Starting a Business? The Devil Is in the Details
People are remarkably creative and constantly finding new ways to earn a living. Often, those ideas evolve into a new business. As exciting as that process can be, there are a few basic—but critical—steps to take before getting started. While many entrepreneurs focus on the big-picture vision, it’s often the overlooked details that have the greatest impact down the road.
Don’t Overlook Recordkeeping
I’ve met with many individuals just beginning the process of forming a business, and one of the most common oversights in the early stages is recordkeeping. Issuing contracts and invoices to customers helps ensure that expectations are clear on both sides of a transaction. Being ready to issue receipts, especially for cash exchanges, is equally important.
New business owners are also often unsure which expenses are tax-deductible. The best approach is to keep receipts for every purchase so their deductibility can be assessed at tax time.
Tracking Income and Expenses
So how should you track income and expenses? There are several options. Accounting software can make the process easier, but if the business is simple, a spreadsheet may be enough. For those who find managing numbers overwhelming, hiring a bookkeeper can be a smart move. The more organized your records are at year-end, the less time (and money) your tax preparer will need to spend on your return—saving both cost and frustration.
Other Essentials for New Business Owners
In addition to strong recordkeeping practices, new business owners should also:
- Obtain appropriate business insurance.
- Keep a contemporaneous log of business mileage.
- Open a bank account in the business’s name.
- Always separate personal and business transactions.
Helpful Resources
Beyond these essentials, there are other steps worth reviewing before launching your venture. The IRS’s Publication 583, Starting a Business and Keeping Records, offers helpful guidance, and the U.S. Small Business Administration’s 10 Steps to Start Your Business provides a comprehensive checklist for new entrepreneurs.
Start on Solid Ground
They say that if you do what you love, you’ll never work a day in your life—but even the most passionate business requires structure. Keeping accurate, ongoing records and addressing foundational details from the start can make a world of difference. Before you open your doors, consider meeting with a tax professional to discuss these critical steps and start your business on solid ground.
