Starting a new business is so exciting that when many people have the idea for a business they often get ahead of themselves. It’s important to make sure that you have all of your ducks in a row before incorporating your new business. There are a lot of considerations that the new business owner needs to understand and have plans for before taking the next big step.
What’s your plan?
Before you start a new business make sure that you have a strong business plan in place. If there are kinks in your plan or you have concerns about how the plan will translate to real life it’s best to discover that before spending money and time to incorporate. A good business plan will help you understand your goals, cash flow, and how you’ll network. Getting started without one is just silly.
Who will work at the business?
Are you going to hire employees? Or work for yourself? What if it doesn’t take off – or what if it does? Are you in a place where you can quit your current job? Or pay bills without a steady income while your business slowly grows? These are important questions to answer before jumping into your new business. Many people look to family when opening a new business, but this is something that won’t work for everyone. Family and friends can be tricky to work with – especially when tensions run high.
Another consideration the new businessman needs to think about is what kind of money they will be able to infuse into their new venture. Where will this money come from? How will you make sure that your cash flow works? Without emergency money to inject will your business survive? Sometimes the thrill of a wonderful idea takes over and logistics aren’t thought out. Without strong capital many businesses fail. Look into the possibility of a short-term business loan if you think that it’s a good fit for you. A business banker can help you with this decision.
If you are able to address the above concerns and are ready to take the next step then you need to decide what time of the year is beneficial for you to incorporate. If you don’t want to worry about reporting taxes for two years and don’t have concerns about liability, wait to incorporate on January 1. The paperwork for your new business will start fresh in the new year. If, however, you have liability issues to address or will benefit immediately from incorporating, don’t wait – do it now. If there’s no urgent need to incorporate immediately then it’s best to take time to make sure you are ready to open your new business. Rushing in can have grave consequences for the unprepared and your new business will need a solid foundation to start. Every business and business plan is different and it’s up to you as the owner to understand when is the best time for you. Tax advisors can be particularly helpful during this time for you to gain new knowledge.