Launching your first startup can be a daunting feat.
At Holloway and Associates, we’ve worked with a lot of new and seasoned founders, including helping set up different business and tax structures for them to ensure they’re off to a good start.
Although every client has their own goals, we decided to break down a few commonalities we see out of startups for you to consider. While we ultimately advise speaking to an expert before you get started, these are a few common touchpoints we’ve seen. Check them out below:
Know Your Structure
The business structure of your startup is going to be what defines how you’re taxed. Regardless if it’s an LLC, partnership, cooperative, corporation, or S corporation, every structure is going to have a different set of laws you need to be mindful of. Ultimately, the biggest factors you should consider tax-wise for your business formation is how many members there are, who’s liable for what, and how many employees you’re going to have. As there are a lot of intricate details that go into the formation of a business, it’s important to talk with both an accountant or lawyer who has the experience to suggest formations from the jump.
Sign-Up For A Business Checking Account
Regardless of what type of business formation you pick, it’s a vital step to sign up for a business checking account. Not only will this help you keep track of accounting and expenses, but you’ll also have a hub to understand how the money is flowing. Even if you’re a sole proprietor, there’s a big difference in using a separate business account when it comes to keeping track of income and expenses versus using personal checking. And if you haven’t signed up for a business account, some of our early favorites are Azlo, TIAA, Novo, or even a credit union. All of them give good rates, with some waving any balance minimum.
Establish A System For Keeping Track of Expenses
Even with business checking, there are still a number of expenses you or your partners are going to experience. For this reason, it’s smart to have an app or piece of software that helps keep up with what you’re spending and where. This will keep everything organized, as well as help aggregate and reconcile a lot of what’s incurred personally versus the business. Expense tracking also is what’s going to help with defining what losses you incur, which is helpful information when it comes tax time.
Take the time to work with someone on what reasonable expectations you should have for write-offs…
Familiarize Yourself With Write-Offs (before you start spending)
As almost every business can utilize write-offs in one way or another, which is why knowing what’s acceptable for your industry is a must before your start spending. Although you should speak with a tax expert on what exactly is applicable for your business, knowing what type of write-offs you can incur will impact your spending quite a bit. Take the time to work with someone on what reasonable expectations you should have for write-offs, highlighting how you should be directing your spending to maximize your tax savings.
Don’t Forget About Healthcare
Finally, as healthcare is a hot button issue for small businesses, it’s important to know just how the structure should work for your company, as well as what tax liability you might be held accountable for. As it currently stands, there are a few options out there per state on healthcare plans, however, it’s best to consult with an expert on both what’s best for your team, as well as how tax liability works for each. As health insurance is now a requirement that almost every accountant to deal with, finding a straight-forward solution will be something your tax expert should have a good grasp on.
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