5 Guidelines for Entrepreneurs to Follow
Starting your own business could lead to the financial freedom you have desired all your life, but it is a risky move. If the business is not a success, it usually makes a mess of your personal finances. Thus, before you venture out on your own, consider the following tips:
- Diversify. If you invest every penny you have into the business and it fails, the result is devastating. It is imperative that you have a separate means for dealing with potential negative events. In other words, make sure you have a fallback. The standard advice is to maintain an emergency cash fund that will cover three to six months of your bills. However, for entrepreneurs this amount should be even larger if the business is the sole income source.
- No Co-Mingling of Assets. It is imperative for the business owner to keep business and personal assets and debts separate. Not only is this important for tax purposes and the deductions your business can claim, but it is also necessary to maintain the shield from personal liability.
- Conservative Investments. Starting a business is high risk, so your other investments should be fairly conservative. This includes stocks, real property, bonds, cash and other types of investments that can lessen your overall vulnerability.
- Proper Insurance. In order to mitigate certain risks, an entrepreneur should consult with a professional to determine what types of insurance policies are helpful. Many small business owners forego disability insurance which is a costly mistake. When a business is first getting started, the owner is the primary asset and if he or she becomes disabled, the business is likely to fail.
- Prepare for Taxation. It is imperative that you confer with a tax expert to ensure that you set-up your business structure properly and maximize your tax deductions. The IRS rules can be tricky, so having a professional assist you can help you avoid making costly mistakes.
At Nielsen Law Group, we will not only help assist with what is the best structure for your business, but will also aid with the additional details that will foster a strong foundation and get you started on the road to success. Whether you need assistance forming your new business entity or establishing a more sophisticated corporation or non-profit organization we will be able to guide you the entire way. You can schedule your initial consultation by calling (480) 888-7111 or submitting a web request here.