Lately, I have been sharing a lot more about small business tips. Like, cash flow, projections, revenue, and expenses. If all this sounds like another language to you, you are not alone. Accountants like myself are always dealing with financials and projections all the time. As an Account Manager, every aspect of a business is our main focus, and serving our client is our priority.
Businesses are built out of necessity every day. Like the immigrant setting up their workshop in almost every corner of my city. Building their small businesses from the ground up because it is the only way to generate income to feed their families. The dreamer that will never stop building a business even if it fails every year because that’s their true passion. Whatever your story is, trust me when I say to you, I understand. The main reason why I’m passionate about numbers and business ideas is that each business has its own story, and every idea has an opportunity to be build. I have composed a few steps for you to follow when thinking of going into business for yourself. A few house rules first, always ask for a second opinion and make sure you find a comfortable place with your future bookkeeper or accountant, building a trustworthy relationship with someone you can trust is the key to a successful business.
Begin with a business structure, meaning what entity are you going to establish. Are you going to work as a Solo Proprietorships, Partnership, Corporation, S Corporation, and LLC? Are you just going to work for right now as an independent contractor? Depending on the side of your business, some of these entities might not work for your startup company. If you choose to go work as an independent contractor, here are a few rules to remember.
Independent contractors are self-employed individuals, and they are liable for self-employment tax. This means that you should be paying estimated taxes quarterly to avoid any penalties. Any work done above $600.00 needs to be reported to the IRS, and you must file an annual tax return.
There are many steps to take before getting into taxes and threshold of your business tax liability, but keep in mind that a real business foundation begins with structuring your business the right way from the get-go.
Here are a few steps to consider before going into business for yourself:
Have a Business Idea
Funds/Loans (Enough cash to support your business)
Business structure- (Choose your entity)
Register your Business/ obtain a business license/ sales permit/ EIN
Insurance purchase (If you have any employees)
Marketing
Employees
Taxes/ Filing/Paying
These are some of the steps to think about when starting a business, from my own experience the number one reason why most companies failed in their startup years is from the lack of money. So, remember if your new business is your side hassle, continue building your business funds while you are getting a paycheck from the other company you are currently employed because once you go on your own, it’s a real roller coaster.
As usual, please email me with any questions or comment below. Stay wealthy, my peeps!