Guest post by Brittany Fisher
You have a great product idea and the marketing experience to get that product into the hands of the people willing to pay for it. You have enough savings to self-fund your entrepreneurial effort until your product gets to market. You’ve explored a few outsourcing options for manufacturing and production, and you are pretty certain you can afford your top pick. You believe you have your business startup process well in hand and on budget.
Of course, the only budget you’ve ever set up and followed (or tried to) in your life has been your household budget. But business budgeting can’t be all that different, right? Well, it can — that is why some accountants strictly handle individual finances but not business matters. In this situation, you need a solid accountant with a keen understanding of business on your side.
Get started on the right financial foot
You may be starting out small, but that doesn’t mean you shouldn’t start out right. According to The Startup Magazine, a finance and accounting person should be among your first five hires when you are just starting out.
You’re going to incur startup costs for your business, and even if you are diligent about saving all of your receipts, do you know what to do with them? How are you paying yourself? Do you have a separate bank account for your business? Do you know what taxes you are facing down the road that might affect your projections? In fact, is your state the best state for your new business headquarters or operations? These are all questions and issues that a qualified accountant can help you work through as part of your small business planning.
Dollars and cents structure
Another piece of your finance and accounting puzzle is the business structure you select for your new business. It may be tempting to stick with a sole proprietorship: It’s easy, it makes the company 100% yours, and it’s inexpensive — at least initially. However, it also means you assume 100% of the risk. If you are unable to pay your business debts, you may need to sell personal assets in order to satisfy them. You can also be held liable in any legal matters.
By registering your business as a limited liability company or LLC, you receive greater personal protection. And, unlike with other, more inflexible corporate structures, you will avoid paying both personal and corporate taxes within the LLC structure. There are also fewer reporting and operational requirements than with other corporate structures. A qualified accountant can also identify startup and ongoing expenses that qualify as tax deductions in accordance with IRS rules and regulations.
It’s not difficult to set up an LLC. Once you choose a name, you’ll have to make sure it meets your state’s regulatory requirements (also make sure it has a corresponding domain for your business website) and then reserve it immediately.
Another conundrum is getting your payroll off the ground. Begin by establishing how often you plan to pay yourself and your staff, determine how much withholding you need to deduct, and stay on top of your tax deadlines so that you can avoid getting into trouble with the IRS. There are apps like QuickBooks that can help with this. They automate payroll processes like scheduling, tax filing and even record-keeping so you can focus on other business-related tasks, like optimizing efficiency and boosting outreach efforts.
Reach for referrals
A good place to start with hiring an accountant is to ask other small business owners in your business and social circles for recommendations. Your chamber of commerce and other civic organizations may also be able to refer you to one of their members. Take a look at existing job descriptions and modify them to suit your business specifics. Once you have a few candidates, don’t be shy about asking them for references or checking their credentials — accountants are also thorough by nature so they understand the importance of diligence.
A step ahead from the beginning
You may be at a startup stage right now, but if your great idea and marketing finesse come together as planned, your future expansion ideas may require outside financing. Being able to produce proper financial records from your earliest days of business operations can impress outside investors and bankers. And this all starts with having a qualified accountant in your corner.
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Photo by Kelly Sikkema on Unsplash