Before you start your own company or purchase the assets of another business, you should first do some basic research.  You should review competition in the area for the type of services or products you expect to provide.  Is there is a niche that will provide customers for your products and/or services?  Do you have means of financing your business start up through business loans or available capital?  Many young businesses last only a short time because of the lack of working capital at the time of start up.  Once you have gathered and analyzed data in these areas, you can make an informed decision whether to move forward with your business acquisition--
 

  •  Choose your entity type.  There are advantages and disadvantages to every type of business entity.  You should research the business type that best suits your services or products.  Should you be a sole proprietorship, a limited liability company, a partnership or a corporation?  If a corporate structure seems to fit your needs, should you business be a "S" Corporation or a "C" Corporation.  Your accountant and/or your attorney will be able to assist you with this planning so that you have a thorough understanding of the type entity that fits your needs and the tax implications of each business type.  Tax planning is a very important step in the selection of a business entity.
  • Once you have decided on the business entity type, you need to have an attorney file with the appropriate governmental entity that will legally record your business.  Once you have reserved you business name and have begun the legal process of establishing your business entity, you will need to apply for a federal identification number.  This can be done on line at the Internal Revenue Service website (www.irs.gov.)  Your attorney or your accountant can request the number for you.  A business privilege tax return is required to be filed within two months of establishing a limited liability company, a partnership or a corporation.
  • Once you have received your identification numbers, you need to establish a business bank account to allow all transactions of the business to be captured in that account.  No personal expenses should be paid from this account but you may deposit money into this account from your personal funds or loans. Document fully the source of that deposit. 
  • Are you going to have employees?  Will you be selling inventory?  If so, now is the time to apply for a state tax withholding number, sales tax number and state unemployment number.  All these numbers are requested on-line at each agency. 
  • Once you have transactions occurring through your business, you need to decide which record keeping system and inventory control system that you will use.  Our firm is familiar with many accounting bookkeeping systems.  We can assist you with set up or our firm can provide you with bookkeeping assistance.
  • Do you have a business plan?  Most banks will not loan to a start up company unless a business plan has been prepared.  This plan will include a description of the business, the market the business will enter and competition that will affect the company well-being.  The location of the business should be cited with the advantages of the location and a description of the business management team as well as the personnel the business will require, the capital needed from loans including capital that will be contributed by the owner(s), and an equipment list and real estate needs.  Pro-forma income projections and cash flows for at least three (3) years should be included.  Our firm can provide assistance with the preparation of the accounting pro forma information as well as the preparation of the business plan.  Of course, we always use the information that is provided by you to complete the plan.
  • Do you have your business licenses?  Each municipality that your business will service requires that a business licenses be purchased based on your expected revenue for the year.  Also, you will need to get a business license from the county.  There are other licenses that may need to be purchased depending on the type of services/products your company offers.

Bookkeeping basics for effective records should include: identifying the source of a receipt, tracking all deductible expenses, figuring depreciation allowances, capturing capital gains and losses, calculating your self-employment tax and your estimated tax payments, if applicable, and compiling items to support your tax return.

Your best friends should be your insurance agent, your attorney and your accountant.  Few businesses are successful without the assistance of all three types of consultants.  Best wishes to each of you.  We would love to assist you with your accounting needs.