I work with Entrepreneurs every day and today again I was reminded that Entrepreneurship is not for the faint of heart. It takes a lot of guts to put your ideas out their everyday to either be received or rejected. Most people think their ideas are great and some are but a good idea isn’t always good enough to keep you in business.
There are important decisions that are made early on that will define whether or not you will remain in business. In the accounting world a startup business really isn’t a business until you have done several of the following steps:
1. Setup an LLC. I personally recommend my clients to start out as a Limited Liability Company. It’s a good place to start and for appearances the LLC gives your business more credibility. For tax purposes, it is a flexible entity that can be used as a single member, partnership or a small business corporation. These entities all have different tax consequences that should be discussed with your CPA prior to making that decision.
2. Setup your books on QuickBooks. The next step in the process of getting a business started you will have already setup your banking and filed for all your tax id numbers through the IRS and your state agencies. Once that is completed you should purchase your QuickBooks Pro program and get started. All your purchases and income will be recorded from the start which increases your likelihood of them being included in your taxes. Shoeboxes are a highly overrated organizational system that never assures the expenses are all being captured. Miss a receipt and you miss a deduction.
3. Setup a budget. Yes, that’s right. Setup a budget by forecasting what you believe your income and expenses will be. Many business owners fail to do this part because they become too busy and overwhelmed. A budget in your first year is a goal. In order to stay in business you must set little goals in order to reach your mark. The first year may be to just cover costs but without a goal you’re chasing a bull’s-eye that is ever changing.
4. Setup a business and marketing plan. A business plan is a very valuable tool that will help you focus. Your focus will be what type of business you have and what market you will be serving. Once you focus, every decision that you make must be to further the marketing or business plan. If you’re marketing to a specific market then your money and decisions must be to support that focus.
All these steps are not and should not be made without the help of a CPA. We are trained to assist and help in the financial arena but have some unique insights into how business should be done. A public accountant is exposed to new and old businesses alike and could probably prepare you for a few bumps in the road. My specialty has been startup small businesses and I relate well because I am one. Call me so I can help you navigate through the inevitable potholes.