Now, I want to talk about a few important things you need to do when starting a business to put yourself in a good position out of the gates. In fact, I would consider these items the top three things you need to do as a new entrepreneur.

If you are going to sell products or services to the general public or to other businesses, you will most likely need to form some type of legal entity to operate under. Most start-up businesses form either a corporation or a limited liability company (LLC), with the majority, for my perspective, opting for the LLC. 

An LLC gives a business owner liability protection, management flexibility, and certain tax advantages if set up properly. The set-up of an LLC should not be taken lightly and you should work with an attorney that understands the nuances of this structure. Too many clients over the years have come to us with poorly formed LLCs and have had to spend more money to fix the problems than it would have cost to have it set up correctly from the start. This is a situation where you do not want to be pennywise and pound foolish. A mistake can cost you thousands.

Another overlooked area for clients is licenses and permits. Depending on the type of business you operate and/or where you are located, you may be required to obtain certain licenses and permits to run your business. Do not overlook this. Licenses and permits can be issued at the local, state, or federal level, as well as through various licensing bureaus or organizations. You must ensure you do your homework and know which licenses and permits you need to obtain to operate. You must also consider the amount of time it will take to obtain these licenses and permits as such may delay your business opening. By doing your homework ahead of time, you will ensure that any delay will be reduced to a minimum.

Co-mingling of funds is the biggest mistake small business owners make that can severely damage their business. Co-mingling of funds is when a business owner mixes their personal and business finances. The most common way this happens is when a business owner pays for personal expenses from their business accounts. This should never be done! If you need money for personal expenses, transfer money from your business account to your personal account or take a distribution check (or any other method your CPA recommends).

So, make sure to open all bank accounts and credit lines in the name of your business. Make sure all business income goes into your business account and all business expenses are paid from your business accounts. If you take one piece of advice from this article, make sure this is it!

These are three important things you need to do when starting your business. Remember, don’t get overwhelmed. Take things one step at a time and make sure you work with the right professionals to help you build your foundation! If you would like to schedule a no-cost, no-obligation strategy session, click here to call our office.