Starting a new business is thrilling, just like jumping out of an airplane from 10,000 feet. You have fears and questions and you don’t know exactly how this all works. You don’t even know what questions to ask, but you know you need a partner to help you through the process.
We love working with new entrepreneurs who are passionate about your idea and want to take the leap to owning your own business. Here are some things you need to know:
- What kind of business structure should you set up? You’ve started generating some revenue and expenses, so you are a sole proprietor by default. Sole proprietors report income and expenses on a Schedule C on their personal tax return. But you plan to get big and make this business your full-time endeavor. You may consider an LLC or an S Corp or maybe even a C Corp. What does that mean and how do you decide?
- Now you have your business set up and there are so many kinds of taxes to consider. Income tax, self-employment tax, excise tax, sales tax, city taxes and county property taxes. How much are these taxes going to cost you and how do you pay them?
- Pick a way to track your income and expense so that you know what your profit is. Having information about the health and profitability of your business is the best way to be successful. We recommend that you use a software to track your business transactions. Set up and use separate bank accounts and credit cards so it is easier to track your business transactions.
- Before you set up a business bank account, you need a business EIN (Employer Identification Number) or you can use your Social Security Number. Your business needs an EIN if you have any kind of business entity other than a sole proprietor.
- Pick an accounting method. Are you going to report your net profit using the cash method or the accrual method? How will you bill your customers? How can you make collection of your fees easier for your customers? What kinds of expenses can you legitimately deduct for tax purposes?
You can be knowledgeable and run your business efficiently with a good chance of success, if you know the questions to ask and you listen and follow good advice. Our passion is to assist small business owners navigate through these challenging questions. We enjoy watching your business grow and succeed. Let us know if you need a partner to help make your business prosper!