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It's a new year, and for many of us, that means starting a small business. Starting a business is something that comes with a lot of excitement and apprehension. To that end, we're here to offer you our top three tips for starting a small business in 2011.
You need to have a plan in place for your business from the beginning. Who are your potential customers? What are your expenses? Where will the money come from?
The business plan doesn't have to be long. It just needs to cover a few essential points. For example, a break-even analysis, a profit-loss forecast and a cash-flow analysis. A business plan is crucial because it will help you to get your business on paper, long before you open your doors.
Most businesses start out as sole proprietorships. While easy to form, a sole proprietorship exposes you to liability for business debts and judgments. That means creditors can come after your personal assets, like savings accounts and homes, once the business' money is depleted.
While you should maintain proper insurance, it is also often worthwhile to form a corporation or limited liability corporation (LLC). These business structures will shield owners from personal liability, although their protections are not absolute.
You know what they say about death and taxes. You definitely don't want the IRS coming after you and your business. The IRS imposes penalties and can even come after your personal assets you don't remit payroll taxes on time.
Also, make sure you pay your bills on time. If you don't, you may find it difficult to form business relationships in the future. Plus, if you stay current on your debts and pay them as you incur them, it will help you avoid being overwhelmed by cash flow problems if several debts come due simultaneously.