funds reserved for 8(a) participants. That means not only fairer qualification given the program guidelines but less competition as a whole.
And if the idea of applying for federal contracting dollars sounds daunting (as with anything government-related, it can be painfully confusing), you get access to a specialist representative who will help you through the entire process.
So, how do you become a part of the program?
To be approved for the SBA’s 8(a) Business Development Program, you must meet these guidelines:
Be 51% or more owned and controlled by U.S. citizens who qualify as economically and socially disadvantaged
Must be involved in the day-to-day operations of the business itself
Have a personal net worth of less than $250,000
And have less than $4 in assets
Keep in mind that there are additional guidelines to qualify as an 8(a) business you’ll need to meet as well.
For all the information you need to get started with the SBA’s 8(a) Business Development Program, see here.
2. SBA Community Advantage loans
The second of three main programs the SBA offers to minority-owned businesses, SBA Community Advantage loans are a part of the SBA’s flagship 7(a) loan program, which is offered in conjunction with local lenders.
The SBA Community Advantage loan program offers funding in the form of term loans to business owners in underserved markets, between $50,000 and $250,000 in funding. Interest rates typically range from 7-10%.
To learn more about the SBA’s Community Advantage loan program, click here.
3. SBA Microloans
The third and final SBA program minority-owned businesses can take advantage of is the SBA Microloan program.
SBA Microloans are exactly what they sound like: small loans between $500 and $50,000 (with the average Microloan being $13,000).
The Microloan program is designed for new businesses that are minority, women, or veteran-owned or low-income, with roughly half of all Microloans going to minority-owned businesses each year.
Microloans have a relatively short-term repayment plan at within six years and have an average interest rate of 8-13%.
To learn more about the SBA’s Microloan program, click here.
4. Business Consortium Fund
The Business Consortium Fund, or BCF, is a U.S. Department of the Treasury certified Community Development Financial Institution designed to help minority business owners in various ways.
The BCF has several programs, including its Direct Lending Program, which offers minority business owners $75,00 to $500,000 either in the form of a term loan or as a business line of credit.
To be approved for the program, you’ll first need to get your business certified as a minority-owned business with the National Minority Supplier Development Council.
While several national programs exist to help minority-based businesses, programs also exist on the state and local level.
Below is a list of example state and local programs for minority-owned businesses, but take the time to research what programs might exist in your area as this list is definitely not exhaustive.
1. Community Development Financial Institution Fund
The Community Development Financial Institution Fund was established by the U.S. Department of Treasury. Through the fund, CDFI’s or Community Development Financial Institutions offer both financial and technical assistance to minority-owned businesses.
The BEA Program’s mission is to facilitate investment in economically distressed communities around the country to revitalize those areas.
Native Initiatives offers monetary awards and technical training opportunities to help create jobs, build businesses, and create economic growth in Native Communities.
As a whole, the CDFI provides affordable credit, capital, and other business and financial growth opportunities to minority and economically distressed communities nationwide.
The loans range up to $35,000 for their trust fund program and $50,000 for fixed asset loans and require businesses have less than $100,000 in annual gross revenue.
3. National African American Small Business Loan fund
The National African American Small Business Loan fund offers business loans to African American-owned businesses in several major cities throughout the U.S., including New York and Los Angeles.
The fund also offers comprehensive business services, including marketing, business plan development, and tech assistance.
Loan amounts range from $35,000 to $250,000 and can be provided in the form of short-term loans or business lines of credit.
Do you qualify for minority business loans?
Now that we’ve covered some unique options for minority-owned businesses to obtain funding, you might be wondering: will I qualify?
The main prerequisite for most minority business loan programs is that the majority owner (51%+) must be part of a minority group.
It is possible in some rare cases that a program might require all owners to be part of a minority group, but most programs only require a single majority owner.
Beyond that, every loan program is different, so you’ll need to check with each individual program’s qualification factors to figure out what you’ll need to qualify.
Grants and additional resources for minority-owned businesses
In addition to the above minority business loan programs, there are several grants and additional resources for minority-owned businesses to take advantage of.
While obtaining a business loan is generally easier (both to find and obtain), grants and other similar programs are a chance at debt-free capital for your business, so they’re worth looking into.
Here are a few:
1. U.S. Minority Chamber of Commerce
The Minority Chamber of Commerce is a national organization supporting minority-owned businesses throughout the U. S.
While not offering any direct grant or funding programs, the MCC is great for connecting you to existing resources, including both grants and new and existing funding programs.
2. Minority Business Development Agency (MBDA) Business Centers
MBDA business centers connect minority-owned businesses in 34 states with countless small business services.
Services include:
How to secure funding
Other financial counseling
And contract acquisition
Financial counseling is 1-on-1 and offers minority-owned businesses an invaluable financial overview from one of the MBDA’s own financial experts.
3. Grants.gov
A final and the best general source for finding qualifying grants is Grants.gov.
The site offers up-to-date information on more than 1,000+ grant programs throughout the U.S.
It has an easy search function with access to information on countless minority-based grant programs, such as the Minority Research Grant Program.
Make your dream business a reality
Much still must be done to bridge the divide that minority-owned businesses face in today’s business world.
However, progress has been made and there are programs and resources available to business owners who are willing to look.
Get the funding your business needs to make your dreams a reality, with the loan programs and additional resources we covered in this guide.
Frequently asked questions
How do I get a minority business grant?
To apply for and potentially obtain most minority business grants, you must:
– Get certified as a minority-owned business – Create your business plan – Visit a grant directory such as Grants.gov to find a grant that matches your business – Gather your business documents – Apply for the grant (double-check whether there is a deadline, as most grants work on an annual limited-time application schedule)
It might not be the first thing that comes to mind when you think about starting up your business, but choosing which bank to work with is a vital part of your daily business dealings.
For that reason, it’s important to invest the time and energy in finding a bank that works for you and your business.
You should consider:
How many monthly deposits do you make?
Do you need funding in the form of a business or real estate loan?
Are the number of available physical branches important to your business?
How often do you use mobile banking?
The only problem is, there are a lot of banks out there, and with all of them vying for your business, so it’s hard figuring out which one is best for you.
That’s the purpose of this guide.
