Tax Tip of the Week: The ABCs for new businesses

“Wherever you go, no matter what the weather, always bring your own sunshine.”

                                  -Anthony J. D'Angelo, Author

Starting a new business can be an unbelievably exciting time!  Unfortunately, due to various governmental agency compliance issues, it can be an overwhelming undertaking. 

The statistics don’t lie. Most new businesses will not make it past their first year. The big question is why?

In most cases, it is due to a lack of accounting systems. A new business can be losing money and not even know it.

We've also seen situations where the new entity was not compliant with a tax or government agency.  Getting behind with payroll taxes, sales tax, or income taxes can be a hole that is seemingly impossible to climb out of.  The penalties and interest associated with back taxes or failure to file can be a huge hit to any business, but especially a new business.

Practicing your ABCs
The above is a lot of doom and gloom. But if you practice the ABCs of business you can build the foundation needed to succeed in the market place.  What are the ABCs you ask? The ABCs are having an active relationship with an Attorney, a Banker, and a CPA who can give you the extra leg up your business needs to get past the first year hump—and on its way to future success.  Below are just a few of the foundational building blocks a great financial team can help with:

Entity Choice:  An Attorney can help your business choose the right legal entity for asset protection and for tax saving strategies. (For more information see Tax Tip #45: Considerations for choosing an entity.)

• Accounting Software:  A seasoned accounting team should be able to get you up and running on accounting software that us right for your new business.  You need to know if you are selling your products for the right prices and if your overhead is in a good place. Good accounting software and systems will answer these questions and more. (For more information see Tax Tip: Getting Organized part II).
• Banking Relationship:  A good relationship with a local banking team can help your business set up separate checking, savings, & credit accounts that are necessary for running a business.  Having these accounts separate from your personal accounts can help you with asset protection issues as well make your accounting for income & expenses easier. You will also need their assistance if you plan on taking credit card payments for your goods and services.

It is a big step when you start your own business—it is best not taken alone. Don't forget your ABCs!

What's your story?
Do you have a story about when you started your business? What did you learn? Share your tips and lessons learn on the Bradstreet Tax Tip Blog

Thank you for all of your questions, comments and suggestions for future topics. As always, they are much appreciated. We also welcome and appreciate anyone who wishes to write a Tax Tip of the Week for our consideration. We may be reached in our Dayton office at 937-436-3133 or in our Xenia office at 937-372-3504. Or, visit our website.
 
This Week’s Author, Mark Bradstreet

-until next week