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Things every small business owner should know

cupsofcoffee37472685.jpgWhile small businesses seem to abound everywhere, the reality is that many small businesses fail within, their first year of business. However, savvy small business owners know things that can help improve the odds that their small business will succeed. While it can be overwhelming and intimidating, to try and start, and keep a small business going, if you know certain things, it can make it a little easier. Here are things that every small business owner should know-

  • Carefully choose the legal structure-This is an important step because the legal structure you choose can have big ramifications, in the future. Most small businesses start out as sole proprietorships, which means that they have no boundaries between the business and the personal assets of the owner. In the beginning the risk is minimal; however, as your business grows, and you have more assets, your legal risk grows as well. Choosing another legal structure such as corporation or LLC, gives you much better legal protection. This can mean much greater legal protection, should your business have trouble in the future.
  • Manage your tax liability-When you own a small business, paying taxes is a little more complicated. How much tax you are required to pay depends a lot on your business structure. There are some small businesses that pay quarterly taxes, while others only pay taxes on what they make. If your small business is a sole proprietorship you may only be required to pay taxes, as a part of your personal income tax. You need to be clearly aware of what your tax liability will be, and the resulting fines and penalties if you can't pay them. You should also be aware that it is required that you pay the appropriate payroll taxes, no matter how many employees you have. The IRS holds business owners of every size in strict accordance to the law when it comes to paying taxes on their employee's payroll. You should fully understand what your responsibilities are when it comes to this.
  • Have the right business insurance-You need to educate yourself as to exactly what types of insurance you should have, for your business. Most businesses (even when just starting out), will require several different kinds of insurance. Some small business owners try to cut corners and get away without it, usually with disastrous results. You need to understand exactly what your risk is, for getting sued and whether your business could survive without the appropriate insurance. Depending on the type of small business that you run, this risk varies widely. However, if you are a small business that has any amount of valuable assets, you face a risk of getting sued. Small manufacturing businesses should be especially careful about having the right insurance, since the fact that they make their product, gives them even more liability. The bottom line is you should be prudent and be smart, and get the right kind of insurance to protect yourself.
  • Make sure you get paid-You would be surprised to learn how many small businesses struggle to get paid. You must keep in mind that no matter how many items that you sell, if you can't get paid, you aren't making money. You may want to be the nice guy when it comes to collecting money; however, that doesn't pay your bills either. Working for free is the fastest way to having to shut your doors. Have a clear policy on payment and make sure that you are very deliberate about who you extend credit to. Make sure that everyone (most especially your clients) understands your payment guidelines, before any sale is finalized.
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