Let’s face it: starting a business is not for the faint of heart. It’s risky. It’s scary. It’s exhilarating. It’s what you make of it. It’s glorious. It’s a roller coaster. It’s your life. And while we are all for folks making a go of it on their own, just about every successful small business owner has had a “what I wish I knew” moment. Thus we’ve collected a few things every aspiring small business owner should consider before they go all in…
Are You Personally Financially Prepared?
If you’ve enjoyed a steady job, you’ve likely enjoyed a steady paycheck. But when you go into business for yourself, there are plenty of expenses that take priority over your own salary. That means there’s a “startup period” in which you likely won’t be enjoying a steady paycheck. But personal financial obligations wait for no one! Your rent or mortgage will still be there each month. Same goes for utilities, car payments, credit card bills, tuition… the list goes on. So do you have the appropriate amount of money saved up to endure that “startup period,” however long it may be? Getting a clear sense of your personal finances will help you gauge how long you can go unpaid.
When you’re in business for yourself, the way in which you pay taxes changes drastically. A few potential new wrinkles might include:
- How you incorporate
- Estimated quarterly tax payments
- Local business tax requirements
- Payroll taxes
- Sales taxes
- Ecommerce taxes
This is where some good advice helps. As you start out on your own, talk to other who’ve gone before you. Talk to an accountant who’s familiar with your industry and region. Talk to your spouse or partner too, because there are tax implications if you co-file.
Going into business own your own means kissing the clear definition between work and personal time goodbye (at least in the early going, but likely for good). Rarely will you work 9 to 5. You’ll wake up early on Saturdays to crank out a few emails. You’ll take a sales call when you’re out with the family. Bottom line: when it’s just you, you’re always on call. Ask yourself if you’re ready for that. Ask your family.
But it’s not all doom and gloom. The “always on, always connected” curse, can also be a blessing. With a mobile device like a laptop or an iPad and internet connectivity, you can work from anywhere, anytime. Say you have a newborn. Working from home and handling daycare duties becomes easier. (Notice we didn’t say easy.) Similarly, you’re able to enjoy activities that an office tether might not have previously allowed (i.e., spontaneous three day weekends).
Assemble Your Allies
A small business owners greatest allies are a good lawyer and a good accountant. Getting those in place out of the gate will not only help you be prepared for come what may, but also provide you with sources of advice. Our small business evangelist, Amrik Randhawa, talked about this on YoungEntrepreneur:
While a lawyer doesn’t play much of a role in your company’s books, he or she will be helpful with the foundational elements of your business — namely, which kind of business entity you choose. Your industry and your future plans will impact the kind of business entity you should form (i.e., C corporation, limited liability corporation, S corporation, etc.).
Surprise, you need an accountant. This isn’t a recommendation to offload all of your company’s financial activities to a service provider. You still need to be involved in your company’s books — especially in the early days, when it’s perhaps just you.
But an accountant will surely help you come tax time. Plus, they’re often chockfull of pertinent, helpful information. And the fact that in time they’ll likely develop a deep knowledge of your company’s financial picture and possibly act as a trusted source of business advice can’t hurt either.
This rundown is just the tip of the “what I wish I knew” iceberg. And we’re sure there are plenty of seasoned small business owners out there who have their own tips. We welcome you to post your tips to our Facebook wall.