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A friend and fellow consultant and I grabbed lunch earlier this month, and she mentioned something I think a lot of us feel this time of year: she's just less motivated to chase new contracts right now. We laughed about how nice it would be to hibernate — just curl up and wait for spring.
We can't actually hibernate, of course. But we can honor what winter is trying to tell us, which is to rest more. And if winter happens to be a slower season for your business — whether that's your natural cycle or because something like Central Virginia's recent ice storm forced the issue — it's actually a great time to look at the behind-the-scenes stuff that keeps your organization running well but rarely feels urgent enough to prioritize when things are busy.
So that's the theme of this newsletter: practical, unglamorous, important fundamentals for small businesses and nonprofits alike. I'll cover when S Corp status might make sense for a LLC; why nonprofit bylaws deserve a closer look; a link to a colleague’s piece on registered agents (along with my take on whether to pay for one); free resources for business owners wanting to proactively plan their exit; and a cautionary note about those "easy money" financing offers that may be flooding your cellphone or inbox.
None of it is flashy. All of it matters. Let's dig in.
Kate Zuckerman, Conscious Consults |
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| Consider The Exit—Before You Need One 🏃🏻♀️➡️🚪 |
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| If you’re a small business owner, you’ve probably wondered, at least in passing—Is my business actually worth something? And if so, what can I do to increase its value?
Exit strategy advisory is about answering those questions intentionally—well before a sale is on the table. It’s the process of understanding what truly drives business value, identifying the factors that matter most, and making thoughtful decisions over time that strengthen your business—whether you plan to sell someday or simply want a more resilient, valuable company today.
To support business owners who want to start thinking about exit, I’m sharing two free resources:
🎥 Video Resource: From Sellable to Valuable — a recent one-hour video presentation I gave in partnership with our local SBDC.
📄 Written Resource: A Practical Guide to the Intentional Exit — available as a free pdf download on the Resources page of my website. This written guide goes a bit deeper than the video, and is ideal if you prefer to read, reflect, and return to the material over time. It’s a first version that I’ll be expanding on in the coming months, so let me know what’s most helpful and where you think it falls short.
If you’d like to talk through your own situation, I offer free, confidential discovery calls focused on exit strategy and long-term value creation. You don’t need to be ready to sell—just ready to think intentionally. |
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| Is This the Year To Elect S Corp Status? |
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| If you're like many small business owners, this is the time of year when you're (hopefully) sitting down with 2025 P&Ls — getting a clear picture of where your business landed last year and what that means going forward. It's also a natural moment to think about your tax structure and whether it's still serving you well.
I always recommend working with an accountant on decisions like this — the specifics of your situation matter. But I also believe that empowered business owners understand the basics of how their business is taxed, even if they're not doing the calculations themselves. So here's a plain-language look at what S Corp status is, when it might make sense, and what to consider before making the move.
First, a Quick Primer
An S Corp isn't actually a separate type of business entity — it's a tax election. Your LLC stays an LLC in every legal sense. What changes is how the IRS taxes your income.
As a standard LLC, you pay self-employment tax (15.3%) on all of your net business income. That covers Social Security and Medicare. When you elect S Corp status, you pay yourself a reasonable salary (which is subject to payroll taxes), and then you can take the remaining profit as a distribution — which is not subject to self-employment tax. That's where the savings come from.
Signs It Might Be Time
There's no single magic number, but here are some indicators that it's worth a conversation with your accountant: Your net income is consistent and substantial. The S Corp election makes sense when your self-employment tax savings clearly outweigh the added costs of running as an S Corp. The key word is consistently — one strong year doesn't necessarily justify the switch.
Your income is predictable enough to support a regular salary. As an S Corp, you're required to pay yourself a "reasonable salary" through payroll. Although you can set a payroll frequency that suits the financial realities of your business, if your cash flow is unpredictable or you're reinvesting most of what you earn back into the business, the timing may not be right yet.
One important note: The break-even point isn't just about your business income in isolation. Your broader financial picture matters too — things like a spouse's income, other income sources, and how they interact with Social Security wage caps and deductions like the Qualified Business Income (QBI) deduction can all shift the math. This is one of the reasons a conversation with your accountant is so valuable — they can look at the whole picture, and help you determine what’s right for you.
What It Costs
The tax savings can be significant, but S Corp status does come with additional expenses: Payroll. You'll need to run payroll for yourself — even if you're the only employee. That generally means either using a payroll service or software, which can cost $500–$1,500 per year, depending on the service you use and how often you run payroll.