Below, we’ll take you through each of the best banks based on a variety of factors including:
Number of branches
Fees
Online-only checking option
Monthly transactions
And the best credit unions
So, let’s get to it:
Best for low fee checking: Bank of America
A mainstay in top small business banking lists, Bank of America is known for having high customer satisfaction ratings compared to most other major banks (with only Chase consistently beating it out).
However, one of its most notable features is its low-cost small business checking account.
Bofa business checking accounts have an $18 fee, but they offer numerous ways to avoid said fee, including:
$5,000 average monthly balance
$3,000 minimum daily balance
$15,000 combined average of all linked BofA accounts
Or, most notably: if you charge just $250 monthly to a business debit or credit card
That last one, in particular, makes it incredibly easy to avoid the monthly fee.
Combine that with the fact that all BofA business checking accounts offer free cash deposits and free online and mobile banking, and BofA is the stand-out winner for the lowest fees for any small business checking account.
Best for number of ATMs and branches: Wells Fargo
If a vast network of ATMs at your fingertips is important to you, Wells Fargo is a choice to consider.
It’s worth noting that they have the lowest approval rating on average compared to any other major bank.
However, with more branches than any bank in the nation, you can’t argue with their convenience.
Wells Fargo also offers no-fee withdrawals from its network of branches, which serves as a nice compliment.
It’s also worth noting that their Simple Business Checking Account offers the option to avoid fees by maintaining a low minimum balance of just $500, which is far better than BofA’s $5,000 (though their $250 monthly debits is still king above that).
Like BofA, Wells Fargo also offers a wide variety of small business lending products.
In fact, it’s the largest Small Business Administration (SBA) lender in the country, offering more SBA loans than any other major bank.
However, it’s important to mention that you won’t get competitive rates compared to most local credit unions, which is usually the first place you should start if you’re looking for funding from a local bank.
Best credit union: Navy Federal Credit Union
Often reported as one of the highest-rated credit unions in the country, the Navy Federal Credit Union (NFCU) was originally founded to serve the U.S. Armed Forces.
However, it now serves civilian individuals and business owners throughout the country with a variety of services.
Including:
Business checking
Savings
Business loans
Credit cards
And employee benefits such as insurance and retirement
The NFCU is known for its stellar customer service record, above and beyond even the average credit union, but that’s only a part of why they’re on this list.
What makes credit unions in general so notable is that, partly because they’re not-for-profit entities, interest rates and fees tend to be lower.
And that’s the case for the NFCU, who offer everything from term loans to business lines of credit at affordable rates.
The only drawback is that you need to be a member first to take advantage of any of their offerings (typical for all credit unions).
Also, to become a business member, you must first become a personal member first then apply to become a business member (along with a $100 opening deposit).
However, all things considered, the benefits you get far outweigh the drawbacks.
Best digital (online-only) checking: Azlo
Countless new digital banking options have sprouted up over the years, but few have reached the heights of online bank Azlo.
Born from the digital boom that saw freelance and entrepreneurialism explode online, digital or online-only banking offers a convenient option for solo business owners to manage their banking online without ever having to step into a physical branch.
Azlo, in particular, stands apart from other online banking options for one big reason: there are little to no fees.
With Azlo’s small business checking account, there no fees for:
ATM use
Domestic and international wire transfers
ACH transfers
They also offer mobile check depositing and minimum balance or basic checking fee.
Overall, their lack of extensive and confusing fees makes Azlo refreshingly transparent when compared to the average major bank.
Best for high monthly transactions: Capital One
If you tend to pull a high number of monthly transactions, Capital One is a great option.
Some banks will often either put a restriction on your number of transactions or add unnecessary fees that make those frequent transactions more of a challenge (or at the very least, eat into your bottom line).
Capital One’s small business checking account options, on the other hand, have no such cap.
Their Spark Business Basic Checking account offers:
Unlimited monthly transactions
No fee on deposits up to $5,000
$15 service fee that’s easily avoidable, either by having three or more Capital One products or by maintaining an average balance of $2,000 over either a 30 or 90-day period
With a Spark business account, you also get access to a collection of financial management tools that can help you better manage your business’s cash flow.
All of that combined makes Capital One’s business checking options a great fit for any small business owner, especially if you make frequent transactions and/or high-value deposits.
Best overall: Chase Bank
Consistently rated highest in customer satisfaction, Chase Bank stands atop the collective.
Why?
Besides customer service, there’s no one thing that sticks out about Chase compared to other major banks such as Wells Fargo and BofA.
It’s a collection of several different factors that, taken together, that help it securely take its spot at the top.
According to Consumer Reports:
“Banking surveys, such as one from J.D. Power, also shows that many consumers appreciated Chase’s ATM and branch network, and mobile and online services, as well as the quality, clarity, and relevance on the advice provided about financial products it offers.”
One of the more notable features of Chase’s business checking is that it offers no checking fees if you maintain a balance of just $1,500, low relative to competitors such as BofA’s $5,000.
Not to mention, Chase’s mobile banking app and mobile check deposit functionality are both highly rated (which says a lot considering most major bank’s mobile apps, including BofA’s, are ridden with issues).
Another notable mention is Chase’s Ink Business credit card, which has a great rewards program and a consistently high rating.
That’s not to mention the transparent presentation of Chase’s credit products themselves, which makes shopping for a business credit card if you bank with Chase an all-around pleasant experience.
Add on top of that the fact that with 16,000 combined branches and ATMs, Chase has one of the largest networks nationwide, and you’ve got the overall best bank in the country for small business.
Best banks by state
While the above are the best overall banks for small businesses throughout the country, we couldn’t end this list without giving you a list of the best banks by state.
The reality is, while the list above gives you a general idea of which banks are best to go to for certain features and aspects of small business banking, the best offerings vary wildly by state.
And they’re local credit unions, not big banks.
So, without further ado, here are some of the best banks by state:
Best in Maryland, West Virginia, and Pennsylvania: First Peoples Community Credit Union
Founded in 1959 under the Amcell Corporation, First People’s Community Credit Union currently serves over 30,000 members in and around the Maryland area as well as parts of Pennsylvania and West Virginia.
FPC is best known for its convenient digital and local branch services, a rare combination for a local credit union.
Best in Minnesota and Illinois: BCU Credit Union
Originally founded to serve Baxter Healthcare more than forty years ago, BCU Credit Union was recently rated as one of the most loved banks in both the Minnesota and Illinois area.
