Owning and operating your own business is exhilarating. It’s a time to work as your own boss and create a successful path for yourself. Yet, starting a business is also quite daunting. While every business owner shouldn’t hold back in terms of goals or strategy, he or she should also take plenty of time to get a deep understanding of what having a business actually means. This includes all of the caveats, legal responsibilities and financial risks that come with it. Before launching your start-up, make these all-important decisions
When you have your own business, it’s tempting to simply write off everything and anything at tax time. Deciding ahead of time what to write off will eliminate any confusion from business owners and employees on what is a practical write-off, and in effect, reduce the chances of getting audited come April 15th.
Travel, cell phone use, home office, rent and business supplies are all popular write-offs, but the important thing is to decide on a policy, and understand the regulations, up front. Preparing your taxes at the end of a new business’s first fiscal year is no joke and making the right preparations months in advance is crucial in helping owners avoid financial issues down the road.
How will you structure your business?
In the beginning stages, a decision about business structure has to be made. Ask yourself these important questions about how you’ll structure your start-up business:
- Do you want to have a business partner?
- How much liability do you want to have personally versus liability for your business?
- Do you want yourself, and any partners, to have a lot of flexibility in the handling of the business?
- How many tax liabilities do you want to be responsible for?
Depending on the answers to these questions, you might be looking at forming a Limited Liability Company, a Standard Corporation, a S-Corporation, a Professional Limited Liability Company, or something similar. Each option incurs different taxes and has its own caveats and structures. It is wise to consult professional help to see exactly which structure is right for your business.
Which banking option is for you?
In the time leading up to starting a business, it’s important to create a cushion for yourself. After all, many start-up businesses fail and it’s important to have a back-up plan or exit strategy should your business model go south. Start off by looking into the rates, yields, minimums and other options for different banking accounts. Setting up the right type of banking option can make help to alleviate some of the financial risks that come with launching a new business.
Each bank offers its own set of advantages for business owners. For example, those who choose to do online banking at Discover Bank can opt-in for various rewards and cash bonuses for making businesses expenses. By establishing a financial cushion and working with companies you trust is one of the most sure-fire ways to stay afloat in the awkward launch process.
Who will you employ?
After deciding on the industry of your business and going through the preliminary steps, it’s time to decide who you’ll hire and what those individuals will be doing. It’s a very delicate line when trying to hiring a proper amount of people to complete all tasks.
Hire too little and you risk exposing your team to over-extension leading to faster burnout and lower employee retention. Hire too many and you run the risk of confusion over responsibilities and a bloated payroll you can’t justify. The best course is to find qualified individuals for the job who you know you can trust. A few bad eggs can take down companies with even the most sound business models.
Even though launching a start-up isn’t the easiest of tasks, especially among the new information and rules that need to be learned and understood, decisions made ahead of time will make the process as simple as possible. Tasking yourself with making these important decisions from the beginning will help you draw a navigable path into the future.
About the author
DJ Miller is a graduate student at the University of Tampa. He is an avid gadget geek who spends most his time writing on anything tech related. In his spare time he likes to travel, play soccer, and watch movies. You can follow him on twitter @MillerHeWrote