Many of our clients that form Delaware companies are from California.  Also, a majority of these businesses are physically operating in California.  The reason they form a Delaware company may be because California’s corporate law structure is known for being one of the worst out of the 50 states.  So rather than form a California company, they will form a Delaware company and register it to do business in California. For more information on registering as a foreign entity in California, click HERE to see our previous article on this topic.

Also, while operating in California, many of these businesses choose to operate under a different name than what was filed with the Delaware Secretary of State.  California states that individuals or entities doing business for profit under a name different from the owner’s full legal name must file a “Fictitious Name Statement” with the county clerk’s office in the county where the business resides. This is called a “Doing Business As” name or “DBA”.  Before applying for a DBA in California, they require that you register your Delaware company as a foreign entity in the state of California.

By registering as a foreign entity, you will receive a Certificate of Authority.  This will be needed when you register a DBA.

Example of a DBA:  let’s say John Slice forms a Delaware company called “John Slice LLC” but he wants to operate in California under the name “Good Guy Delivery Service” instead of using his business’ legal name. In order to use Good Guy Delivery Service, John will need to register that name as a fictitious business name with the county clerk’s office in the county where he resides.

Beware! Filing a DBA does NOT protect you from personal liability the way incorporating does. When we file your LLC or Corporation with the Delaware Division of Corporations it creates a whole new entity, which is separate, in most legal respects, from its owners.

Now that we have completed our guides to understanding your company’s balance sheet (Part I and Part II) and income statement (Part I and Part II), it is time to turn our attention to the third and final of the major financial statements, the statement of cash flows.  Like the income statement, the statement of cash flows gives us a picture of a company’s performance for a period of time, usually a calendar year or quarter.  But while the income statement is concerned with tracking net income, the statement of cash flows, as the name implies, is concerned with reporting changes in a firm’s cash position.  As we take a look at our sample statement of cash flows and decipher its entries, we will see that a company’s net income is very different from its cash position.

As we can note from the above sample of our fictitious ABC Corporation, the statement of cash flows is broken down into three categories—operating activities, investing activities, and financing activities—plus a summary section at the bottom.  If you are now familiar with the balance sheet and income statement from our previous posts, you should recognize most of the line items here because what the statement of cash flows does is pull information from those two statements in order to analyze their effects on ABC’s cash position.  As we go through the entries below, you may want to refer back to  ABC’s balance sheet and income statement to see where the numbers are coming from.

Net Income – Is the “bottom line” figure from the income statement.

Increases in Accounts Receivable, Inventories, Accounts Payable, and Accrued Payroll – These are all calculated by taking the difference between these figures on two successive balance sheets (e.g. 2010 and 2009 year-end).  For simplicity’s sake we only provided one year’s balance sheet for ABC Corp., but once your business has produced two or more balance sheets you would simply use the two most recent ones in order to make these calculations.  One important thing to note here is that an increase in a current asset decreases cash while an increase in a current liability increases cash.  For example, if your inventory (a current asset) increased, your cash would have to decrease by a like amount to pay for that inventory.

Cash Used to Acquire Fixed Assets – Calculated by taking the difference between the “Fixed Assets” entries on the two most recent balance sheets.

Sale of Short-Term Investments – Reflects short-term investments that have been converted to cash.

Increase in Notes Payable – Indicates the amount of additional short-term debt ABC has taken on.

Net Change in Cash – Equals the sum of the net cash provided by operating, investing, and financing activities.

Cash at Beginning of Year – Equals the Cash figure at the top of the most recent balance sheet.

Cash at End of Year – Cash at beginning of year minus the net change in cash.

Next, we will teach you how to analyze the statement of cash flows and show you why one item on it just might be the single most important figure to look at when analyzing any company.

When the time comes to remodel your business’s office space, or to move into a new space, it is easy to think of the process solely in terms of cost.  After all, no matter how nice a conference table or how attractive a desk you purchase, it is hard to imagine them adding anything to your bottom line.  But by taking a holistic, rather than a piecemeal, approach to remodeling, and viewing your office as an asset that can yield returns in terms of efficiency, productivity, and employee performance, you can realize long-term cost savings and benefits from a well-planned office from the ground up.

If you are considering an office remodel then you’ll want to focus on maximizing the utility of the following features in order to get the best return on your investment.

Walls

Once you’ve owned your own business for some time—and been through the ups and downs of a few economic cycles—you come to realize that it’s not just the amount of space you need that can change, but also the way in which that space is configured.  Moveable walls are a great solution that can save you a substantial amount of money compared to fixed walls, while also offering the flexibility to change the layout of specific spaces (e.g. from a set of private offices to a conference room) virtually overnight.  Moveable walls come in a variety of durable materials and finishes including some that incorporate glass, allowing natural light to flow further into a large work setting.

Light

Increasing the amount of natural light that enters your workspace has myriad benefits.  In addition to being aesthetically preferable to artificial alternatives, natural light will reduce your energy bills and has been shown to boost worker productivity.  Besides designing your office to take full advantage of available natural light, installing a lighting system that works in conjunction with natural light by dimming or shutting off entirely when there is ample natural light can save you additional money on utility bills.

Floors

With an office remodel it’s not so much the floors as what’s underneath them that can add the most value. By taking advantage of raised-access technology it is possible to house the majority of your power, data, and communications cables underneath the floors and out of sight.  On top of the obvious aesthetic benefit, the under-floor setup provides outstanding flexibility for the inevitable future configuration changes and furniture reshuffling.  If you are doing a major remodel, or starting fresh in a new space, it is also worth looking into an under-floor HVAC (heating, ventilation, and air conditioning) system, which can offer increased energy efficiency, improved air quality, and a safer alternative to traditional wall-mounted systems.

Furniture

Outfitting your remodeled space with new furniture should be the last step in the remodel.  Hopefully you’ll have taken into account the advice to create a flexible workspace when choosing walls and floors, so you’ll want to select furniture that is flexible as well. There are lots of choices in both modular office furniture and adaptable workstations that can help keep you from having to purchase new items every time your needs change.

By carefully planning your remodel with an eye toward increased efficiency as well as future organizational change, you should be able to recoup some of the cost of the remodel and wind up with an office that allows your firm to adapt to whatever changes lie ahead.