Best in Massachusetts and New Hampshire: Digital Federal Credit Union
Founded in 1979, Digital Federal Credit Union or DCU started out serving the New England area then branched off to the greater Massachusetts as well as the New Hampshire area.
Many customers cite their reliable customer service, with the only drawback being slightly lower interest rates on accounts compared to similar credit unions.
Best in Utah and Idaho: Mountain America Credit Union
Known partly for their mortgage program and high customer service rating, Mountain America Credit Union (or MACU) was recently rated the bank in Utah as well as in the top five in Idaho.
Best in Texas and Colorado: Security Service Federal Credit Union
Known for its low rates and good auto loans, Security Service Federal Credit Union was recently ranked as one of the top banks in both Colorado and Texas.
Best in Wisconsin, Kentucky, and Michigan: Huntington Bank
Huntington has long been a favorite throughout Columbus, Ohio. However, it’s now expanded far beyond its roots and become a top-rated bank in:
Ohio
Kentucky,
Wisconsin
Michigan
Pennsylvania
In fact, no other bank in the country is rated number one in more than one state, something that Huntington has accomplished and then some.
A unique feature of Huntington compared to most local banks is that it’s investing heavily in AI tech, including updates to its app that will notify its customers when their spending increases and isn’t likely to cover their future balance.
Best in Virginia, Louisiana, and Delaware: Capital One
Finally, major bank Capital One is one of the only major financial institutions to be rated highly in multiple states, even compared to credit unions.
It was ranked among the best banks in:
Virginia
Louisiana
Delaware
Maryland
And Washington, D.C.
Capital One is particularly strong when it comes to digital resources, boasting one of the highest-rated apps among major banks, and offering a great digital-only banking service.
The best bank for small business is the bank that serves you
You have a lot to choose from when it comes to picking a bank for your small business.
It might feel a bit overwhelming having to look through countless features, options, and resources just to decide which bank to go with.
However, the bank you choose to work with plays an important role in the daily operation of your business, so it’s an important choice you need to invest some time and energy into.
Learning how to start a business is a lot like learning a new language:
At first, everything feels foreign and new.
After a while, though, you start to get the hang of it. It starts to be comprehensible.
The only problem?
When that starts to become comprehensible to you depends entirely on your own work ethic.
You could get there sooner, learning the right steps to take in advance and being smart about each next stage and decision that can move your business forward.
Or, you could get there later, making costly mistakes that cause you to be set back.
Or, worse, cause the business to go under for good.
Business isn’t a race. It’s a marathon, and the better you are at collecting information, considering your options and validating your actions the better results you’ll get.
To that end, this guide is intended to help you get the information you need to start your business the smart way.
Let’s start with step 1, the most important step to take before starting your business.
Step 1: Do market research
Before officially starting your business, it’s important to understand something we touched on a moment ago:
Validation is key to business success.
Many business owners make the mistake of thinking they can simply act on a business idea and it will work out.
But there are a few things you need to consider first before you should jump.
That includes:
What problem does my product/service solve?
Are people looking for a solution to the problem?
Would they pay for my solution? And how much
Another point to consider is whether to do the same thing better or strike out and do something new.
There are valid arguments both ways, but ultimately, you have to choose either to:
Do what other businesses have done before, but different
OR do something entirely different (typically by identifying a need that doesn’t yet offer a solution)
The difference might seem inconsequential right now, but it could make a big difference later as you work to gain traction for your product or service.
Doing something proven to work, just a bit differently, requires less skill and knowledge of business and marketing in general.
Launching a business with a totally unique product or service has a sharper potential growth curve, with a much higher risk and chance of failure.
Step 2: Write your business plan
A business plan can be 1-page or ten pages, it mostly depends on how extensive you want it to be (and why you’re crafting it).
A business plan is important because it helps establish a gameplan for your business.
What kind of product or service do you offer?
Who is your target customer?
You competitors?
What is your financial strategy?
And your marketing strategy?
Also, what is your unique selling proposition (USP)?
These are all questions you should have an answer to before you officially “open your doors” because they determine your success.
Not creating a thorough business plan is one of the single greatest mistakes of a large percentage of business owners.
And, sure, you can just figure it out along the way.
The problem is, that’s a costly mindset that will bite you eventually.
Instead, take some time to craft a good business plan so that those critical details are made clear before pulling the trigger and investing your time and money.
Choosing a business structure is one of the more technical steps you’ll need to take in starting up your business.
However, it’s vitally important that you do the proper amount of research here.
That’s because the business structure you choose can affect things like your:
Business tax strategy
Structure
Operating costs
Liability protection
And more
Pick the wrong business structure and you could end up costing yourself a good chunk of change, or worse.
There are 5 basic types of business entities in the U.S.:
1. Sole proprietorship
The most basic business structure, a sole proprietorship is what most business owners start as.
That’s because it’s designed for a sole employee (you) operating the business in its entirety, the way most businesses start out.
It’s important to mention that you have no liability protection as a sole proprietor, which may or may not be important for your industry and product or service.
If that’s the case, you’ll probably want to consider starting out as an LLC.
2. Partnership
A partnership is very similar to a sole proprietorship, except the business has more than one owner.
Those owners don’t necessarily need to have equal responsibility or ownership, but you’re likely a partnership if you’re starting your business with a partner.
A partnership also offers no liability protection.
3. C-Corporation
A C-corp is what most people think of when they hear the word “corporation”.
When a C-corp is taxed, it gets hit twice: once at the corp level and another at the individual level.
However, it does have its benefits, particularly for very large companies, such as making it easier to generate investment capital.
4. C-Corporation
A popular business structure for larger businesses, an S-corp is a “pass-through entity”, meaning it bypasses taxation at the corporate level.
Unlike C-corps, where you’re taxed twice, with S-corps you’re only taxed once, at the individual (owner) level.
This has made S-corps a popular structure for many larger businesses where the owner still wants to maintain control of its taxation.
5. Limited Liability Corporation (LLC)
An LLC combines aspects of the corporation, namely the liability and some of the tax savings, with the flexibility of a sole proprietorship.
With an LLC you get, as it says, limited liability protection. It’s not quite what you get as a full corporation, but depending on your type of business, it might be all you need.
