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ARE TWO CORPORATIONS BETTER THAN ONE
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    Whether you're just getting started in the alarm business [or perhaps I should say recurring revenue business] or well established, the idea that maybe you should operate two rather than one business entity has occurred to you.  Typically the idea is that the installation side be one entity and the recurring revenue part another entity.  Invariably when you think about the recurring revenue side you're thinking monitoring.  
    Some of the justification for operating two or more entities is separating liability and perceived ease of selling the recurring revenue contracts and money stream.  The drawbacks are keeping separate books, licensing and tax return filings, among others.  
    Before giving the idea any more though you have to be honest with yourself and ask if you're really going to operate the two or more entities separately.  If you're not, then don't bother with the charade; you're the only one you're going to fool.  What does separate operations entail?  Well, here is a layman's way of looking at it.  Imagine that you own the installation company.  Someone else owns the recurring revenue side of the operation.  You don't like or trust each other.  You don't like or trust the others employees.  You don't like or trust the others accountant.  You wouldn't even consider sharing space, sharing employees, contracts with subscribers or subscriber information, using the same bank account, same credit card processor, phone number, vendor accounts or credit cards.  In other words, your business has nothing to do with the other business, except you refer work to each other.  
    In a real world, think about how you're going to deal with your subscribers.  You've separated your operation into installation and monitoring.  After all, you subcontract the monitoring to a wholesale central station, so all you're doing is billing and collecting the revenue.  But how did you "paper" the relationship?  Did you have a separate sales and installation contract for Company A and a monitoring contract for Company B?  Do you provide any repair service to the subscriber, and do you do it under a recurring revenue service contract or on a per call basis?  Which company is under contract to do the repair service and collecting the revenue?  
    Since you're operating two entities you'll need insurance for both, licenses for both and contracts for both.  If you indeed operate two separate entities then you will have accomplished your goal of separating potential liability.  When it comes time to sell the recurring revenue you won't have to involve the other entity, which presumably you are either going to continue operating or shut down.  Seems like a lot of work and effort.  An optimistic business owner is not likely to go down this path.  Why worry about potential liability if you intend to pay your debts?  How long do you think you can get away with letting one entity do all the purchasing and the other entity collect all the revenue?  Not long and the creditors of the entity with debts will not have much trouble piercing the corporate veil of both entities.  
    In almost every consultation I've had on this topic it was clear that more than one entity was a waste of resources and time.  The answer is to carry appropriate insurance and operate your business above board.  Whether you succeed in the alarm business isn't going to depend on how many different entities you operate.  If you do in fact have separate operations, perhaps in different states, then separate entities probably makes sense.  If you have a centralized location with shared operations then you need to plan carefully to accomplish two or more really independent entities.
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VIDEO CONSULT
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    So I had my first video consult the other day.  We used oovoo.com.  I'm under kenkirschenbaum if you want to add me as a contact.  Sure it was a novelty but I couldn't help think it was likely the future of telephone communication.  It saved the client the trip to the office, and it compelled me and the client to pay attention since we were watching each other and ourselves.  Probably a good idea to call my office ahead and let us know you're going to call us using oovoo.
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