MONDAY MATTERS - Get Started
Posted on May 03 2021
You have this great idea, you KNOW it would be successful, you've told trusted friends about your idea and you've received epic feedback about the nuts and bolts of it, but have no clue how to lay the foundation.
I got you boo. Although, I'm not so sure we will stick with a construction metaphor through all this, so stick with me if I pivot. :)
I know it's cliche, but getting started really is the hardest part, especially when you have no idea where to start. Unfortunately, some of the most boring tasks are part of getting started, but also they are BIG steps in getting your business off the ground and telling the universe, "ok we're doing this".
Let's jump into it.
I've had a small business for about 6 years and these are the things I wish I had done from the beginning, as going back and implementing them after the fact was a pain. Regardless of what your business is or what industry it falls into, these are the things you'll HAVE to do to get going.
1. GET AN ACCOUNTANT
Lemme say it again. GET AN ACCOUNTANT. Even if your business is in the money world, GET AN ACCOUNTANT. At the end of the day, do you want to be working on the thing that lights you up or looking up how to run your benefits through payroll to make them tax deductible at the end of the year? Do you want to be making money or figuring out when your SEP-401k contribution is due?
I know some of you are reading this and thinking, "hmm, well I am curious and I'm a sponge for knowledge, who likes to her herself talk and I can teach others about these things down the road." It's me, I'm some people. Look I get it, there is nothing I love more than imposing my wisdom about ANYTHING onto others and the more wisdom I acquire, the smarter I will be and the more people will listen.
NAH. Here is where we can take the example set by our friends on the other side of the coin who have read the words SEP-401k and likely ran away from this blog in a panic. HIRE IT OUT.
You'll want to find an accountant who specializes in Small Business accounting. Personally, I work with Eric at SBTax. The level of respect and appreciation I have for this man is unparalleled. I didn't meet him until I was in year 2 of my business, after I had found out I owed about $60,000 in taxes because I had not done my taxes correctly the previous year.
An accountant will make sure your business is set up as a BUSINESS, but also how to take advantage of tax credits throughout the year, how to pay yourself, how to pay employees and answer any random question you have about taxes or business structures. Trust me when I say, this is THE most valuable step you take in starting your business.
If you don't want to work with Eric, err on the side of caution if you find someone asking you to pay a retainer, more than $1,500 to formalize your business and/ or a monthly fee. (If they are also doing your bookkeeping, then a monthly fee of ~$200 is perfectly acceptable). Basically dig in to see if they are legit or taking you for a ride.
That brings us to our next item on the list...
2. FORMALIZE YOUR BUSINESS
Your accountant should/ will do this for you, but I have plenty of friends who have had businesses for years and still operate informally. What it means to formalize your business (tbh I'm not even sure this is the correct term) is to formally set up a business entity. The government knows you exist and that you need to pay taxes as a human being with your SSN, this tells the government that you created another entity that needs to pay the appropriate taxes! This can be a sole proprietor, LLC, S-Corp, C-Corp or partnership. I will be fully transparent and tell you that I don't know too much about the differences between these, but that's because I have Eric, who handles that for me!
What I do know, is that when you create a formal business entity, it removes the liability from you and your assets. This means that if you get sued, your house isn't up for grabs. Phew. Plus, there are some bonuses! At the end of the year, you can give your accountant a list of the expenses it took to run the business and these can be deducted from your taxable income = less taxes to pay! Someone please let David Rose know THIS is a write off.
When you formalize your business into it's on entity, it needs its own bank account, which is WHY YOU WANT TO DO THIS FROM THE START. Your business will get it's own identification number, similar to your SSN and that's how the government tracks your monies. I know y'all don't wanna deal with going to a bank even once because the only thing worse is the DMV.
3. START PROFIT FIRST
Y'all when I listened to the book Profit First, I was so incredibly overcome with emotion because I thought the book had come to my life to save my life. I've experienced a lot of ups and downs throughout owning my own business, but if I could go back and change one thing, implementing Profit First from the start would be it. This book rewires our thinking from "spend more to make more" to "make money first". I will do a much more in depth post on this later, but buy/ listen/ absorb/ fall in love with Profit First.
Ok friends, those are your first 3 steps to actually getting this business started! Obviously there is a lot more to come, but what I love about these first few steps is that it legitimizes your idea! It tells the government, the bank and most importantly YOU that you're taking the first steps towards entrepreneurship!
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