Important information for every small business owner
If you are planning on opening a small business or you are already a small business owner there is some very important information that you should know. Many of these recommendations can make running your small business much easier. Understanding this information can make the difference between successfully managing your small business and having it quietly fade away. Here is some important information for every small business owner-
- Investigate and carefully choose a legal structure-It is important to realize that the legal structure that you choose for your small business can carry heavy consequences in the years to come. This makes it crucial that you know what all of your options are when it comes to choosing a legal structure. Most small business owners begin their company as a sole proprietorship. However, keep in mind that this does not provide any protection between your personal assets and the assets of your small business. While your risk may be minimal at first as your small business grows the risk will grow, as well. So for further legal protection you may want to consider choosing an LLC or a corporation. However, whatever choice you make you should consult with your attorney or business planner.
- Learn all you can about business taxes-When you pay business taxes it is a little more complicated then when you pay personal taxes. Keep in mind that your business structure will in large part determine how much you pay in taxes. There are some small businesses that only pay taxes on what they make while others will pay quarterly taxes. If you have chosen to remain a sole proprietorship then you may only pay taxes as a part of your personal income tax. The bottom line is that you should be aware of what your tax liability will be. You should understand what the penalties will be if you can't pay them. Finance experts stress that you also need to be aware that you must pay accurate and full payroll taxes at all times.
- Protect yourself with the right insurance-Every small business owner should become totally familiar with the different types of business insurance that they need. You want to make sure that you have adequate business insurance to protect all aspects of your small business. Do not be tempted to cut corners by not having the right type of insurance since this can be disastrous. You should have a clear understanding of whether your small business could withstand getting sued and still survive. Keep in mind that this risk will vary from small business to small business which means that you should never assume that someone else's risk is the same as your own. Make sure that as a small business owner you are both smart and prudent and purchase the right kind of insurance to protect yourself.
- Set up an accounts receivable policy-Many small business owners do not take into account that it can be difficult to get paid. It is important to always keep in the forefront of your mind that sales alone won't keep your small business going if you aren't getting paid for them.While you may think that collections is not a nice business it will make the difference between having a small business that continues to survive and one that fades away. You simply cannot work for free. You must have a very detailed payment policy and be very careful about who you extend credit to. You should take the time to do a background check on anyone who you may be considering extending credit to. You should make sure that all of your clients have a clear understanding of your payment guidelines before you make any sales to them.