Solicitation Warning

Today, LegalZoom sent me an email alert regarding unscrupulous companies that are targeting LLC and corporation owners with misleading solicitations. The solicitations apparently request the completion of an official-looking form and the payment of a filing fee. The full details of the scam can be found in this alert issued by California's Secretary of State.

It sounds similar to any of a number of scams in which a company accesses your public information (e.g., mortgage or property tax) in order to pass themselves off as an official government office requesting payment. I'm not sure who falls for this type of scam, but obviously someone does given their continued existence. As a general rule, if you intend to pay a government fee or tax, make sure you aren't writing your check to a third party.

Cost of Business

As we approach the end of our second quarter in business, it seems like an appropriate time to review a breakdown of our expenses thus far:

Government	74.2%
Internet	18.5%
Advertising	0.0%
Other	7.3%

The largest expense—by far—is compliance with governmental requirements; taxes and tax-compliance costs account for over 60% of this category. Internet costs, which include domain registration and hosting service, are the next largest expense. We will be starting paid advertisements this quarter, but have engaged only in free activities up to this point. The final category includes mailbox rental, software costs, and office expenses.

Clearly, we are running this business on the cheap. Our motivation for doing so should be equally clear: It's our money we're spending. For that reason, bootstrapped companies like ours typically have a more difficult time justifying expenses than companies with outside funding. This is good when it leads to prudent use of funds; it is bad when it leads to overly cautious spending that slows progress. It is not always obvious which is the riskier route: increasing your burn rate to reduce time to market, or preserving capital and thus increasing time to market. A straightforward risk-reward analysis—particularly for large expenses—can be a helpful guide.

Launch Update

Today, we sent an email update to all those who have signed up for Truth Rally's upcoming beta test. The message alerts them to our schedule slippage, and states in part:

Based on our current rate of development and sign-ups, we are moving our launch date to June. Over the next quarter, we anticipate completion of site construction and alpha testing; we will also conduct a formal advertising campaign, which will help us meet our membership goals. We appreciate your patience...

With regard to our forthcoming ad campaign, we received promotional credits from GoDaddy for Google AdWords ($25), Microsoft adCenter ($50), and Facebook Advertising ($50) to get us started. Google is also offering Analytics users a $50 coupon (code: E68N-YPJ2-R4Y3-B4NS-SS) to get started with AdWords; this deal expires April 15, 2009.

Social Hub

Since starting our company, I've become involved in several social networks to help spread the word about Truth Rally. But keeping track of all my accounts, as well as referring others to them, has become unwieldy. That's where UnHub comes in.

UnHub is a free service that provides a simple framework for presenting all of your social-network accounts in one place—your social hub. Unlike social-network aggregators like FriendFeed and Socialthing, which present a unified stream of data from various sites or share data across them, UnHub merely provides a unified URL.

It only takes a few minutes to set up and configure an UnHub account. You can then use your personalized URL to direct others to all of your accounts, which are displayed in a persistent menu bar across the top of the browser window. UnHub also provides rudimentary analytics: the number of times each account is displayed during the current day, past week, and past month, as well as since account creation. Despite its bare-bones design, this is a cool service. Check out my URL for an example.

A Twitterer, Not a Twit

I finally gave in and signed up for a Twitter account, which I will use to make brief Truth Rally announcements that are not blog-worthy. For those who aren't familiar with this rapidly growing service, it could be described as a micro-blogging social network. Each post, or tweet, is limited to 140 characters, and is public by default. Tweets can be sent and received via their Web site, your mobile phone, or any of several related applications. Twitter seems to be at the center of an entire ecosystem of new services.

Based on monthly visits, Twitter is currently the world's third most popular social network, trailing only Facebook and MySpace. I don't pretend to understand the mass appeal of Twitter, but I do recognize it and decided it was worth joining: Anything that attracts attention to our site is worthwhile. Prior to our site's launch, I don't expect to have much of a following, if any; however, users of the eventual site might find it informative, so I might as well get into the habit of using it now. Those who are interested in following me on Twitter, can do so by clicking the link near the top of the right-hand column.

Coincidentally, Twitter is celebrating its third anniversary today, a tidbit I learned from the first three tweets I received after signing up. Happy birthday!

Drupal Content

Drupal, like any content-management system or framework, is centered around content (obviously), so designing your Web site's content types is the logical CMS starting point. There are two default types of content available in Drupal: page and story, similar generic types that are adequate for only the most basic information. There are also several optional types, which can be enabled to provide specific functionality, such as blog entries or polls. However, most sites will need to define and use their own content types to provide all desired features and functionality.

Content types are easily defined in Drupal using the Content Construction Kit (CCK). New content types come with three default fields: title, menu settings, and body; fields such as author and timestamp are not visible through the CCK's interface. New fields can be defined as one of the following types: text, decimal, float, integer, node reference, or user reference. If this selection proves insufficient, there are hundreds of special-purpose field types available through contributed modules. Other configuration options for the content type and each of its fields can also be set with the CCK, but are beyond the scope of this post.

It is fairly simple to get started with the CCK, but will probably require some trial and error to understand some of the finer points. I recommend just diving in, because it is easy to undo mistakes or simply start over with a new content type or field. Thus far, we have defined nine custom content types, but none will be revealed until Truth Rally goes live.

Company Voice

It is important for any company that wants to be taken seriously to make a consistently professional presentation to potential customers. This presentation includes everything that is public: your storefront, Web site, employees' conduct, blog, advertisements, business cards, etc. This can be a challenge to companies that are operating on a tight startup budget, and can require some creativity.

