In this video, I will discuss the decisions that need to be made when starting a business, as well as, the elements of a successful small business. I will also talk about the tax filing responsibilities you may encounter, from collecting and paying sales tax, to the various IRS registrations that are required depending on what you will be selling. Other topics include maintaining proper financial records and the need for a dependable payroll service.
The first decision to be made is the selection of the business entity. Are you going to be a Corporation, an LLC, a Partnership, or some other business entity allowed by the government? A wrong decision at this point could be disastrous for your new business down the road.
There is a lot of information out there that talks about LLC's and corporations and partnerships and you're probably wondering what all that means to you as a taxpayer. I suggest you consult with your CPA to go through each of these because there are a lot of variables. It is important to determine what entity suits you best for your business and for your tax situation.
Once you have selected your entity, you need to know what filings you are responsible for. For instance, in the state of Florida if you are going to sell tangible property to consumers, you need to register to collect and remit sales tax. You also have registrations with the IRS that must be completed so that you can pay certain taxes on time. It would be helpful to sit down with your CPA and map out on a calendar listing all of the filing requirements that you're going to have, specifically the date driven requirements.
Once you know what entity you are going to have and what your responsibilities are to comply with the tax laws at the federal and state levels, you need to get our books in order. That is not just a cliché. You need to have good clean books and records. By that I mean there is no commingling of business and personal funds. There needs to be a clear chart of accounts, where income, assets, and liabilities are posted. There also needs to be a weekly, monthly, or at the least a quarterly review of those financials to make sure that everything is in good order. As your business grows those financials are going to become more and more important. Especially if you seek outside financing. The first thing that a bank or an investor is going to want to see are those financials and if they are not in good order that is going to create a problem.
Another element of a successful small business is that of payroll. As your business grows you are going to find that you can no longer wear all the hats and do all the things yourself. Therefore, you are going to have to bring on people to help. This is a great problem to have, but you have to be very sure that you start off on a good foundation and you hire the right people and you have the right compliance in place. For the state and federal authorities payroll can be very complicated. I personally recommend that people seek out a dedicated payroll provider. Payroll services have fully automated systems to handle all of the compliance and will make your life a lot easier, I assure you of that.
Finally, do not forget the step of contacting a CPA and sitting down with them and really poring over the topics that we have brushed on today. There is so much more to it and it is so critical that you get these things right in the beginning, it will serve you well over the life of your business and you will be happy that you did.
If you have any questions, comments, or ideas for future videos, please let us know.