For the last 15 years that I have been working as a CPA, I’ve often heard many clients state that they either want to start their own business or have already started their own business. The question that always follows is “what should I do now in order to have a successful business?” That is where we as CPAs can provide significant value to clients as they embark on this journey.
They often tell me how paperwork is not their top priority and they just want to be able to do what they’re good at and nothing more. In addition, there has always been a misconception that having your own business is easy, you make a lot of money, and you get to take off as much as you want. Have you heard the same thing? I’ll tell my clients that the opposite is true and that it takes dedication, hard work, and a good support team working with you to make sure the business is set up correctly and is running well.
In my experience, one client had already purchased a business and was about to open in a week as the new owner. The client was totally lost on what to do next, what paperwork to file, what items he could sale without charging sales tax, how should he pay his employees, and what software he should use. It’s always helpful if clients come to you before they purchase anything or begin their business but that is not always the case.
What experiences have you had in working with clients who want to start their own business? Do they have the same perceptions, or misperceptions, about what it’s like to own a business? Have they come to you with enough lead time that you can provide the necessary amount of guidance?
When I’m working with a client who plans to start a business, I’ve found that a Small Business Checklist can be very helpful. Here is an example checklist that I use:
- Pick a name, develop a business concept, and determine the product or service you would like to sell to the consumers.
- Select and retain accountants and attorneys. Today there are so many tools over the internet on how to set up a new business that it can become very confusing and overwhelming.
- Select a business entity – Sole Proprietor, S Corporation, C Corporation, or Partnerships.
- Establish a business plan for marketing, finance, management and operations depending on the size of the company.
- Initial startup capital –- how much will it take, do I borrow the money, do I take it out of my savings?
- Create a basic cash flow budget.
- Apply for Federal and State ID numbers to use when you are conducting your business.
- Open a business bank account. I always emphasize to keep business and personal income and expenses separate.
- Will the business be conducted in your home or in a separate building?
- What kind of accounting software will fit your company needs? Ask questions such as do I need to keep track of inventory, accounts receivable, and accounts payable, etc.? Who will maintain the records?
This checklist is from THE TAXBOOK that I purchase for each tax season. These are the basic questions that I find I use consistently. There are many websites such as the IRS or IDOR that are helpful to use.
The one thing I always remind my clients is to make sure they do not step completely away from the paperwork because it is a good way to know how the company and cash flow are doing. I find myself very passionate in helping the client begin this new journey and my reward is watching the business grow and the client succeed.
Fun Trivia Question:
I trace my roots back to 1849, when two German cousins borrowed $2,500 and opened a chemical business in Brooklyn. My first product was an almond-toffee-flavored anti-parasitic to treat intestinal worms. Also, I produced disinfectants and painkillers for use in the Civil War and supplied penicillin in World War II. I’ve been a top global producer of penicillin and vitamins. Today, with a market value recently topping $200 billion, I’m a medicine and vaccine giant. Who am I?