Founder of TaxMama.com, Eva Rosenberg, explains the essential components to setting up a business properly.
Over the years, I have done a lot of trouble-shooting for businesses, or representing them during IRS audits (usually because another tax professional asked me to handle the audits).
As a result, I have learned a lot about how to set a business up properly – as well as common mistakes people have a tendency to make. The other thing I learned over the years was that some people became amazingly successful; while others in the same business or same field just did OK, or even struggled to stay afloat. Yet, the Super Success didn’t work any harder – just smarter.
Today, I am going to give some tips about what to set up and how to become a super success.
- Set up an advisory team (THIS
is one of the two steps that most people resist. THIS is the step that leads to
Super Success, rather than subsistence.)
Note: You advisory team can help you with all the steps and decisions coming up.
- Prepare a business plan (This is the second step most small businesses resist – and also leads to Super Success.)
- Decide on your business structure (proprietorship, partnership, S corporation, C corporation, etc.)
- Decide on your business name and image. (Yes, this does come after the first three steps – because you cannot trademark it unless you know which entity owns it.)
- Open a separate bank account for the business (You’d be surprised how many people do not do this. And you cannot do this without establishing your entity.)
- Research your licensing (local, city, county, state, federal, trade or professional, as applicable. Again, you’d be surprised at how many businesses find themselves in trouble when the city or county officials come knocking on their doors to collect fees and taxes.)
- Research your costs (Be honest with yourself about ALL the costs of running your business, even the ones you take for granted. Your advisory team can help you get better prices from vendors they know. And knowing your actual costs, including taxes, you can do a better job of pricing your products and services.
- Where will you operate the business (at home or pay rent or, perhaps think long-term and buy a building.)
- Lease or buy your vehicles and business equipment (Each may have advantages depending on how often they must be replaced. Obviously, buying means not having payments for life – but may not be worth it if the asset deteriorates before it’s paid off.)
- Arrange for your inventory if you are selling or manufacturing products (This is where your advisory team can be a huge benefit, if you include successful advisors from your own industry.)
- Hiring – employees or independent contractors (There are laws about the status of workers – and you need to know them. Your advisory team can help you find the right people who will enhance your business’ success.)
- Research legal issues (Every business faces some issues: contracts; bad debts; liabilities; employees; and more
- Where are your sales coming from (Do you really know how to reach your target market? Or will you waste money shot-gunning advertising and market all over the place, instead of zeroing in on the right customer base? Your advisory team can help you save a fortune – and generate higher sales, faster.)
These are just some of the things to consider to set up a new business, or to improve your current business – and make it wildly successful.
Learn more about how to improve your business – or your clients’ businesses. Starting in May, I will be teaching a 12-part series of courses at CCH CPELink, based on the first 12 chapters of the book. Please join me – and invite your clients.
They will understand why they need to consult you to rebalance their tax and business plan each year.
The latest edition of my book, Small Business Taxes Made Easy contains complete updates about the business considerations, from the PATH Act of 2015, up to and including the Setting Every Community Up for Retirement Enhancement Act (SECURE Act); and the Taxpayer Certainty and Disaster Tax Relief Act (TCDTRA).