Starting in hard times? Plan and prepare
“A negative economy has little effect on a given business’ survival. Businesses started in expanding economies in 1995 and 2005, those started just before the downturn in 2000, and those started just after the downturn had almost identical survival paths”
BLS, Business Employment Dynamics
Many new small businesses go under within their first two years, but usually the failures can be explained. Knowing the pitfalls associated with a new business and having a professional team, especially a CPA (certified public accountant), can maximize your chances of success.
Being your own boss is exciting. It also means hard work and risk taking when you start a new business. You can be a successful business owner if you already have or can learn the right traits, such as being a self-starter, goal-oriented, committed and resilient, to name a few.
You have what it takes. Now what? You need to do your homework.
Where’s the best location for your business? Do your market research.
Should you buy an existing business or start from scratch? Here are some things to consider:
* You take on more risk if you build your business from the ground up.
* Because a start-up has no previous track record, raising capital to acquire an existing business with a proven track record of success may be easier than a start-up business.
* If you decide to acquire an existing business, engaging a CPA to assist in the transaction is advisable, and will be mandatory at some step of the process for financial credibility and tax purposes.
What’s the best type of ownership for your business (sole proprietorship, corporation, partnership, LLC, S corporation)? There are advantages and disadvantages for each type of ownership.
Which software and accounting method is appropriate for your specific business needs? Do you need a business plan? How can you raise capital for your business? Should you buy or lease? Your CPA can advise you on the best form of ownership for your situation. They can help you decide on the software and the appropriate accounting method unique to your business. A CPA can assist you with a business plan and make suggestions on methods of raising capital that are appropriate for your model. Your CPA can also provide you with what-if scenarios to identify hidden consequences, and to decide whether to lease or buy assets for your business.
You must comply with the state and local licensing requirements before you make your first dollar. These include state registration, state and local sales and use tax license, and local business licenses and permits. You’ll need to apply for a federal employer identification number (EIN) if you plan to have employees, or if your business will not be owned as a sole proprietorship. Your CPA can advise you on the various tax reporting requirements and due dates of the reports.
Your business is now ready for operation. You must keep good accounting records for the preparation of year-end taxes as well as other compliance reporting. Examples include preparation of payroll reports and other government forms. Your CPA can also provide advice on estimated tax payments you should make during the year. They can prepare you for an IRS audit, if necessary. Let your CPA help you with the record keeping and compliance issues, while you concentrate on running your business.
Your CPA can help you monitor the growth of your business and provide assistance with the sale of your business when the time is right.
You need to have an experienced CPA on your side when you start a business. CPAs must pass a national exam and are licensed by individual states. The right CPA can help you launch your business, assure long- term success and prevent costly mistakes. Hire a CPA for your immediate small business consulting needs and potential challenges.
Having a CPA from the start will help your small business to succeed. From making the correct decision on the type of ownership to the sale of your business, your CPA is there through all the cycles of your business adventure.
Kam L. Chan is director of tax administration for Barnard Vogler & Co. in Reno. Contact her at 775-786-6141 or firstname.lastname@example.org.
Per the agreement, Caesars will continue to operate Harrah’s for the first half of 2020 before it’s redeveloped into a non-gaming hotel and mixed-use development.