One of the beautiful things about living in this country is the “American Dream.” If you are one of the many people who want to start business, you have an idea and then you aren’t really sure where to go after that. I wanted to offer some broad assistance with the process. Of course this is only for Colorado and some industries require additional licensing, certificates, etc.
The first thing is registering your business. Of course that means, coming up with a name. You do want to discuss entity types with your tax professional. Choosing the wrong business entity can result in higher taxes, penalties, etc. Once you have figured out the entity type fits your tax situation best and the name, its time to register. You want to register with the Secretary of State first. It’s recommended to register with the IRS. Technically, you don’t need an employer tax ID number until you are going to have employees. However, without it the business is linked to your social security number. To protect yourself against identity theft, its best to get the employer ID.
Once you have the business set-up and registered, you will take those documents to your bank to open a bank account. A lot of people don’t think this is necessary until they have income. But you have to spend money to make money right? We want those expenses separate from your personal account as soon as possible. You might need to deposit money into this account from your personal account. That’s OK. We will keep track of this.
The bank account is the only way to keep track of expenses. You do want to start now with some sort of tracking system. Whether it is an Excel spreadsheet, QuickBooks or other software, it is best to start now while its simple. Get your processes in order now while you are starting up while things are slow. Then as you ramp up your business and you start to have more and more transactions to enter it won’t be overwhelming because you are already used to the process.
Taxes are more important than ever as a business owner. You may or may not have sales & use taxes as well as payroll taxes. You want to file these on-time, each and every time. The penalties and interest can quickly get away from you. Keeping up with your books on a regular basis makes filing the taxes a breeze. All the numbers are already in a format that is easy to find.
Finally, you want to review your income, expenses and overall financials on a regular basis. Whether you are working with a bookkeeper, CPA or both, its wise to have them privy to your finances and goals. Having an outsider point-of-view can really help you grow your business and take it to the next level. They can also catch any habits early if they are not the best use of your time and money.
Don’t be afraid to ask for help. With any luck, your business will be taking off before you know it. Its to start giving up some of those hats. You can’t do sales, marketing, accounting, tech support, etc. all by yourself.