Along with a sole proprietorship, this has quickly become one of the most popular “starter” structures available for new business owners.
That’s because it’s typically best to start as this or a sole proprietor and then shift to a full corporation later as your business grows (something an LLC makes even easier than a sole proprietorship).
Step 4: Register your business
Once you’ve decided what your business structure will be, it’s time to register your business.
That involves a couple of different steps:
1. Register your business name
If you’re opening either a sole proprietorship or partnership, and you won’t be using your legal name, you’ll need to register a DBA, or “doing business as”.
The best way to do that is to contact your local state center or use an online filing service, in which case you’ll typically have to wait about 30 days for everything to be completed.
2. Get a tax ID
The SSN of businesses, a tax ID or EIN (employer identification number) is an important form of identification that most business entities need.
The only exception is a sole proprietorship or LLC without any employees, which don’t require a tax ID so long as you’re the only member of the company.
3. Register local taxes
This final step isn’t required for everyone, but in most states, you’ll need to register your business for taxation due to things like unemployment insurance and workers’ compensation.
In some states, additional steps are required on top of this.
Because every state is different, it’s important to find out what requirements you’re responsible for.
In short, a business license is like a driver’s license, just without the test. You need one to operate a business– simple as it gets.
Keep in mind that, depending on your region/state and type of business/offerings (such as if you offer food and/or alcohol), you might also need additional licenses to operate.
Check with your local state offices (found easily by typing “[state] business license filing” into Google), to be sure what’s required of you.
2. Obtain patents and similar documents
Also make sure at this point to take care of any patents, trademarks, or copyrights you need to apply for.
While this doesn’t apply to everyone, if it does apply to you, it’s important to start on the process now.
Reason being: it can take months or even years to get final approval (which is why you see “patent pending” or “registered trademark” so often).
Step 6: Get small business funding
How much does it cost to start a business?
Every business is different, from a startup with billion-dollar dreams to a sole proprietor just looking to build a business that gets them freedom.
How much it costs for you to start up your business could be anywhere from a few hundred to tens of thousands of dollars. It all depends on what you need to get started.
Funding is an essential ingredient of business success and a step that keeps many businesses from ever getting off the ground.
Whether it’s marketing, business registration, to payroll, you need to have the cash flow to run a business.
The challenge, in the beginning, is getting the money you need to launch before you have that cash flow.
There are a few ways you can go about it, depending on your available resources:
1. Borrow from friends and family
The first and simplest (and oldest) way to go about it is to just borrow from friends and family.
If you’re lucky enough to have a relative that believes in you and your business idea and wants to fund it, you could go that route.
2. Use credit cards
Another common option, you could tap into your available credit to fund your business.
This is particularly effective if you don’t need much to get started.
Some types of businesses online nowadays only require the cost of a website, some marketing tools, and maybe a bit of initial funding for ads to get started (if that).
However, if you need a large sum of cash, you could be running a huge risk by inadvertently affecting your credit.
3. Venture capital
The go-to option for Silicon Valley startups, venture capital involves obtaining cash from an investor.
This can be time-consuming but offers a huge potential payoff, so if you’re in need of a large quantity of cash and you don’t mind answering to investors, this is a good way to go.
4. Use a personal loan
If you have good credit and can get a personal loan, you could also apply for one use that to start your business up as well.
This is a decent option if, again, you don’t need much funding but your needs are greater than what you could get out of your credit cards or from friends and family.
The only thing to watch out for is the effect it could have on your personal credit if things go south.
Then you won’t only have to pay back the loan, but your personal credit could get shot in the process.
5. Get a startup business loan
Another option is to get a startup business loan, a loan designed for new businesses that need funding to start their business.
If you don’t like the idea of getting a personal loan, or you need more funding than you could get personally, this is another potential option to consider.
Step 7: Open a business bank account
An often-overlooked step in the early stages of any business, a business bank account is an essential element of any well-run business in terms of basic financial organization.
That’s because many businesses start out as sole proprietors. As they grow, they might become an LLC but continue to operate like they’re an individual.
That’s a big mistake as it starts to muddy your personal and business financials, which isn’t just bad accounting but can get you in trouble with the IRS.
That’s because you don’t just want your finances separate, you’re required by law to do so.
Choosing a business checking account is important for other reasons as well.
After all, it’s where your cash flow will pass in and out of. You want to know that you’ve chosen a bank, and an account, that provides you with what you need to operate smoothly.
Consider:
Which bank you’re choosing (if you’re happy with your bank, going with a business checking option of theirs might be most convenient, but still shop around)
If you don’t have any customers, you’re out of business.
And how do you get customers? Marketing.
So, what should include in your marketing plan and what do you need to craft it?
Here’s a quick rundown:
1. Where are your customers?
You need to know where your customers are located, whether that means where they physically hang out or what websites they visit in the digital world.
Knowing this allows you to collect vital information you can use to market to them later.
2. What kind of challenges do your customers face?
Like this information.
Knowing your customer’s main challenges as they relate to your product and the problem it fixes will tell you how to angle your marketing in a way that your customers will respond to.
3. What are your most effective marketing channels?
This is something that you might require a little testing first to find out.
However, it’s essential as not every marketing channel will be equal in terms of your product (and what works for one company/product might not work for you).
Both before and as you market, you should be keeping an eye out on which marketing channels convert the best for you and your product.
Once you find that out, you can ease off of channels that aren’t converting well and double down on those that are.
4. Free vs. paid marketing
No form of marketing is free per se.
However, while you always need to pay for the time it takes to create marketing material, some forms of marketing have additional costs to run the said advertisement.
In the digital world, where marketing and advertising is now king, that typically comes down to content marketing vs. paid advertising.
It’s important to consider how much money you’re willing to invest in marketing, but also how much of each of these types of marketing you’re investing in.
One important factor that could influence your decision is understanding the “return curve” on different forms of marketing.
With content marketing, which typically comes in the form of blogging, publishing videos on YouTube, and social media marketing, you’re investing manpower up front for a long-term result.
However, that result tends to have a much higher long-term ROI and offers a much more long-term return, one which once built requires a low time and monetary investment.
