Business Start-ups

You should always keep a separate bank account for running your business. Even if you are a sole proprietor, it is important to segregate business expenses and deposits from personal. Always think of your business as a separate living entity.

If you are incorporated, you are deemed a employee and should be included on a payroll system. S corporation owner shareholders need to take a "reasonable" salary. Only begin a payroll for yourself when you know your business has the cash flow to allow you to regularly and consistently take a check. The amount of your check will be net after withholdings. If you never have had any experience running a business, you definitely need to retain a CPA to advise you about payroll reporting requirements for yourself and your workers. You are personally liable for any payroll taxes you do not pay in a timely fashion or those you fail to report, even if you are incorporated. Some CPAs will recommend a payroll service company.

Not all business years end on December 31. When you start a business, you can pick the twelve-month cycle. A business year or fiscal year can end on the last day of any month. However, if you elect S status, the year end is usually the same as the calendar year end.

You must contact the State Department of Taxation where your business is located. Sales tax is a tax charged by various states on the sale of products or services? You must register with that state and every state's rules are different. Contact a CPA in your state to determine your responsibilities. As a business owner always remember, you are personally liable for sales tax not remitted properly, whether you collect it or not. So get yourself a good CPA.

There are many sources of money to start a business. However, realistically borrowing money from traditional sources such as a bank for a small business startup will be based solely on the credit worthiness of the owner of the business. In other words, you will have to sign personally. The SBA and Business Development Center are good places to start inquiring if your credit is good. If your credit is not good, find an angel investor, a friend or family member, to jump start your idea. A CPA quite often can help you find alternative sources of money, traditional and non-traditional.

If you’re planning on sharing responsibilities, profits and losses, resources and liabilities, then you should make a formal agreement. When everything is going right and you are making money you have a lot of best friends. When things are going great, you do not want one person saying they deserve more than the other. When, and if, your business is losing money, you will want a formal agreement. It is really in everyone's best interest to have a formal agreement when a business venture is involved. You may want to consider a partnership or corporation. Speak to your local CPA about the formation of the business entity.

Generally, you may lease or buy the location for your business. Supply and demand will figure into your decision. A surplus of commercial and retail space may give you the opportunity for some favorable leasing rates, but owning might also be to your advantage. Owning provides you with the tax benefits of capital appreciation of the property, interest expenses write-offs, equity buildup in the property, the potential for you to lease or rent space for additional revenue and having greater control over the property. Speak to your local CPA about the tax ramifications of buying or leasing and their recommendations of a reputable commercial real estate firm in your area.

A college professor was overheard telling his class, "There are three basic principles for a successful business: location, location, location". You can have the best business in the world, but if it is located in a desert, your business will probably fail. Time and effort devoted to selecting your business location will mean the difference between success and failure. The kind of business you are in, the potential market, the availability of employees and the number of competitive businesses in your neighborhood should all be determining factors in your choice of location.

The price of goods or services is based on three basic production costs: direct materials, labor and overhead. After you determine this unit cost, you will need to determine a unit price to cover your production costs and achieve your desired profit margin. This amount should be acceptable in the marketplace. It must be profitable and competitive. The basic economic concept of supply and demand should also be considered in the pricing equation. Speak to your local CPA about your pricing strategies.