For this blog post I thought I’d tackle a very important side to running your own business – liability! This dreaded word brings fear to even the most intrepid entrepreneur, but do not flinch, our quick guide will get you going in no time. Here we give you tips and tricks on how to protect yourself from a legal and tax standpoint.
Before we begin
But to protect ourselves, we do want you to understand that this advice is not meant to replace that of an attorney or tax professional. With that said, let’s get started on why these professionals are essential to your success as entrepreneur.
Our three tips centre on making three smart decisions early on – incorporate, get everything in writing and consult a tax professional.
The main reason to consider making your business a corporation is that it becomes its own entity. You can protect your personal property and assets when you incorporate, in the event something happens to you or the business goes south (death, disability, bankruptcy).
To become a corporation, you’ll need to follow the rules of your state. It’s also important to select the right type of corporation for the tax benefits. This is a great guide to becoming a limited liability corporation.
We recommend you consult an attorney for your unique business situation. He/she will help you avoid personal liability in the event you get sued. This is a smart move for just about any entrepreneur, even if you think no one will ever have a reason to sue you.
Get It in Writing
Behind protecting your lovely assets, it’s cool to trust your friends, family and potential business partners and associates. But it’s smart to get it all in writing – always. The reasoning is that if it’s in writing, it cuts out the he said, she said.
You also want to make sure you keep adequate records of everything. Taking a few extra steps to get it in writing and proper records can save you tons of money and heartache.
Consult a Tax Professional
The old saying goes, “there’s nothing certain in life except death and taxes.” Don’t let your taxes become the death of you (or let them cause premature wrinkles). Start out smart and consult a tax professional about the records you need to keep, the business decisions you need to make each year to avoid overpaying and on how to keep your nose clean should the tax guys come looking for you.
Additionally, a bookkeeper may be the first person you put on your payroll besides a CPA and attorney. He/she can help you organize, track and properly document your finances. Smart outsourcing like this can help you get ahead faster because you can focus on growing your business.
Start smart with records and financials and you’ll hit a lot less bumps in the road.
While starting your own business can be filled with excitement and a rush to get things going. You need to consider the long-term future of your business and act accordingly. Forward planning will keep you and your business protected and in a very healthy position in the future. Plan for tomorrow and live for today. This is always my saying.