Paid advertising is fast– lightning-fast, in fact, about as fast as you can pay for and produce an ad that converts– but it’s also much more expensive and leaves you susceptible to the constantly changing guidelines of those advertising platforms (such as Facebook).
Another drawback to look out for with regards to paid advertising is that it’s easy to become dependent upon it.
Why is that bad? Because, eventually, every ad stops working and you have to iterate. The problem is the next ad might not convert as well, which means your entire source of leads is depends on your ad conversion rate, instead of a consistent flow of leads through content marketing.
Again, though, content marketing takes time to build (6+ months, often 1-2 years before seeing decent results). So, keep that in mind.
Start your business the smart way
Many business owners start their businesses without much more than an idea and figure it out along the way.
And while that can work out fine, it’s not the smartest way to go about it and could contribute to an early closure.
Instead, you’ve taken the time to learn what you need to get started right, which will give you the greatest chance of success.
So move forward knowing you’ve taken a step in the right direction and let your business grow.
Since 2001, LegalZoom has been the face of digital legal services.
From incorporation to setting up a trademark, LegalZoom has established itself as the forerunner in business and legal services for business owners everywhere.
But are they the best option in 2020?
Where do they excel?
And what competitors exist?
These are questions we’ll help you answer throughout this guide.
Table of Contents
Pricing
Pros and Cons
Online reviews for LegalZoom
Best LegalZoom Alternative
Final Verdict
LegalZoom review: Should you use them for your legal and technical business needs?
Boasting a nearly 20-year history, LegalZoom has helped nearly 5 million customers throughout the U.S. establish a business or set up a patent, trademark, or other business service and make their dream a reality.
LegalZoom offers dozens of various business-related services, but most of their services fit neatly into one of three categories:
Starting a business
Creating an estate plan
And protecting your work
Some of their other services include LegalZoom:
Business name change
Cohabitation reviews
Dissolutions
Estate planning
Trademark
Bankruptcy
Divorce
Building agreements
And LegalZoom living trusts
If you’re a small business who can’t afford a legal team, LegalZoom could be just what you need to take care of these vital business services without having to pay an arm and a leg.
LegalZoom Pricing
LegalZoom is generally considered more expensive than its competitors, but that isn’t the case for all of its competitors, most notably for its biggest competitor in Rocket Lawyer who is slightly more expensive across the board.
Here’s a quick overview of LegalZoom’s pricing for its various services:
Keep in mind that for every service, there are typically add-ons that can inflate the price if you choose to opt-in to them.
The most common of these add-on services is expedited processing for business formation, often costing an extra $100-200.
Also, their Business Advisory Plan includes several different services in one for a flat monthly fee, including:
Consultations with an attorney
Discount on attorney fees for additional services
Contact with tax professionals
Document review
Annual business evaluation
LegalZoom Pros and Cons
LegalZoom’s overall offering has many pros but also cons you should be aware of.
Read on to get the most complete view of the positives and negatives of LegalZoom:
Pro: Money-back guarantee
Despite having spotty online reviews, one of LegalZoom’s saving graces is their 60-day money-back guarantee.
If you’re not satisfied with your service, you can get a full refund within 60 days (or cancel your subscription any time if it’s a monthly service along with a prorated refund).
Pro: Affordable tax advice
While many of LegalZoom’s competitors offer legal advice, where LegalZoom has differentiated themselves is in also offering affordable tax advice.
Available with their Business Advisory Plan for just $31.25, it’s one of the most affordable tax advice services available online. Plus, considering the fact that it includes everything else you get in the plan, it’s an even better deal.
Con: Inconsistent customer service
Likely the biggest and most commonly mentioned con of LegalZoom’s service, while some customers say they had a great customer service experience, others say they were downright ignored and the service they paid for unfulfilled.
Con: Costlier than most competitors
LegalZoom is known for being more expensive than most of their competitors. Their pricing for most services is anywhere from $20-30 more expensive, not including upsells which LegalZoom is known for pushing to the point of annoyance on the part of customers.
Online reviews for LegalZoom
We touched on their reviews earlier, but it’s worth highlighting this point as it’s the one big blight in terms of LegalZoom’s service as a whole.
LegalZoom has many happy customers, but when you look at their reviews online, it’s anything but happy.
Keeping in mind that the BBB’s online ratings often include many negative reviews (after all, you’re typically motivated to leave a review most when you have a negative experience), that’s still not ideal and should be taken into consideration when choosing whether to go with LegalZoom or a similar service.
What is the most common complaint within these reviews?
In our research, the most oft-mentioned complaint was that the customer purchased a business establishment service, such as a DBA set up, and correspondence was dropped mid-process without the customer being able to get a hold of anyone in customer service.
Whether that’s a question of negligence or an overtaxed customer service team is impossible to know, but it is important to know that it’s a common complaint nonetheless.
Best LegalZoom Alternative: Rocket Lawyer
While many happy customers report being satisfied with LegalZoom’s services, many other negative reviews exist to counterbalance that.
If you’re unsure about whether you want to use LegalZoom, there are many great alternatives.
One such alternative that stands above the rest as a worth competitor is Rocket Lawyer, which offers a comparable set of services and boasts great online reviews both with the BBB and Consumer Affairs (4 stars average, as opposed to LegalZoom’s 2 ½).
What services does Rocket Lawyer offer?
Rocket Lawyer’s services are virtually identical to LegalZoom’s.
According to their website, they offer:
From starting a business to planning your estate and protecting your business ideas, Rocket Lawyer offers many of the same services as LegalZoom.
However, they’re also known for being a bit more expensive.
Rocket Lawyer vs. LegalZoom: Who is cheaper?
So, who is more affordable?
LegalZoom tends to be a bit cheaper for most services than Rocket Lawyer. For example, their basic LLC filing service is $90 while LegalZoom is $80 ($79.99).
Not a big difference, but it is still worth noting that most of their services cost $10-30 more than LegalZoom.
However, what Rocket Lawyer does have that LegalZoom doesn’t is a monthly subscription service for those with recurring or frequent legal needs.
If you need regular access to attorney advice or something similar, or regularly need to make use of various services that include corporation filing or registered agent services, you can pay $39.00 for Rocket Lawyer’s monthly subscription and get most services for free (with a few at a steep discount).