A more complex tax return. Instead of reporting business income on a Schedule C attached to your personal return, you'll file a separate Form 1120-S for the business (due March 15), which generates a K-1 that flows to your personal return. This typically adds $800–$1,500 to your annual tax preparation costs.
More administrative overhead generally. Your business will need to track your salary vs. distributions, handle quarterly payroll tax filings, and stay on top of any additional compliance requirements.
All told, the extra costs usually run in the neighborhood of $2,000–$4,000 per year. Your accountant can help you model whether your tax savings will meaningfully exceed that.
A Few Other Things to Know:This is a commitment. If you elect S Corp status and later decide to revoke it, you generally can't re-elect for five years without special IRS permission. It's not something to flip on and off.
"Reasonable salary" isn't optional. The IRS takes this seriously. You can't work full time in the business and pay yourself a token salary of $20,000 while taking $100,000 in distributions. Your salary needs to reflect what someone in your role, industry, and market would reasonably earn. Getting this wrong can trigger an audit.
State rules vary. Most states follow the federal S Corp election, but not all. Virginia follows federal treatment, but if you do business in other states, check the rules there too. Some states impose additional fees or taxes on S Corps.
The Bottom Line
For me, the S Corp election has been a smart financial move — but only because the timing was right. My business had reached a level of income and stability where the tax savings justified the added costs and complexity.
If you're looking at your 2025 numbers right now and your business is generating consistent, meaningful profit, it's a great time to have this conversation with your accountant. They can run the numbers for your specific situation and help you decide whether 2026 is the year — or whether it makes more sense to keep watching for now.
Have questions about navigating your business growth? I'd love to hear from you. |
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| Is it Time to Look at Your Bylaws? |
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I'm currently delivering a governance enhancement program for a nonprofit client. One of the first things my colleague and I did was review their bylaws. Like a lot of organizations, they hadn’t revised them in years. It’s very common for organizations to treat bylaws as a one-and-done document: you file them when you incorporate and never look back.
But bylaws aren't a mere formality. They're the foundational document that lays out how your organization does business—how decisions get made, who has authority, and what happens when things get complicated. They can and should be reviewed on a regular basis, and updated when the way you operate has evolved beyond what's on paper.
What's Typically in Nonprofit Bylaws?
If it's been a while since you've read yours, here's a refresher on what bylaws generally cover: the organization's name, purpose, and principal office; board structure, including how many directors you have, how they're elected or appointed, and how long they serve; officer roles and responsibilities; how and when meetings are held, including quorum requirements; committee structure; conflict of interest policies; how the organization handles finances and fiscal year; the amendment process for the bylaws themselves; and provisions for dissolution.
Bylaws are legally binding, and your board is obligated to follow them. If the way your organization actually operates has drifted from what your bylaws say, you're at risk—not just of confusion, but potentially of legal exposure.
What's Worth a Fresh Look in 2026?
Much of what's in your bylaws may be perfectly fine as written. But there are several areas where the landscape has shifted enough in the few years that a review is worth your time:
Virtual and hybrid meetings. If your bylaws were written before 2020, they may not address virtual meetings at all—or they may require in-person attendance for a quorum. Many organizations shifted to virtual meetings during the pandemic and never went back, but their bylaws haven't caught up. If your board regularly meets by Zoom, your bylaws should explicitly authorize it, including how notice is given, how voting works, and what counts toward quorum.
Board term limits and rotation. According to BoardSource, nearly half of nonprofit boards have no term limits, which can lead to stagnation, concentration of power, and difficulty bringing in new perspectives. A common recommendation is two consecutive three-year terms, with the option to return after a gap year. This keeps institutional knowledge on the board while making room for fresh voices.
Board size and composition. Your bylaws may specify a fixed board size that no longer fits your organization. Consider whether a range (say, 7–15 directors) would give you more flexibility to recruit strategically as your needs evolve. Some organizations are also adding language about seeking diversity of skills, backgrounds, and perspectives in board recruitment—not as a quota, but as an expressed organizational value.
Conflict of interest policies. Best practice has moved well beyond a boilerplate statement. Your bylaws should reference a conflict of interest policy (the detailed policy itself can live as a separate document), and that policy should require annual disclosure, define what constitutes a conflict, and outline procedures for recusal and documentation.
Committee structure. Bylaws written years ago may reference committees that no longer exist, or fail to account for committees you've since created. Current thinking favors a leaner committee structure—standing committees for essentials like governance, finance, and fundraising, with task forces or ad hoc committees for time-limited projects rather than permanent committees that meet for the sake of meeting.
