Today, I have an amazing guest post written by Elena from ElenaStewart.com. Elena is a certified life coach specializing in career guidance and runs a thriving business giving her the financial freedom and flexible lifestyle she has always wanted. Elena loves to help aspiring CEO’s, entrepreneurs, or managers jumpstart their careers through one-on-one coaching. Enjoy her post!
Have you been thinking about starting your own business? Maybe you have a creative idea for a product or service and are confident that there’s a demand for it. You may already have begun to dream up your marketing campaign. You’ve talked to potential clients and partners. You even have a catchy name picked out for your company, and you’re working with a designer on logo ideas. Making your dream business a reality is pretty exciting—but you don’t want to get so caught up in the adventure of it that you forget to be methodical about the bureaucratic and legalistic side. Here’s your checklist from My Personal Finance Blog for making sure you aren’t cutting corners when it comes to the less-exciting aspects of launching your startup.
Write a business plan.
Yes, you probably want to jump right into making your business happen, but it’s unwise to do this without a step-by-step plan. This plan will not only guide you as you create your company it will also be your touchstone to refer back to when assessing your business’s progress over the years. It will also be your company’s calling card when you seek to woo investors or secure loans. So don’t cut corners when putting together your plan, and research to be sure you’re covering every aspect of your proposed business.
Set a budget.
If you’ve been putting off writing a budget for your business because it seems daunting, remember that it would be a lot more daunting to have to regroup and start over should you mismanage capital due to lack of foresight. When you do set your budget, give yourself time and do some extra research to make sure you aren’t leaving out any extra expenses, whether these be small occasional ones or one-time purchases. Even small amounts add up. Another mistake to avoid when budgeting: assuming profit before it is guaranteed. It’s better to be conservative in your budgeting than to base your expenditures on capital you don’t yet have.
Create an LLC.
Can you run your business without registering it as a limited liability company, or LLC? Yes, but there are compelling reasons why choosing an LLC is the smart option for the savvy business owner. For one thing, it protects your personal property and assets should your business be involved in an accident or lawsuit. It can even save you money, as being an LLC helps you avoid double taxation. While some states do charge additional fees for running an LLC, it’s still a good idea because of the added protection it affords.
Set up a business banking account.
It might be possible for you to use your personal account if you are running a business of only one or are self-employed instead of an LLC owner. But most banks will require you to have a separate account just for your business, especially if you are handling larger sums of money. While there may be fees associated with having a business account, it ultimately makes it easier for you to keep track of your finances and your deductions. It also makes your company look more professional.
Make sure you have all permits and licenses.
You don’t want to start your business, contract with your first clients, then suddenly discover you can’t legally serve them. Make sure you have any licenses needed in order for your business to operate in your region. Also be aware of whether you need specific permits to complete certain jobs, depending on type and location. And before you even started your business, you should have done a quick check of the zoning laws where it is based. You should also make sure you have an employer identification number, or EIN, if you plan to hire employees or incorporate.
Trying to run a business without insurance is extremely risky. An accident or a lawsuit could end up destroying your whole company if you aren’t adequately covered. And in some states, depending on your business, certain types of business insurance are required by law. Having insurance can help you in case of accidents, property loss, and interrupted operations. It’s a good idea to have property and liability insurance, even if your business is on the smaller side. Companies with employees should have workers’ comp, and if you have vehicles for your business, they should be covered as well.
Hire an accountant.
Managing accounts can be one of the least exciting and most stressful aspects of business ownership. But it’s also one of the most important. It’s important for you to keep track of the bookkeeping so you know where your company is financially—but you should also work with a professional accountant to make sure you are compliant with tax law, up to date, and correct in your calculations. An accountant can help you save money as well as avoid expensive errors, so this is an investment well worth your money.
Choose a payroll system.
Payroll is another part of business management that is both potentially confusing and vitally important. This is partially because miscalculating pay or missing deadlines can throw off your books, cost you money, and even incur penalties. But it is also an important component of good employee relations. Messing up your employees’ pay or not playing them on time ultimately creates a frustrated and distrustful workforce. Plus, you simply owe it to your team to be sure they’re paid correctly and on time. Using full service payroll services can help you stay on schedule. Try to find a system that will calculate your federal and state payroll taxes, and take care of reporting as well as direct deposit for payments.
These nuts-and-bolts components of successful business management may not be exciting, but they’re the solid framework you need to make the vision you have for your company come to fruition. Over time managing the legal and money side of things will become second nature, too, so don’t worry if it seems overwhelming at first. You can get more useful information and guidance on money management at My Personal Finance Blog.
Are you interested in booking a private one-on-one coaching session with Elena? Go check out her website and request a consultation!