LegalZoom does have a similar service in their Business Advisory Plan for $31.25, though that only includes year-round legal help from an attorney and not the legal forms, incorporation filing, and other services that Rocket Lawyer’s service offers which could save you hundreds of dollars or more depending on how often you need to make use of such services.
Alternatively, LegalZoom’s service offers tax advice. So, if that’s more of what you’re in need of, their plan is likely the better option.
If you’re in need of legal and tax advice, LegalZoom is likely the way to go, especially with their Business Advisory Plan.
However, if you’re in need of one-time or other recurring business services such as legal advice by itself, registered agent services, or frequent incorporations, there are better options out there.
No matter which you choose, take the time to consider your options and what is most important to you.
Frequently asked questions
Why is LegalZoom so expensive?
While LegalZoom is more expensive than some business formation services, it’s cheaper than others. However, it’s price sits on the high end, so check around for pricing on comparable services before committing to anything first.
Is LegalZoom trustworthy?
LegalZoom has received mixed reviews for its services online. Some say they received top-notch customer service, others say their payment was taken then communication went dark.
We can’t rightfully suggest one way or another whether you should use LegalZoom or not, whether you’re starting a business, planning your estate, or setting up a trademark or similar protection.
However, we hope this guide helps you make an informed decision about whether LegalZoom is a good choice for the business services you need.
Due to the strain of mass lockdowns across the U.S. as a result of the COVID-19 pandemic, businesses are squeezed harder than ever just to get by.
And the reality is, without help, many won’t be able to.
Fortunately, Washington understands this.
That’s why, in part due to the recently passed Coronavirus Aid, Relief, and Economic Security Act (or CARES), which designated $350 billion to help small businesses, new programs have been created which are designed to help small business owners make ends meet in this unprecedented financial crisis.
At Excel, we wanted to do our part to help small businesses– and the country as a whole– recover.
That’s why we’ve put together this guide, which not only breaks down those new financial resources but also details a few other lesser-known resources you may not have heard about.
Notice: Available funds have been temporarily extinguished for both the Paycheck Protection Program and EIDL.
“SBA is unable to accept new applications at this time for the Paycheck Protection Program or the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding.”
Read on to find out more about additional relief options available to your business and learn more about the PPP and EIDL federal programs so that you’re ready if and when additional funds become available.
Part 1: New Financial Assistance Resources for SMBs (Updated for April 2020)
First, let’s talk about the most important of those resources: the two major and newly available financial assistance resources created as a direct result of the COVID-19 crisis.
The Paycheck Protection Program
Created in conjunction with the CARE Act, the Paycheck Protection Program is one of the largest small business relief bills ever passed by congress.
The program is designed to encourage employers to retain their payroll during the crisis to help support the U.S. workforce and businesses in the process.
While the program is technically a loan, the terms of the loan state that if you retain all employees on payroll for a total of 8 weeks, and that money is used only for expenses related to payroll, mortgage interest, rent, and/or utilities, the loan will be forgiven in its entirety.
Can I apply?
If your business has been affected by the coronavirus, you’re likely eligible.
Small business owners will be able to apply through the SBA or approved lenders starting April 3rd and the application period will run until June 30th, 2020.
These businesses qualify to apply for the Paycheck Protection Program according to the SBA:
Any small business concern that meets SBA’s size standards
Any business, 501(c)(3) non-profit, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act with the greater of 500 employees or which meets the SBA industry size standard if more than 500
Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
As well as sole proprietors, independent contractors, and self-employed persons.
Will my loan really be forgiven?
According to the CARE Act, the loan will be 100% forgiven and you will owe nothing provided you use the funds for payroll costs, rent, mortgage interest, and/or utilities.
According to the Act, 75% or more of the funds must have been used for payroll (and those employees must have been retained or quickly rehired) for it to be fully forgiven.
That means only 25% of the amount forgiven can be used for non-payroll expenses, including:
Benefits
Mortgage interest
Rent
Utilities
Or other debt
Also, if payroll drops, the amount of the loan forgiven will lower as well (though no specified percentages are yet available).
And keep in mind that the forgiveness won’t go into effect until the end of the 8-week period of unemployment following the receipt of your loan.
Lastly, keep in mind that no collateral or personal guarantee will be required to be approved for the program and no fees will be charged by the lender or the federal government.
How much can I borrow?
With the Paycheck Protection Act, loans can be up to 2.5x the business owner’s typical monthly payroll costs (not exceeding $10 million).
To calculate your average payroll costs to get an idea of how much you could receive, use this equation:
A second opportunity for financial relief for small businesses exists in the SBA’s Economic Injury Disaster Loan (or EIDL).
With the EIDL, business owners can receive up to $2 million, with $10,000 of economic relief in the form of an advance that does not have to be repaid, provided you can show you’re experiencing financial difficulty as a result of the current crisis.
Can I apply?
Any business with less than 500 employees that operates within the 50 states or Washington D.C. qualifies to apply for an EIDL.
Sole proprietors, self-employed persons, and independent contractors qualify to apply as well.
To apply for an Economic Injury Disaster Loan advance with the SBA, click here.
Part 2: Additional SBA resources
In addition to the Paycheck Protection Act and the EIDL, other strictly SBA-related resources exist to help offer relief to small business owners.
Here are two such programs:
SBA Express Bridge Loans
The SBA’s Express Bridge Loan program offers $25,000 to business owners who already have a relationship with an approved SBA Express Lender.
These loans can either be used as standalone term loans or as bridge loans while applying for an EIDL.
If your business is in an urgent need of cash, an Express Bridge Loan could be just what you need to make payroll while you wait for the programs mentioned in the previous sections to come through.
Keep in mind that an SBA Express Bridge Loan will have to be repaid. However, if you use it as a bridge loan until you’re approved for an EIDL, that can be used in part to forgive a portion of your Express Bridge Loan (up to the amount you were approved for).
SBA Debt relief
In an effort to further help small businesses during the crisis, the SBA has temporarily amended the policy of its other loan products.
That includes a few points, according to the SBA’s official debt relief page:
“The SBA will automatically pay the principal, interest, and fees of current 7(a), 504, and microloans for a period of six months.
The SBA will also automatically pay the principal, interest, and fees of new 7(a), 504, and microloans issued prior to September 27, 2020.”
