Remember the Butcher, the Baker, and the Candlestick Maker? Before you start your home-based business, you need three very important supporting partners. You need an Attorney, a Banker and an Accountant in your corner from the very start. Starting a home-based business is an exciting time and the rewards can be tremendous! But too many times people get caught up in the whirlwind of marketing their business and forget that it’s a business. Frequently these people are the ones with headaches and frustration at tax time, and they are often the ones with unexpected surprises and disappointments along the way.  By setting up a relationship and meeting with your Attorney, Banker and Accountant in advance, your business will be off to a smooth start.
Start with an Attorney. You need to set up your business so you and your family have limited risk exposure from liability suits. That’s right, somebody could sue you for whatever reason, and you need to make absolutely sure that your home, the vacation money and the kids’ college education funds are protected. Your attorney can help you decide which organizational format you should choose, an LLC (Limited Liability Corporation), a corporation or other structure. One decision I discussed with my attorney was whether or not to include my wife in the LLC. Your attorney can help you avoid headaches by advising you of good choices up front, then you’ll have a relationship that you can call on when you need assistance with contracts and other legal matters later.
And get a Banker. If you’re moving fast, you can set up the LLC or corporation first, then go to the banker. You’re going to need an EIN (Employer Identification Number) from the IRS before you set up your business account. Your banker will be a great friend if you need to arrange money transfers, wiring funds, business credit cards, and any number of transactions. Some banks even offer Merchant Accounts so you can accept credit cards in your business. By building a solid relationship with your banker up-front, you’ll be in a stronger position later when you need fast action or even a line of credit to support your business.
Finally you need an Accountant up front as well. Accountants aren’t just for tax time. Your accountant can advise you on which financial management system to use. Mine recommended Quick Books PRO. Here’s the kicker, she even offered to help set it up. Now I don’t know about you, but that’s a real help for me, a custom-installed accounting system for my business. Depending on your transaction volume, you may want to outsource your bookkeeping (data entry) to your accountant or a bookkeeper. Also your accountant may have some advice about how you pay taxes. For instance, having your LLC taxed as an S-Corp. By building a relationship up front, your accountant can help you make sure you have the right accounting system, set up the right way, and that you are processing transactions correctly. This will dramatically streamline things at tax time, and that’s when your accountant will be your new best friend.
So get your home-based business started right by building relationships with an Attorney, a Banker, and an Accountant. A little bit of effort up front will pay off strong dividends in the long run, and you’ll have a stronger, smoother running business from the outset.