14 Jan Starting a Business? An ounce of prevention is worth a pound of cure.
Have a great idea? Already have some potential revenue? Investors? Great! Make sure you take the time to set up your business appropriately before you have to correct issues a year or two down the road. Items such as your legal structure, accounting system, tax considerations, etc., can all lead to unnecessary headaches at a later date. One of the most common pieces of advice we give is to prevent future stress by properly organizing your company at the start, and developing good accounting habits early on. This approach will pay dividends when your company begins to grow and become more complex. Which is what we all want, right?
Pick your name and legal structure. We recently addressed this in a limited fashion here. Basically, you have four types to choose from: sole proprietorship, partnership, LLC, and a corporation. There are plenty of reasons why you may choose one or the other, so please contact us to discuss. Regarding your name, that is a fairly personal decision, so the only advice we offer is to not spend a year trying to figure it out – strike while the iron is hot!
Get your EIN. You should apply for a Federal Employer Identification Number from the IRS. It will be necessary to open a bank account. This process is rather straightforward – Axiur can do this for you on your behalf or you can head on over to the IRS website and work through the steps.
Open your bank account. Remember how you needed that EIN to do this? Once you have it, this should be your next step. Separating business activity from personal activity is essential, and isolating all of your business activity to this account will also help you keep track of income and expenses. Trust us, this (along with a good accounting system) is much better than a shoe box and a notepad.
Set up your accounting system. Clearly, we are biased here at Axiur regarding a good accounting system, but the cost is marginal compared to the problems you could face if you choose to go the shoe box method. Every taxpayer is required by law to maintain records with enough detail to prepare a proper return. You could also be put on notice by the IRS if you fail to meet that requirement. Getting your basic system set up, bank accounts linked, and chart of accounts defined are all things we at Axiur are passionate about.
Consider your other needs. You may need to explore business licenses that are required for you to operate, general business insurance, and any permitting that you need to obtain. Finally, you should work on getting your name out there in the form of marketing and defining your company’s identity. You have most likely given some thought to your brand, get to work putting in on paper and into practice!