Also: “For current SBA Serviced Disaster (Home and Business) Loans: If your disaster loan was in “regular servicing” status on March 1, 2020, the SBA is providing automatic deferments through December 31, 2020.”
In addition to this, all new traditional SBA loans issued will offer the same incentives as usual but with deferred payments.
For more information, read up on the SBA’s debt relief efforts here.
Part 3: Additional relief resources for small businesses
In addition to the relief programs we’ve mentioned so far, several businesses and banks have stepped up to do their part to offer help to small business owners.
Here’s a list of all COVID-related relief resources we’ve located so far, a list we’ll keep updated as more become available:
Banks everywhere are offering assistance: See this list on Forbes for a comprehensive break-down of all the banks (including BofA, Chase, Citibank, Wells Fargo, and many more) offering assistance.
Yelp is giving $25 million in assistance: They’ll be waiving advertising fees for the time being as well as offering free advertising opportunities and a $100 coupon in free search advertising.
LinkedIn has opened up many of its online learning courses for free: Courses on things such as digital relationship building, virtual meeting tools, and more. If you’re looking for information on how to transition to effective remote work with your employees, this is a great place to start.
If your business exists outside major cities in rural American, you know the disadvantages that come with the territory.
It’s hard to get supplies and shipments, harder to meet with clients and customers, and not really possible to entertain them as guests when the need arrives.
Plus, there’s the problem of inadequate access to certain basic resources like printing services, a local post office robust enough to offer all the shipping supplies you’ll need, not to mention a reliable Internet connection in many cases.
The USDA understands the unique challenges that face rural-based businesses, so they sought to help out by doing what they can. Hence, USDA business loans were born.
What are USDA business loans?
Referred to as the USDA Business and Industry (or B&I) program, the USDA offers a business loan program to small businesses located in rural areas.
The purpose of the program is to both support small businesses and create jobs in rural communities.
Similar to the SBA’s business loan programs, the U.S. Department of Agriculture themselves don’t offer the loan but rather guarantee a portion of the loan for lenders, who can then pass on the savings to you.
What can you use a USDA business loan for?
USDA business loans have a variety of uses, including:
Working capital
Inventory purchases
Equipment and supply purchases
Debt refinancing
Updates, repairs, and general development
Agricultural production of various kinds
And real estate development
USDA business loans can be used for pretty much anything so long as it’s tied to the growth of the company in some way.
And they’re also available to nonprofit organizations, making them a great funding option for rural nonprofits of all kinds.
How do I qualify for a USDA business loan?
Qualifying for a USDA B&I loan can be a bit tricky, as they have pretty extensive qualification requirements.
However, that’s mainly to make sure that the program is going towards helping the businesses that it’s designed to help.
To qualify for a USDA B&I loan, you’ll first need to be located in a rural area. According to the USDA.gov website, you qualify under this section if:
Your business is located in a rural area “outside of a city or town with a population of fewer than 50,000 people.”
Your headquarters is based in a larger city “as long as the project is located in an eligible rural area.”
You must be located in the U.S.
And projects can be funded “in rural and urban areas under the Local and Regional Food System Initiative.” The USDA suggests checking the eligible addresses for Business Programs here.
Next, you’ll also need to be one of the below types of businesses:
For-profit
Nonprofits
Cooperative
Federally-recognized tribe, or
Public body
However, keep in mind that these types of businesses are ineligible:
Church-based organizations
Lending institutions
Insurance companies
Charitable organizations
Gambling establishments
Fraternal organizations
Raceways
And golf courses
Finally, you need to meet these additional requirements:
Must be a U.S. citizen (or permanent resident): If it’s a business, 51% or more of the business must be owned by U.S. citizens or permanent residents.
680+ Personal credit score: For businesses, this includes a history of on-time payments and no negative marks such as bankruptcies and judgments.
Collateral necessary
Personal/Corporate guarantees
Some types of insurance in certain cases
Complete a feasibility study
Business must be in good standing
Is my business in good standing?
In terms of USDA business loans, that last one includes a few things.
First, you must have enough cash flow to show that you have the ability to pay back the loan.
Second, your business must have a positive ‘tangible balance sheet equity position’ either of 10% if you’re an established business or 20% if you’re new.
*Intangible assets include things like amortization of a loan, client and customer lists, and patents, trademarks, and copyrights.
Also, keep in mind that the lender you choose to work with may have additional qualification requirements on top of the USDA’s factors.
Be sure to check with your lender to find out what their additional qualification requirements are.
USDA business loans terms & rates
While the lender you work with will specify your exact loan details, the USDA has certain universal guidelines in place for all USDA B&I loans no matter who offers them:
Here’s a breakdown of all USDA loan amounts, terms, and rates:
USDA business loan amounts
There is no hard maximum on USDA business loans, which can reach above $10 million dollars. However, the typical range is between several hundred thousand to a few million.
How much you’re approved for is based partially on what you’ll be using the loan for, what the USDA calls the “loan-to-value” ratio.
Depending on what your loan-to-value ratio is, you’ll need to make a down payment to cover the remaining amount of the value of the loan.
For example:
So, if you’re looking to purchase or rent several large pieces of construction equipment for a building project totaling $250,000, the USDA loan would cover $175,000 while you’d need to make a down payment of $75,000.
Now, let’s talk about USDA loan terms.
USDA business loan terms
Similar to USDA loan amounts, their terms depend on what you’re using the loan for as well.
For example:
Keep in mind that if you’re using the loan for several different uses in one– for example, a real estate development project where you’re purchasing land, equipment, and hiring workers– your loan will be blended based on the various different purposes, essentially taking on the form of several separate smaller loans.
USDA business loan interest rates
Lastly, USDA interest rates are competitive, often being similar to SBA loans at between 6-9%.
However, keep in mind that your interest rate is set by your lender, so make sure to check that you’re getting a competitive rate before signing any agreement.
In addition to this, your interest rate can be fixed, variable, or a combination of both.
In addition to interest, there are a few USDA loan-specific fees, including:
Guarantee fee: 3% of the guaranteed loan amount
Renewal fee: 0.5% annually (from the outstanding principal)
Keep in mind that, similar to your interest rate, this doesn’t include any potential lender fees that might be in your agreement, so make sure to check before finalizing anything.
How do I apply for a USDA business loan?
