Owning and running a small business is hard. There are lots of things to keep up with. You have to file taxes differently. You have to pay people if you are going to have employees. There are many legal issues you need to be aware of and avoid.
Many people make mistakes on their taxes for their business. The process is exponentially more difficult than personal taxes you may be used.
They may not be required by the IRS, but they give you backup documentations for any deductions you claim. Keep a folder for the receipts. Honestly, you should go to a bookkeeper to assist in your ongoing business operations, there are many different small business bookkeeping services that you can make use of that will help you avoid excess work and focus on your core business (they are very difficult to do on your own). They can also do the job quickly and efficiently. Also, remember to track any expenses you can be reimbursed for.
You really need to keep good, detailed books of all money exchanged. This will make tax time much easier. The books will become more difficult as your business grows. Make sure you keep up with business regulations that affect you.
If you decide to take on a business partner, make a good, strong partner agreement. This can cause a lot of trouble if things go south between you and your partner. The agreement should cover several things. Include your goals for the business. Outline what happens if one partner doesn’t comply with the rules. Include a section on selling the business to outline what happens if either of you want to ever sell the business. Outline how much money each partner makes. Outline the role(s) and responsibilities of each partner.
Potential Legal Troubles
Many small businesses fail to set up the right legal structure for their company. It can open you up to liability if you don’t. You also need to have a shareholders’ agreement if you sell shares. You also need human resource guidelines if you have employees. You can get in trouble if you don’t have a handbook. You need specific guidelines for your employees’ jobs. Keep up with all of the laws surrounding employees. Decide if you want your employees to sign non-disclosure agreements or anything similar. Do not, do not, talk trash about your competition. Don’t do it publicly or anonymously. Be careful not to commit libel against them. Also, it just looks bad as well. You can compete civilly. If you have created something with this company, you should get patents or copyrights or trademarks. Keep your work your own. Be very careful if you are dealing with users’ information online as well. This can cause chaos if you get hacked.
When starting a business, make sure that you do plenty of planning before leaping into it. Make sure you are ready to take on the responsibility of a legal entity. Decide early on if you want to have employees or not. If you take on a partner, make an agreement between the two of you. Enjoy being your own boss and the freedom that entails.