Start Ups

Starting a new business can be very exciting! Sometimes it comes from great ideas. Other times it can be simply the next step from what you’re already doing now. Maybe its just to supplement your income. Or maybe you just need to try something new. Whatever the reason, its important to get started in the right direction. Know where you’re going and how you’re going to get there. Get the right advice from the most successful people you know. And never stop trying!

Once you researched your idea and you think its a winner, you’re going to need to formalize your business structure to get going. Are you going to operate as a sole proprietor or do you need something more formal? Should you incorporate? Or should you form an LLC? These are many of the more common questions we receive from start-up businesses.

Types of Businesses

The most common types of business are the sole proprietorship, partnership, corporation, S corporation and limited liability company (LLC). Each has its own unique advantages and disadvantages and you need to explore which type is best for you. Seek professional advice from an experienced CPA or tax attorney in exploring these structures early on. It will save you money and lots of headaches if you make the wrong decisions or don’t do everything correctly.

Taxes

Yes, you’re going to have to pay taxes. How much will depend on how much you make. Early on, you may not be making much. Especially in the first year. And won’t have to pay much if anything at all. The three general types you need to be most concerned with are income taxes, employment taxes and sales taxes. You need to register the business for each and follow the rules. Even if you don’t start the business until months later. Miss the deadlines and pay the penalties. Ouch!

Recordkeeping

Keeping good records will help you to see where you’re making money and when you’re not. You’ll also need good records to track expenses and other deductible items you report on your income tax returns. Get started early! It will save you lots of time and headaches later on.

Start Up Expenses

Your start up expenses are usually deductible. Even if your business never makes money, you can usually get a tax deduction for the start up expenses you incur. Start up expenses are the expenses you have before you actually begin business operations. Advertising, surveys, training, office equipment purchases are just a few.  Even travel and meals can be deductible.

Organizational Fees

Paying fees to get licenses, professional advice from accountants, attorneys, architects just to form your company are deductible as well.

Home Office

Working from home? That can be deductible too. Be sure to check with your accountant and make sure you follow the rules.

Start with a Budget

Start with a budget. Begin throwing some money at your idea. Don’t try to do it all yourself. Or try to do it for free. It won’t work. If you’re going to start a new business, its going to cost you some money up front. Money to incorporate, pay licensing fees, buy accounting software, a new phone number, some advertising, etc. And don’t blow it all creating complex business structures, legal documents, etc. before you even get started. And don’t spend all your time just thinking about it. Just do it. Commit! Then take it slowly. Give yourself a few months or more to get it started.