1) What type of entity will I form? This is not a question that should be approached lightly. Most people are familiar with the available options (sole proprietorship, partnership, Limited Liability Company, corporation). Going a step further to understand the pros and cons of each option, however, will be important. The type of entity you select for your company will be impactful to both your personal liability and tax considerations.
2) Who will be involved? Whether you elect to enter into business individually or with others, it will be important to determine who is going to be responsible for which tasks. When operating independently, one needs to realistically assess their strengths and areas where they will need assistance. Small business owners, especially initially, tend to take on more than they can handle. Be honest with yourself when looking at the on-going business responsibilities (accounting, marketing, human resources, sales, payroll, etc.) and determine not only from a knowledge standpoint, but also from a time management perspective, what you can realistically handle. When working with partners, discussing up front who has the skill set and capacity to handle these respective tasks will be beneficial.
3) How will I manage my finances? This question can be overlooked, especially when operating as a sole proprietor. It is important, however, to separate personal and business finances from day one. Not only will it be easier when tax time rolls around but it will also help you more accurately assess the financial position and strength of your business as you move forward. As your business grows, there may be several occasions when it will be useful to have separate accounting – pursuing a loan, bringing on a bookkeeper or accountant, handling payroll and more.
These are three important initial considerations all start-up entrepreneurs should address. Plan today for the future of your business and get started on the right foot.
About Stingray Advisory Group LLC: Stingray Advisory Group LLC is based in Grand Rapids, Michigan. By creating dynamic customized solutions for business growth, we empower businesses and entrepreneurs with the tools to further their development. To learn more or schedule a consultation, visit www.stingrayadvisorygroup.com. Follow us today on Facebook, LinkedIN, Google+ and Twitter for more helpful tips!
Contact the author, Leandra Williams, through email at Leandra@stingrayadvisorygroup.com