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Financial Advice for Starting Your Own Business

So you think you might want to start your own business? Be your own boss? Answer to no one but yourself? Be in control of your own destiny? It sounds very appealing and many people do it successfully, but there are a few things you should know before you give up your job and a steady income.

Let's assume that you've already done the research, learned what it takes to be successful at owning your own business, talked to other small business owners or independent financial advice contractors, determined that you have the necessary knowledge and personality to be successful on your own, and can live without the certainty of a steady income. Let's jump right into some of the basic financial issues of having your own business.

Separate Your Bank Accounts--Set up a separate banking account for your business.

Don't mix your business and personal accounts.

Consult an Accountant--Find an accountant to prepare your annual tax returns, give you tax planning advice and other financial business advice. While you might be able to prepare your tax returns yourself using a program like Turbo Tax (depending on what kind of business you're running), you could save yourself lots of money by having at least a preliminary consultation with an accountant regarding how to benefit the most from your business and avoid tax pitfalls.

Talk to Your Insurance Agent--Let your insurance agent know if you're running a business from your home. At the very least, you may need a rider to cover computer equipment used in your business. If your business involves inventory, you'll probably want it covered by insurance, and if you have employees, you'll need workers compensation insurance and liability insurance.

Contact Your State Government--Contact your Secretary of State's office to find out if there are forms you need to file. If you're selling a product, you may need a vendor's license and you'll also need to register to collect and submit sales tax. If you have employees, you'll need to register to withhold and submit income taxes to the state and federal government. You may also need licenses from the state or your city or town.

Determine If You Need a Federal ID Number--If you're a sole proprietor (no employees) and are not incorporated, you probably don't need a separate Federal ID Number (FEIN), but if you're incorporated or have employees, you do. You can download the form from the IRS Web site.

Familiarize Yourself With the Law--You'll need to educate yourself about laws that you'll be required to follow, which may include OSHA (Occupational Safety and Health) regulations, Workers Compensation laws, Unemployment Insurance, employment laws, etc. Don't jeopardize your business and your personal financial advice assets by being ignorant of laws governing hiring and firing, hours worked, employing minors, overtime, safety regulations, tax filings, etc.

Learn About Filing Estimated Taxes--You'll have to file quarterly estimated income taxes and self-employment taxes to avoid penalties at the end of the year. Contact the IRS and your State Income Tax Department for forms and instructions.

Automate Your Accounting--No matter how small your business, you can benefit from automating your accounting. QuickBooks and Peachtree are great systems for small businesses and are non-accountant-friendly and easy to use. You'll manage your business better with the reports generated by these software programs.

Give your business a fighting chance by building a good foundation with these basics for getting started in your own business. The links below are a great starting point. (Want to read more articles about Financial Business Advice, please visit: financial plan)

How to Create a Financial Plan

A personal financial plan advice provides strategies for dealing with periods of personal hardship and helps develop a prudent economic agenda for you and/or your family.

Steps:

1. Divide your financial life into six categories: assets, liabilities, property and casualty risk (house, car, personal injury and so on), personal risk (life, health, disability and so on), education (for children, if applicable) and financial retirement advice.

2. Put a dollar figure to each categories.

3. Add up all assets, then add up all liabilities.

4. Subtract liabilities from assets to calculate your net worth.

5. Evaluate your lifestyle if the net worth is negative, and investigate ways to pay off debt.

6. Develop ways to build on your existing budget. If your net worth is positive, your priority will be to evaluate your lifestyle, transfer "insurable risk" (see the glossary) to insurance companies, and invest more to create more wealth.

Tips:

• Lifestyles change, so make your financial advice plan flexible.
• Revisit your plan at least once a year.
• Unless you have the time and inclination to do it yourself, seek qualified professional advice on matters involving taxes, business and estate planning.
• Integrate your personal values into your financial plan.
• When opportunities and challenges arise, use your financial plan as a standard against which to make decisions.

Source for Business and Financial Advice

Richard Lampner of Wealth Magazine, in interviewing Joe Murtagh says, "financial information abounds. From magazines to the Internet, to personal advisors who claim comprehensive expertise, it surrounds us. You probably have more financial advice and information than you need. So in today's increasingly complex tax and financial investment advice environment, quantity of help is no longer the issue. Quality is."

"Everyone knows different lawyers have different specialties; they come in different packages of skills and ability. If you were put in the position of defending your life, would you go to a general practitioner, or would you put together the best defense team available? (Ask O.J. Simpson, if you're unsure.) If your eyesight or breathing were at risk, you'd see an ophthalmologist or respiratory specialist, right? Of course. But more importantly, you'd want the best financial advice specialist in existence."

"Logical stuff. So it's surprising that many individuals, business owners and professionals are hemorrhaging everyday-money, that is-loyally relying on the hard-working, well-intentioned, sometimes tragically ill-equipped "financial pro's" to help them grow their personal wealth. Where's the logic there? When looking for financial advice of all kinds, why not apply the same diligence, the same resolve that one would use in finding a medical expert?"

Lampner then asked Murtagh… "And your second, bigger point is: No financial advice planner, despite what he or she might tell you, can be at the absolute top of his or her game?"

Not for every specialty, no. But they can be tops at being a powerful source for specialized, superlative advising talent. In all aspects of society, things are becoming more and more specialized, and for good reason: the world is getting more crowded, the marketplace is getting more specialized and complicated, and there's no way someone can go it alone as an advisor.

Lampner continued, "A good financial planner, then, is like a good medical internist: he knows a little about everything, he knows when to send you to a specialist." (Continue to learn more about Financial Business Advice, please visit: go to the source)

Finding Small Business Financing

For many small businesses, the prime source of small business financing is their own pockets. Small business people invest their own savings to start a new business and keep it up and running. They've either built up a nest egg from employment, or do things such as cash in portions of RRSPs to keep their dream of entrepreneurship afloat.

The good thing about this kind of equity financing is that the small business owner retains all of the equity in his/her company.

The downside is that starting a small business and nursing it through the startup phase into a healthy company can be an expensive proposition. Perhaps that's why so many small business people start their new ventures as part-time enterprises, hanging onto their "day jobs" until the financial business advice is able to stand on its own legs.

Even so, the small business person often finds outside sources of small business financing necessary.

In terms of equity financing for startup businesses, the most common sources of small business financing are friends and relatives and angel investors.

Both of these groups will expect "a piece" of your business in return for equity financing. The piece may involve a portion of the ownership of the business, or mean that the investor gets to take an active role of some kind in running your business - or both. But this kind of trade-off may be necessary for you to get your business off the ground.

Once your business is established and has a proven track record, there will be more sources of small business financing available. You may be able to attract venture capital, for instance, or take your company public, selling shares in your company on stock exchanges.

Certainly once your business is established, you'll be able to use your retained earnings as a source of small business financing. Ensuring that you invest some portion of the money your small business makes back into the business is one of the cornerstones of a healthy financial plan advice. (If you want to know more about Financial Business Advice, visit: sb info Canada)