We often get requests for a list of best practices from people who are starting a new business venture. Here is a practical, but by no means exhaustive list of best practices. Realize that selecting the type of business entity best suited for your situation is complex, and it is best done with some support from a CPA or your lawyer. You will want to protect your personal assets from a liability suit directed at your company. You can do this by creating one of several forms of Limited Liability Business organizations, such as an LLC, Corporation, S Corporation, Partnership etc.
If you are purchasing an existing company or a franchise, you should engage the services of a lawyer or CPA as quickly as possible. There are significant tax and accounting issues associated with these kind of ventures.
INITIAL COMPANY SETUP:
- Set up your Limited Liability business organization. We assume you are in Florida, so you will set up your business on the Florida SUNBIZ Web Site.
- Obtain a Federal EIN number. This number is used in lieu of your social security number, in all your business reporting requirements. It limits exposing your social security number in your business affairs.
GENERAL OPERATING BEST PRACTICES:
- It is best to use a separate checking account and a separate credit card for your business. There are banks that offer totally free checking. If you are highly disciplined and will pay your credit card balances monthly, the use of a separate credit card provides great tax documentation. Most provide year end summaries of all your expenses for the year.
- Keep all receipts, even if you used a credit card.
- It is unwise to comingle your personal and business expenses in the same bank and/or credit card accounts. Pay your personal expenses from your personal bank checking account, debit card, or credit card.
- Maintain an Auto Mileage Log, documenting each trip destination and the associated miles. There are two ways of recording your business auto expenses on your business tax return: Standard Mileage and Detailed Auto expenses. We will explain these further in future blogs.
- Maintain records of all equipment purchased, such as Autos, Trucks, Computers, Laptops, Cell Phones, Tablets, Desks, Filing Cabinets, etc; with date purchased and total cost (include sales tax and shipping).
- If you are in retail, be aware of the need to obtain a FL Sales Tax Certificate and collect and report FL Sales Tax.
- If you have or will have employees, be aware that Payroll can be very complex and the reporting requirements are arduous. I strongly recommend you engage the services of a Payroll provider. Services are inexpensive and save countless hours of work.
- Success in your new business venture often depends on you, your vision, your marketing skills, your focus, your products, and your customer relationships.
- Success does not depend on your bookkeeping ability, payroll skills, filing regulatory reports, or tax preparation skills, unless you are opening a Public Accounting company. If you spend too much of your time on these tasks, you diminish the amount of time you can spend on growing your business. In the initial stages of a startup, the more time you can spend on growing the business, the better your chances of success.
CPA Accounting and Tax Solutions can help you with any or all of these business startup issues. We are reasonable, fast, and responsive.
We will do a free initial consultation on your new business. Call us at 239-596-6050 or email me at Joe.Daniele@CpaAccTax.com. Review our service offerings on this web site.
We wish you health and success. In future blogs in the New Business Start Up series, we will cover tax deductible expenses, tax reporting issues, use of a home office, and other related issues.