The best thing you can do for your business is to treat it like a business.
I believe that everyone can succeed and be happy with the right encouragement, inspiration, and motivation that is why I work to provide resources designed to encourage, inspire, and motivate people to be their best at work and home. One of those resources is my series of 20 Tips for Entrepreneurs. This article will introduce you to some important business ideas and get you prepared for the 20 tips series.
Each year in the United States 627,000 businesses are started. Twenty percent of them are gone at the end of the first year. After 5 years, 50 percent of those businesses are gone. It is my hope that the 20 Tips for Entrepreneur Series will help more people stay in business, be happy, and be profitable. Before we delve deep into the 20 Tips, let’s talk about some basic principles for business and accounting.
Treat your business like a business.
When you are an entrepreneur, you must treat your business like it is a business. That means you will not mix your business assets with your personal assets. Start by giving your business a name and wherever possible incorporate your business. When you incorporate your business you create a new “person” who handles the business. When you incorporate and
One of the most important things to do when you are a business is to incorporate so that you protect your personal assets. Open a separate bank account for your business. In some parts of the United States the banks require significant sums in order to open a business account. If your business is new and you cannot afford to open an official business bank account, open a personal account and use it solely for business purposes. If you want to protect your personal assets and show that your business is separate from you as a person, keep the money separate.
Next start signing contracts in your business name. When your business is young, there will be companies and financial institutions that want you to sign to guarantee the debts of your business. This is fine. It may be the only way your business can get in certain doors. When this happens, make sure the contract says that you are signing for the business and keep the money in your separate business bank account. In all you do, treat your business as a separate person. If you need help to do this, think about Clark Kent and Superman. Clark Kent never fights bad guys or flies off to save the day. Superman does not have a byline or write articles for the newspaper. The two entities are separate. Think of yourself and your business in this same manner.
Pay attention to the numbers and the money – it matters.
When you are in business, it is important to keep in mind that there are federal, state, and local laws that must be obeyed. Pay attention to them and make sure you are following them as you should. There are laws, regulations, and taxes from all three levels of government that your business must take care to obey and follow.
Accounting is another area where businesses often get into trouble. Let’s start with my favorite warning – do not try to cheat the IRS. Instead, pay your fair share of taxes. If you have been in business through more than one tax season, use last year’s tax return to estimate this year’s tax liability. Set up a bank account to save money to pay your taxes. Review your tax obligations to see if you need to make payments to federal or state authorities on a quarterly basis. By paying your taxes when you should, you can help avoid penalties and interest charges for non-payment.
Review your income and expenses at least once per month. Look at the current situation and review how things have gone over the past 12 months. Pay attention to cash flow trends. In order to be most successful, you must know when income comes into and out of your business. If you understand terms like cash flow analysis, break-even point, and profit and loss, good for you. If you do not, get an introductory level accounting textbook or cheat sheet and learn. No matter what your business is, you must pay attention to and understand everything about the money in your business.
Many entrepreneurs think that if they created a business plan before their business started they don’t have to pay attention to it again. Others think that if they were able to start without a business plan they don’t need one. Both of these entrepreneurs are wrong. Business plans are living breathing things. Review and revise your business plan on a regular basis. When done properly, someone can pick up your business plan and run your business if something happened and you had to step away for a time.
Begin with the end in mind.
When you start your business, have a plan for your retirement or exit from the business. What do you want to happen to y our business when you leave it? If you do not have an exit strategy, create one and begin taking the steps to make it happen. If you want to leave your business on your own terms, you must know what those terms are and the plan for getting there.
It is a magnificent thing to be a business owner. entrepreneurs are true superheroes. Be sure to pay attention to the numbers and run your business properly. After all, if you take care of y our business, your business will take care of you. So, the question for you this magnificent day is, what are you doing to make your business a success?