Starting your own small business can be a very rewarding undertaking, if you are fully prepared for everything that comes with it.
There are a number of issues that can cause a small business to fail even before it has any true chance to succeed, so it’s extremely important to take all relevant factors into consideration. We’ve prepared a couple of helpful tips that should give you an idea about what you should watch out for when establishing a small business.
It’s a much more complex matter so this is just the beginning, but if you want to know more there are plenty of useful books that you should be able to find in most popular stores, such as Kohl’s. If you really want to invest in those but don’t want to spend too much money at the same time, you can always do it on a budget with Discountrue.com. And now read on for some introductory tips on the topic:
1. Decide On A Legal Structure
Every small-business owner has one major decision to make during the early going. They must decide whether they wish to operate as a corporate entity or a sole proprietorship. A business automatically starts off as the latter, but experts recommend a quick transition to the former, since the distinction will protect you from liabilities and offer far more legal protection. Becoming a corporate entity protects your personal credit rating, but if you’re the only one who is providing capital and putting in the hard work, a sole proprietorship is best.
2. Know The Tax Rules
Knowing when to pay taxes is a crucial aspect of small business ownership, but did you know that you may not need to pay them at all? Businesses who operate as a sole proprietorship won’t have to pay taxes during the beginning of their operation, while those who choose to become corporate entities are left to deal with immediate taxation on all of their earnings. Keep in mind that any entity that makes money is required to file a report each quarter.
3. Save Money For Self Employment Taxes
When you work for someone else at their company or business, you’re only responsible for half of the total taxes that are incurred by your employment. In a traditional employment setting, the employer pays for half of these taxes and the rest are shouldered by you. However, a person who is self employed is now forced to pay the entire amount, so it is important to set aside the funds necessary to cover these expenses on a regular basis.
4. Consider Your Insurance Policy
In many instances, a small business will waste precious capital procuring insurance, only to find out that they can get along just fine without it. As a general rule of thumb, your business does not need to purchase insurance until you have begun to hire employees. Small businesses that are being run out of the home, without any employees, are often covered by homeowner’s insurance policies. Selling a product and worried about litigation? That’s when you may need a product liability insurance policy.
5. Collecting Your Fees
Bosses of small businesses should become accustomed to collecting 10-25 percent of their fees upfront. Using contracts is a great way to ensure that you receive your money. As an additional bonus, it also shows the clients that you are not some fly by night impostor, that you are playing this game for real and you must be taken seriously.