Smart Money Moves to Make Before Starting Your Business
If you dream of being your own boss, setting your own schedule, and watching something you created skyrocket from the ground up, then being an entrepreneur is a great idea. However, you can’t just start a business without first giving it some true thought and understanding the moves you need to make for it to happen. After all, starting a business is an investment, and if you don’t make smart choices with your finances, it could end up costing you a fortune. Instead of putting your hard-earned money at risk, make these smart money moves before you start your own business.
Find the Startup Capital
Your business will require money to get started, so you need to ensure you’re finding the right startup capital. Thankfully, there are a variety of ways to do this. For instance, maybe you are going to fund the business yourself. Maybe you have an investor, or will take out a business loan, or will opt for an online fundraiser. No matter what you do, determining how much cash you’ll need and getting it is the first step to starting a business. Be sure to have an accurate business plan written up if you’re going after investors, as they want to ensure they’ll be making money off the investment.
Set up an LLC
As a business owner, you have a variety of options when it comes to setting up your business. For instance, you can opt to do a sole proprietorship, a corporation, or an LLC. In the event of a lawsuit or other negative event, an LLC will protect your personal assets from becoming damaged in a business mishap. By making this legal, you can ensure that a failed business won’t have a negative impact on the money or assets you have for personal use.
Separate Your Accounts
When starting a business and using your own money, some people just use their personal credit or debit cards to make purchases needed to get the business off the ground. While this is definitely the easiest thing to do, it’s not the smartest. When starting a business, you need to ensure you have your personal and business money in separate accounts. This will help you when it comes to filing taxes and keeping your accounts accurate. If you keep all your money in one account, it will be difficult for you to accurately report on your business at the year’s end.
If you need to fund your business from your personal money, be sure to keep records. The best way to do this is to leave a paper trail. For instance, instead of taking cash out of the ATM and putting it into your business account, write your business a check. This way, you have proof of what the money was for, which allows you to provide detailed records and keep things clean between your personal and business expenses.
Insure the Business
Businesses can take off and do great, or they can be a big flop. While you hope your business will be successful, there’s always the chance it won’t be. For this reason, you want to have different types of insurance on the business. For instance, business liability insurance will protect your company if it is ever involved in a lawsuit, while worker’s compensation insurance will protect you in the event an employee is injured on the job. There are different types of business insurance options out there, and not all of them are the right choice for your specific business. To adequately protect yourself, be sure to talk with a professional business insurance provider to get you the protection you need, even though you don’t hope to use it.
Look for Incentives
Some states, towns, or private organizations want to see people succeed as entrepreneurs, so they provide grants or assist with business incentives, such as tax breaks. Be sure to look for the different incentives that may be available to you to start your business. Doing so can help you lower your costs or make smarter money decisions for your business, which can reduce the need for start-up cash on your end. Check out the Small Business Administration or talk with your local government to see if they provide anything worthwhile. Then, when you find something, be sure to take advantage of it.
Your money and your business are both important, and when you make the right financial decisions, you can help get your business off the ground while also protecting your investment.
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