Starting your own business can be exciting and daunting all at the same time. In today’s DueNorth Insight, I’d like to touch on a couple of key areas, that as an advisor, we like to help our clients work through when they decide they’re going to start a new business. Obviously you have what you’re going to do, what product you’re going to sell or what service you’re going to offer down the road. That’s the easy part.
The next part is figuring out, how should the entity be formed. Should it be a sole proprietorship? Simple. Should it be an LLC? It provides tax advantages. Or should it be an S-Corp? Or should it be a partnership? All those are different questions, and they all have different advantages and disadvantages.
If you want simplicity, but tax advantages, an LLC taxed as an S-Corp might be the way to go. But maybe you want to have a little bit more control over who has ownership and how the revenue and profits are paid out from the business in which case a partnership might be a good option. All of these are different questions and answers that you might not know right off the bat, and quite frankly there’s not a one size fit’s all. You need to talk with an advisor, you need to work with an advisor to be able to ask the questions and figure out what is right for your specific business.
The second key area that we like to focus on is insurance. It’s easy to gloss over this aspect, but to make sure that the insurance you have in place that was your personal insurance, is consistent with what you’re going to need now that you’re going to run a business. Maybe you’re running your business and you’re using your car as part of that business now, your personal insurance might not be enough. And so, discussing those gaps and what we need to do to make sure that the adventure of starting a business doesn’t turn into a catastrophe are different areas that we’re going to look through.
And finally, how are we going to fund the business? Are we going to use cash? Do we have savings saved up? Do we need to look at an SBA loan? Do we need to look at personal financing? All those are questions that are really important to ask yourself, but we need to have some further follow up questions to identify what makes the most sense.
Starting your own business is an exciting adventure. Making sure you have a partner there to get through that adventure and are on the right track is also very important. That’s why I would recommend working with an advisor, that knows what you are looking to do, and to get you on that right path. And that’s today’s DueNorth Insight.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.