The Prevent Defense
O.K. You’ve filled out all the paperwork, paid the necessary fees, got all your accounts set up and even have some business cards.
Starting your business was the easy part. Staying in business takes a lot more work. It’s easy to get lost in the day-to-day of running a business, so much so that you lose sight of some of the things that can put you on the bench for the remainder of the game.
To keep you playing like a pro, we’ve put together some winning plays that will help you make informed decisions, expand your team predictably and avoid those dreaded penalties, including the ones that can get you thrown out of the game.
Finding The Right Coaches
Every pro needs a little help now and then. Because a business can have legal and financial ramifications for you, your family and your business partners, you may want to bring a mentor or other business experts into the loop to avoid the inevitable pitfalls.
Here are just a few of the things you can use a mentor, attorney or CPA for:
As noted, each business structure offers you advantages and disadvantages. A mentor, attorney or CPA can go over the different options with you and help you choose a business structure that meets your unique needs.
Every business structure has different types and levels of taxation. The goal, of course, is to reduce your tax exposure while paying your legal obligations to local, county, state and federal governments on time and in full. A tax expert can help you determine which structure affords you the best results in terms of reducing tax exposure.
How you pay yourself has financial and tax implications. Owners of sole proprietorships, partnerships and LLCs typically pay themselves through draws which may vary from pay period to pay period while officers of corporations receive set salaries. A CPA can walk you through your compensation options to ensure that you meet state and federal tax and reporting requirements.
If you’re a sole proprietor you call your own shots for the team. If you’re a corporation, you are an employee, not an owner. Both have their advantages and disadvantages. A knowledgeable advisor can help you match the structure to the level of autonomy you wish to have and also make sure that the required filings are made in terms of bylaws, charters and other documents.
As a business, you need to keep detailed records about your income, disbursements and other fiscal matters. Since every business structure has a different set of reporting and recordkeeping requirements, you want to make sure you cover all your bases from the very start. A CPA can assist you in setting up your recordkeeping and accounting systems so that you meet regulatory requirements. There are also some excellent do-it-yourself tools out there, such as GoDaddy’s online bookkeeping system and Freshbooks, which allow you to manage most aspects of your accounting, including balance sheets and P&L statements.
REGISTRATIONS, LICENSING, PERMITTING
Every city or county has different filing requirements. An attorney or CPA can help you identify what your business needs to be compliant and make sure you have the proper licenses, registrations and permits.
If you plan to use a business name that is something other than your own legal name, you may want to see an attorney. A lawyer can help you register your name with the state and at the federal level so that you have the necessary protections. Keep in mind that a federal trademark or trade name can trump a state registered trademark or trade name. As noted earlier, the cost of registering a name federally may be well worth the time and cost.
If your business offers services or is hiring freelance or temporary contract labor, you may want to see an attorney about this. They can help you protect your rights and ensure that the contract covers all the angles, including how the terms can be modified, how a relationship can be terminated and how litigation would be conducted and where.
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