Starting a Business? 3 Things You Must Know
Many new owners focus on the product or service and leave the paperwork for later. Three issues deserve attention before you open your doors, because fixing them afterward costs more.
1. Your choice of business structure matters
How you organize determines your personal liability, how profits are taxed, what filings you owe and how easily you can bring in partners or investors. A sole proprietorship is simple, but offers no separation between you and the business. An LLC or corporation can protect personal assets from many business debts, though not from your own mistakes or personal guarantees. Partnerships and S corporations have their own tax and administrative rules.
No structure is best for everyone. Think about the risks of your business, your expected profit, and your long-term plans. Our formation services can help you compare options and handle the filings.
2. Your taxes begin on day one
Owners are often surprised that no one withholds tax from their business income. Depending on your structure, you may owe income tax, self-employment tax, sales tax and payroll taxes. You will likely need to make quarterly estimated payments, and falling behind brings penalties and interest.
- Get an employer identification number if your structure or plans require one.
- Register with the Georgia Department of Revenue where needed; see dor.georgia.gov.
- Set aside a portion of each payment for taxes in a separate account.
- Learn which start-up costs you may deduct and which must be spread over time.
Our tax planning and business tax preparation services can keep you on track.
3. Good records and a plan for cash are essential
Most failures stem from running out of cash rather than from lack of customers. Open a separate business bank account from the start, record every transaction, and review your numbers monthly. Accurate books make taxes cheaper to prepare, support loan applications, and show you where the money goes. See our bookkeeping services.
Build a realistic budget that covers startup costs, a cushion for slow months, and your own living expenses. A written business plan forces you to test those assumptions before you spend.
If you are starting a business, contact us and we can help you get the foundation right.
This article is general information, not tax, legal or investment advice for your specific situation.