Officer roles. Are the officer positions in your bylaws still the ones your organization actually needs? Some organizations find they've added roles (like a vice chair or secretary-treasurer) that aren't reflected in the bylaws, or that the described duties no longer match reality.
Amendment procedures. Ironically, the process for changing your bylaws may itself need updating. Review the notice requirements, voting thresholds, and whether your current process is workable. Many organizations use a two-thirds supermajority vote for bylaw amendments, which is a reasonable standard that balances stability with the ability to evolve.
The Bottom Line
Your bylaws should reflect how your organization actually operates today—and how you want it to operate going forward. If there's a gap between the two, it's time for a review. You don't need to overhaul the entire document, but a focused read-through with an eye toward these areas can surface outdated language, missing provisions, and misalignments that are worth addressing before they become problems.
And a quick note: bylaws are a legal document, so it's smart to have an attorney with nonprofit experience review any amendments before they're adopted. The goal is a document that's clear, current, and actually useful to your board—not one gathering dust in a filing cabinet.
Want to ensure your governance practices are up to date? Conscious Consults offers governance assessments, recommendations, trainings, and more. Reach out if this might benefit your organization. |
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| Those “Easy Money” Offers? Delete Them. ⚠️ |
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If you're a business owner, you've almost certainly been getting them: texts, calls, emails, and letters offering fast cash — sometimes hundreds of thousands of dollars — with approval in hours and money in your account by tomorrow. I get two or three of these pitches a day myself, mostly by text:
“Hi Kate, we have 110K available for you today. Interested?"
These offers come from companies in the merchant cash advance (MCA) industry, and I want to be clear: you should not access capital this way. The terms are not in your favor, and for many business owners, they create far more problems than they solve.
NPR published an excellent piece this month profiling a small business owner whose tariff-related cash crunch led him into MCA debt. The numbers are staggering. These products — which are technically structured as purchases of future revenue rather than loans, a distinction that lets them avoid most lending regulations — carry equivalent annual interest rates that average 94%.
The MCA market was estimated at nearly $20 billion in 2019, and it's grown significantly since — fueled by the pandemic, tariffs, and the ongoing difficulty small businesses face getting traditional bank loans. Billions of dollars are flowing into this largely unregulated space, and some observers are drawing parallels to the subprime lending practices that preceded the 2008 financial crisis:
Aggressive, barely regulated lending to vulnerable borrowers. Backed by institutional investors and Wall Street capital. With inadequate oversight. We've seen this movie before.
If you need financing, you have better options: start with your bank, a Community Development Financial Institution (CDFI), or an SBA loan. Even a HELOC or a friends-and-family loan will come with far better terms than anything these companies are offering. Yes, those options take longer. That's because someone is actually evaluating whether the loan makes sense for you — not just for them.
And about all that spam: if you've noticed an uptick in unsolicited financing offers since forming your LLC, there's a reason. In Virginia, your registered agent address is public record, and it gets scraped by marketing firms, scammers, and these very MCA companies. Below, I write about how using a registered agent service or attorney can keep your personal address off the public record — and cut down on a lot of that noise.
If you're a business owner feeling the squeeze right now, I get it — but please don't let urgency push you into a financial arrangement you'll regret. There are people who can help you find the right kind of capital. I'm happy to point you in the right direction. |
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| Yes, You Do Need A Registered Agent |
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| If you've formed a legal entity for your business, you're required by law to have a registered agent—someone designated to receive legal and government documents on behalf of your organization. This applies to for-profit and nonprofit entities alike, and it's one of those requirements that's easy to overlook until it becomes a problem.
Attorney Rahul Keshap, principal of local law firm Shuru Law, wrote a clear, approachable overview of what registered agents are, what they actually do, and your options for choosing one. It's a quick and useful read: What is a Registered Agent?
One thing I'd add: if you're considering serving as your own registered agent, know that in Virginia, your name and registered office address become part of the public record. If you work from home, as many consultants and small business owners do, that means your home address will be out there. Many Virginia LLC owners report a noticeable uptick in junk mail, solicitations, and scam "compliance notices" within months of filing.
It's not a reason to panic, but it is worth factoring into your decision. Hiring a registered agent service or working with an attorney can keep your personal address off the public record while still meeting the requirement. |
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My work is about helping purpose-driven small business and nonprofit leaders step back, reflect, and intentionally build organizations that align with their values and can thrive through change.
Whether you're strengthening your foundation, planning for sustainable growth, or considering an exit, I'm here to help you move forward with clarity and intention. |
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