Even though we don't yet feature our business number* on our Web site, it is publicly available through Truth Rally's WHOIS information. (And I let the cat out of the bag in my second back-story installment, though I omitted the area code.) To stay a step ahead, I decided that we needed to get a professionally recorded voice-mail message now. With no money in our budget for this task, I considered the alternatives.

My first thought was to use one of the available text-to-speech products. I tested the current offerings from a variety of companies, and found them to be inadequate. Though they use recorded words from actual voice actors, it is obvious that you are listening to synthesized speech. After ruling out this possibility, I asked a gifted friend if she could help me out. She generously agreed, and recorded a professional message for us. I surprised my co-founder, Mike, with the new message, and he was very pleased. We both think she did a great job and could even have a future in voice acting. Thanks!

_______

*Our company's phone number is 858–IT'S–TRUE.

TurboTax Business

I completed and filed Truth Rally's first tax returns today. I used TurboTax Business 2008, and the process went smoothly, except for two problems that I encountered in the state product (California).

The first problem dealt with our company being an LLC that is filing as a corporation: California's corporate form (Form 100) requires the entry of a seven-digit corporation number. As an LLC, we have only a 12-digit file number, issued by the Secretary of State. For this field, TurboTax accepts only entries containing up to seven digits, and has overrides disabled. After several fruitless Google searches, I called Intuit to see if there is a way to get around this; there is not. I then contacted the Franchise Tax Board, but was repeatedly kicked out of the queue because of the high call volume. So I did some investigation and found another number to call, waited on hold for 40 minutes, and found out how to deal with the problem: leave it blank, and a corporation number will be issued upon filing. TurboTax, however, did not like that solution, so I eventually entered all zeroes to make it happy. I assume the FTB will not be confused by this obvious placeholder.

The other problem was that the state product did not correctly compute our estimated taxes for 2009. In California, the minimum franchise tax of $800 must be paid with the first installment of estimated taxes using Form 100-ES; however, TurboTax computed that we owed nothing. I filled out the form manually, and sent the FTB a check for the full amount.

To save the cost of postage, I filed both returns electronically (e-file). This required me to have an electronic signature, which means that I had to sign Form 8453-C and then obtain an electronic copy of it in PDF format. TurboTax customers who don't have access to a scanner can use Intuit's free Fax-to-PDF service. My first attempt at using this service failed to deliver in the promised five minutes, but the status report gave me four possible reasons for the failure. I reasoned that the cause was insufficient fax resolution, so I increased it to "super fine" and re-faxed the form. This also failed, so I increased the resolution to photo quality, which succeeded. TurboTax then attached the delivered PDF signature file, and e-filed the returns. They say that federal returns will be officially accepted within two days, and state returns, within five days. However, our federal return was accepted by the IRS within three hours and the state return was accepted by the FTB just 90 minutes after that. Excellent.

For our first tax year, we owed no taxes—not even the minimum franchise tax, which is waived during the first year for entities filing as C corporations. Because we had only expenses during 2008, we ran a net operating loss (NOL), which can be carried forward to offset future profits in order to reduce our future tax liability.

Overall, I would recommend TurboTax Business, and plan on using it again for tax year 2009. It would be nice, though, if TurboTax—as well as QuickBooks—was more aware of the concept of LLCs filing as corporations. For the most part, it just treated us as a corporation, and ignored the subtle differences, which made me slightly less confident about using the product.

QuickBooks Is Disappointing

I finally got around to doing Truth Rally's books using QuickBooks Simple Start, and I regret to report that it was anything but a "simple start." The main problem with QuickBooks is that it seems to be designed for (and, perhaps, by) accountants who lack computer skills, rather than non-accountants who have computer skills—the clearly larger audience. It lacks the step-by-step interview approach offered by companion Intuit product TurboTax, and also lacks its intuitive user interface. I found the tutorials and help features to be useless; I grew weary of seeing the words "ask your accountant."

For example, I wanted to know how to properly record startup expenses and organizational costs, since we just started our company. TurboTax expressly asks for both of these items, but a search in QuickBooks' help utility retrieved no relevant topics for either of them. A search for capital contributions, another necessity for a new company, returned only a definition, but no instructions on how to enter them. This level of incompetence is inexcusable—and frustrating. As a result, I turned to Google and found many others with similar questions, but few and imprecise answers. Fortunately, after some trial-and-error, I was able to get everything working.

After being a satisfied user of TurboTax for many years, I expected QuickBooks to have a similarly intuitive interface and an equally authoritative level of help available. Needless to say, I was sorely disappointed on both counts. I now understand why there are so many QuickBooks trainers out there, and why there are so many Web pages that document QuickBooks traps and other failings. If it were not for QuickBooks' integration with TurboTax, as well as the hours I've already spent learning it, I would look elsewhere for a better product.

Upgrading Drupal

Upgrading Drupal is even simpler than installing Drupal—at least for minor revisions, such as the recent security releases. Before performing the upgrade, I skimmed the many comments on the Drupal site pertaining to upgrade problems, which put me in a cautious mood. However, I simply followed the instructions in the included file UPGRADE.txt and all went smoothly.

The upgrade instructions on the Drupal site are not as well organized as those in the aforementioned file, so I recommend ignoring the former and using the latter. Yes, there are 14 individual steps, which might seem like a lot, but the steps are straightforward, with most taking less than a minute each to complete.

Nearly all Drupal releases include fixes for security vulnerabilities, so it is critical to upgrade as soon as possible to protect your Web site. Security announcements can be viewed here, or you can subscribe to the RSS feed or the mailing list to be notified immediately of any announcements.