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Setting up accounts for your small business
The first thing that you need to decide on is the amount of liability you are willing to assume.This will determine the type of business that you choose to become.Most small business owners start out as a sole proprietorship.This means that the business owner is the one who is going to assume all legal responsibility for the company.In this financial situation, you are free to manage your accounts in any way that you wish because ultimately you will be the one assuming personal liability for everything that is done.Now, if you are uncomfortable with combining your personal and business liabilities together, as you would be doing in a sole proprietorship, you may want to consider a more corporate entity.In a corporate entity, your personal liabilities are more limited, but the process of taxation is more drawn out and you generally end up paying more in taxes.If all of this seems confusing to you, there are financial advisors who can help walk you through the process of choosing the entity that is right for your business.They can also provide suggestions for the kinds of business accounts that you can apply for under that specific business structure. After you have situated all of your internal accounts, it is time to look outward at the accounts that you will undoubtedly open with suppliers, deliverers, consultants, etc.Setting up credit accounts with these entities is generally a simple process but the management of debts and payments should not be taken lightly.How you manage these and other personal accounts can dramatically affect your ability to receive additional funding from both private investors and financial institutions.Credit and credit worthiness are incredibly important to the new business owner as starting up a new business requires a lot of capital up front, capital that you will likely need to borrow.Be sure that your decision regarding how much to borrow and at what rate to borrow wisely as these decisions can have a huge impact on your profits in the long run. Keep in mind that you are encouraged to search around for the best accounts that are available.Look for things like low interest rates, low or no maintenance fees, and added incentives like rewards programs.Take every opportunity to have your money work for you.Plan to take a good portion of the first several years earnings for your business to re-invest in the business.To do this you will need an investment account.Again, a financial consultant can be very helpful in guiding you through the thought process of what types of accounts are wise to opens and maintain and which ones are not. Although the process of setting up and managing accounts for your business can be complicated, the up side is that your financial situation grows with you.You can start out very simple and add on to your financial plans as time goes on.
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