Decision making surrounding starting a small business can often be clouded by the stress and frenzied nature of a fast-paced world. We often hear clients lament, “I know I’m not doing this right, but I can’t afford to stop.” However, it’s crucial that important questions be asked because there’s a cost to starting a business incorrectly.
At JMR Accounting, we encourage small businesses to take the necessary steps and account for the initial start up fees to set their future up for success. Let’s take a look at three areas all small business owners should reflect on as they launch their new venture.
Logistics
When business owners begin to feel overwhelmed, we find it is often due to small logistical decisions as well as being bogged down by forms and legal jargon. The two main phrases a small business owner may hear are “LLC” and “S Corp.” In short, LLC is a legal designation and S Corp is a tax classification.
LLC, or Limited Liability Corporation, protects small business owners from personal liability during business operations. This is usually accomplished by filing the appropriate paperwork with your State.
S Corporations can be an LLC and can also provide certain tax benefits. The main benefit we observe is owner salary. The owner of a S Corp must pay themselves a reasonable salary and only that salary is subjected to Social Security and Medicare taxes.
Another important task is setting up a business bank account. This is very significant and saves a lot of time down the road. Commingling personal and business transactions is an accounting nightmare. We strongly suggest taking the time to go to your local bank to set up a dedicated business account to handle deposits and expenses.
Team
No matter the size of your small business or number of employees, you don’t need to go at it alone. There are a few areas of business that should be outsourced to professionals.
Lawyer: Writing contracts for work you will be performing, protecting your intellectual property, and defusing potential issues are all best left to a professional 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 “bulletproof.”
Accountant: Having a reliable accountant from day one is one of the most significant decisions you can make. An accountant can assist in making important tax decisions, business plans, and help you understand how you are performing month to month and year to year.
Marketing: Staying in front of your audience can seem like a daunting task, but hiring an agency like Concrete & Palm assures that you’ll be educated on what works best for your business and that your target audience can 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