Does a USDA B&I loan sound like a good fit for you?
If you believe you qualify for a USDA business loan, you simply need to find a lender who offers USDA loans.
Remember, the USDA doesn’t offer business loans directly, but through other lenders who they’ve approved to offer their loan program.
How does it work?
Your lender will take the information and submit your application to the USDA for pre-approval. A USDA rep will then meet with you and your lender to determine eligibility.
Once it’s been pre-approved, that’s when you’ll be able to submit a full application to the USDA.
How long does approval take?
According to the USDA.gov website, approval takes anywhere from 30-60 days from the date you submitted your official application, with funding taking 30-90 days.
What do I need to apply for a USDA business loan?
To apply for a USDA loan, you’ll need financial documents, which may include:
Personal + business credit report
Bank statements
Balance sheet
Profit & loss statement
Cash flow projections up to 2 years
Business plan
Resumes of all business owners
Keep in mind that additional documents may be requested based on your specific situation.
However, in general, it’s best to get everything together that you have in advance just in case, so the approval process isn’t slowed down.
Frequently Asked Questions
How much can you get approved for with USDA business loans?
There is no hard maximum on USDA business loans, though they typically don’t go any higher than $10 million. How much you can get approved for depends on several qualifying factors, so you’ll need to submit an application to see what you’re approved for.
Does the USDA do small business loans?
The USDA offers small business loans through its USDA Business and Industry program, a loan program that backs loans for rural-based businesses and business projects to help grow small businesses and develop jobs in rural areas.
As anyone in a business such as construction knows, getting a big contract can be a big step forward for your business.
Then you realize you need to pay for it.
If you’ve ever found yourself in that or a similar situation, where you’ve got a big job to pay for but you won’t get paid until you reach the first milestone, or worse once the entire job is completed, then contract financing was designed for you.
Contract financing uses open contracts you have as collateral to approve you for funding. Those contracts also then determine the amount of funding you’re approved for.
It’s similar to invoice factoring in that the advance is based on your customer’s creditworthiness, not yours.
That’s because your lender is going to have to collect the amount from your customer, so they want to make sure they can be counted on to pay the contract.
How contract financing works
We’ve covered the 30,000-foot view, but how exactly does contract financing work?
First, if you snag that big job and the customer wants confirmation that you can fund it (to ensure there are no delays), but you don’t have the cash, you can go straight to a lender and receive a letter of intent to fund which you can show them.
Once you’ve signed up and been approved for contract financing with a lender, you receive a lump sum based on the size of the contract, often somewhere around 90% of the invoice itself, with the remaining 10% (minus fees) being released once the invoice is paid.
Often, with such large jobs being split into milestones, these payouts happen for each milestone invoice.
For example, let’s say you sign a contract for a $200,000 construction deal with 4 milestones, each $50,000.
Each $50,000 invoice would be sent to the financing company. First, they’d pay out 90% of that invoice, $45,000, immediately. Then, assuming the invoice is Net 30, once the finance company receives the invoice amount 30 days later, they send you the remaining 10% minus fees.
This would then go on for each of the other 3 invoices until the job is complete.
Now, let’s talk a bit about how fees work with contract financing.
Contract financing fees and rates
Factor fees, the fee typically associated with contract financing, typically range between 1.5 – 2.5%.
Using our example, if each invoice is $50,000 and your factor fee is 2%, you’d pay $1,000 in fees. So, for the total $200,000 job you’d pay $4,000 in factor fees.
Also, keep in mind that an additional fee might be charged in the event that your client doesn’t pay on time.
What businesses use contract financing?
If contract financing sounds like a useful funding method, but you’re not sure if it’s a fit for your business, use these points to help you decide.
Contract financing is a good fit for your business if:
You have poor credit and likely wouldn’t be approved for a traditional bank loan
Your customer does have good credit
You have a signed open contract with a clear schedule of milestones mapped out
Your business has a good financial track record and history showing you can get the job done in the allotted time.
What kind of businesses does this make contract financing a good fit for? In particular, real estate development and other construction businesses are a good fit. Also, security, hardware/servers, and other various installation-oriented businesses are a good fit as well.
How is contract financing different than invoice factoring?
If you’ve heard about invoice financing (also known as invoice factoring) before you might be wondering what the difference is between the two.
They have their similarities. However, where they differ primarily is this:
Invoice factoring: Uses open invoices / your accounts receivable.
Contract financing: Uses open contracts for work that has not yet been completed.
In general, a financing company that offers contract funding is far harder to find than invoice factoring.
That’s because if the business does not fulfill its contract, the lender is not going to get paid, making this a risky investment for the financing company.
What do lenders look for when qualifying you for contract financing?
If contract financing sounds like it might be a good fit for you, you might be thinking about what the qualification requirements are.
Typically, lenders look at these elements to determine whether to approve your business for financing a contract:
Your customer’s credit: They’re the ones paying the invoice, so they need to know that your customer is reliable.
Your company: Do you have the resources necessary to complete the project and within the estimated block of time? The financing company will have their experts review your business’s profile to make sure.
How long you’ve been in business
Financial documents: The financing company might consider your customer’s credit a primary qualifying factor, but that doesn’t mean they won’t also look at your financial health.
Keep in mind that these are all basic factors. Your financing company may consider other factors in their qualification methods.
The best thing you can do to prepare is to review your own financial documents and make sure you’ve cleaned things up as much as possible.
Double-check the contract and make sure you estimated the time to completion correctly and that you have everything you need to complete the job.
Where do you get contract financing?
As contract financing isn’t technically a loan, it isn’t offered by banks.
Instead, alternative lenders may offer contract financing (though not all do, for the reason we talked about earlier).
Before you apply for contract financing, make sure that it’s the right fit for you.
Many alternative lending options now exist for businesses of all sizes and needs, from short-term lump sums of cash to business lines of credit you can tap into any time you need capital to pay for a contract.
Get the funds your business needs– fast– with Excel Capital
We know how difficult obtaining a bank loan can be.
If you have bad credit, not enough credit, or a blemish on your credit report that could keep you from being approved for a loan, let us take a look and assess your business financial health.
Our system offers a more complete view of your business and allows us to approve you based on more than your credit alone (often even with bad credit).
Click here to apply and find out what your options are:Apply Now
