There’s a specific empowerment entrepreneurs get from owning their own business; the pure, simple enjoyment of building something from the ground up and watching it flourish. While first-time business owners plot, plan, and polish their business plans, some forget important aspects that could eventually lead their company into a bottomless pit.
Some new business owners find themselves filing for bankruptcy or in court, with issues regarding finances simply because they didn’t have a firm grasp on the ropes of entrepreneurship. Taking the steps to secure your business and make yourself knowledgeable about what it takes to successful operate a business can prevent the pitfalls of starting up a new company.
Being a part of the 50% of small business that succeed is possible by becoming aware of the legal obligations and financial aspects of running a legitimate business. Here are a few business-savvy tips to sharpen your “entrepreneurial street smarts”:
· Making Claims of Ownership– Determining the legal structure of your business will help you get it started. Choose what form of ownership is best for you; sole proprietorship, partnership, Limited Liability Company (LLC), corporation, S corporation, nonprofit or cooperative.
· Licensing and Permits– All business typically need some type of licensing, and in some cases, permits. The type of licensing and permits you need depend on the industry of the business and state requirements. Check with your state’s laws to see what permits, licensing and certification your business must abide by.
· The Security Blanket for Businesses– Because you can’t predict your business’ success, the only real security blank for businesses is insurance. Insuring your business is like giving your business a warranty, and all valuable assets need protection! Depending on the type of business you plan on owning, decide what type of insurance is most appropriate your company; for example, insurance for those “just-in-case moments” (fire, natural disasters, or theft). Research different insurance companies, get quotes and choose the top three that are the most suitable and affordable for you.
· Making Your Business Official– One of the best ways to pick a name for your business is by asking yourself, “who do I want to do business as?” When you pick a name, conduct some research and make sure another business hasn’t already claimed it. After choosing a name, applying for an Employer Identification Number or an EIN. As soon as your company establishes an EIN, you are officially and legally in business! Keep in mind, you’ll need your EIN when filing for taxes, so keep it stored somewhere safe or even memorize it.
· Money Talks– For some new business owners, the financial aspect of owning a business can be overwhelming, especially when one faulty move or mistake can wreak serious legal havoc. One effective way organize your business’ overall finances is by keeping tabs on them weekly, quarterly and annually. That way, if it’s necessary to “pay in” to IRS around tax season, you’ll be prepared and able to cover the funds, instead of leaving in a state of panic.
Another beneficial way to prevent an audit and avoidable mistakes is by hiring an accountant. Accountants are able to help you organize your assets and manage necessary expenditures, such as; payroll, equipment, and other bills to upkeep your aspiring business running smoothing. Most accountants specialize in maintaining money and income tax preparation. So, when it comes time for your business’ “end-of-the-year financial review from the IRS”, you can relax knowing a professional took care of the financial chaos that comes with owning a small business.
Article contributed by Jenna Smith