Day One: Starting Your Business Correctly

Decision-making around starting a small business can get clouded by stress and the frenzied pace of trying to do everything at once. We often hear clients say, "I know I'm not doing this right, but I can't afford to stop." The problem is, there's a real cost to starting a business the wrong way.

At JMR Accounting LLC, we encourage small businesses to take the necessary steps and account for the initial startup fees that set them up for future success. Here are three areas all small business owners should address when launching a new venture.

Logistics

When business owners start feeling overwhelmed, it's often due to small logistical decisions and getting bogged down by forms and legal jargon. Two phrases you'll hear constantly are "LLC" and "S Corp." Here's what they actually mean.

LLC stands for Limited Liability Corporation. It's a legal designation that protects small business owners from personal liability during business operations. You accomplish this by filing the appropriate paperwork with your state.

An S Corporation is a tax classification. An LLC can elect to be taxed as an S Corp, which can provide certain tax benefits. The main benefit we see is around the owner's salary. The owner of an S Corp must pay themselves a reasonable salary, and only that salary is subject to Social Security and Medicare taxes.

Another critical task is setting up a business bank account. This is significant and saves enormous amounts of time down the road. Commingling personal and business transactions creates an accounting nightmare. Take the time to go to your local bank and set up a dedicated business account for all your deposits and expenses.

Team

No matter the size of your business or number of employees, you don't need to go at it alone. There are a few areas that should be outsourced to professionals.

• Lawyer – Writing contracts for work you'll be performing, protecting your intellectual property, and defusing potential issues are all best left to someone who has spent years studying local and federal law.

• Insurance Agent – Deciphering an insurance policy can feel like reading a foreign language. Have a conversation with a trusted insurance agent to make sure your business is protected.

• Accountant – Having a reliable accountant from day one is one of the most significant decisions you can make. An accountant can assist with important tax decisions, business planning, and help you understand how you're performing month to month and year to year.

• Marketing – Staying in front of your audience can seem daunting, but hiring an agency like Concrete & Palm ensures you'll be educated on what works best for your business and that your target audience can actually find you.

Vision

At JMR Accounting, we're dreamers. Spending time thinking about your 12-month, 5-year, or 10-year plan allows everyone on your team to share the same goal and destination. Your business is your livelihood and has the potential to leave a legacy for years to come. We want you to dream of big opportunities from your business's very first day, and it's our goal to help get you there.

This article is for informational purposes. This content is not legal advice. Please contact a professional directly before making business decisions.