Why Care About Business Basics?
~by Haley Lynn Gray~
Many times when entrepreneurs start a business, they just hop in with both feet, figure out what they’re going to sell, and get going. They really don’t spend the time to figure out their business basics.
What are those business basics I’m speaking of?
Business basics are things like setting up separate bank accounts, a filing system, accounting systems, incorporation, insurance, and all of the nitty-gritty parts of running a business. They are the operations portion of a business and business set up, and they are critical for a business’ success, yet many entrepreneurs don’t want to be bothered to take the time to focus on taking care of these details.
I can tell lots of hair raising stories, as can others in business, of other business owners who failed to set up their accounting systems, and who ended up spending thousands of dollars in extra accounting fees to finally get their accounting set up. I’ve heard of home care owners who ended up owning hundreds of thousands of dollars for failing to set up their employees as W-2 employees. Let’s stop there for a minute. Hundreds of thousands of dollars owed to the government. That would definitely not make me happy!
I can go on for a long time with stories of people who ended up with fines, who nearly lost their businesses, or actually did lose their businesses for silly things. Quite simply, they failed to set up their business basics appropriately.
Don’t let this be you.
Business Basics Everyone Needs:
- Incorporation. If you are operating a business serving other people, or selling things, you should consult an attorney, and incorporate your business to separate your own finances from the business. This also provides a level of legal protection.
- Separate Bank Accounts. Keep your business bank accounts separate from your own, and keep a log of all of your mileage for your business. You need to do this so that you don’t end up giving the IRS a free loan, and so that you can grow your business. This is also valuable if you ever decide to sell.
- Tax ID. If you incorporate, the business will have its own tax ID. You’ll use that for opening a bank account too.
- Accounting System. If you don’t have an accounting system – even if it’s just a spreadsheet, you have given the government a free loan, as you won’t be able to track your own expenses.
- Filing System. You need to be able to figure out where you stored things, so a good filing system that makes sense to you is super important.
There are, of course many, many more business basics that I could come up with that would be meaningful here, but if you start here, you will be making good progress.
Meet the Author: Haley Lynn Gray
Haley works with female entrepreneurs. The only problem? Many want their business to grow so that they can make money to pay the bills, send the kids to dance lessons, and be able to spend quality time with the kids.
Haley works with her clients to create a strategy plan for their business – so that they can make enough money to spend that quality time with their family, pay for their children’s lessons, pay bills, and not worry about where the next client is coming from.
Haley is a serial entrepreneur and founder of Leadership Girl. She offers Business Coaching, Business Plan Development and Strategy Sessions for entrepreneurs. Whether you want to get a new business off the ground, or expand an existing business, Haley can assist you.
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