So You Want To Be Your Own Boss?

So you think you might want to start your own business? Be your own boss? Answer to no one but yourself? Be in control of your own destiny? It sounds very appealing and many people do it successfully, but there are a few things you should know before you give up your job and a steady income.

Let's assume that you've already done the research, learned what it takes to be successful at owning your own business, talked to other small business owners or independent contractors, determined that you have the necessary knowledge and personality to be successful on your own, and can live without the certainty of a steady income. Let's jump right into some of the basic financial issues of having your own business.

Separate Your Bank Accounts--Set up a separate banking account for your business. Don't mix your business and personal accounts.

Consult an Accountant--Find an accountant to prepare your annual tax returns, give you tax planning advice and other business advice. While you might be able to prepare your tax returns yourself using a program like Turbo Tax (depending on what kind of business you're running), you could save yourself lots of money by having at least a preliminary consultation with an accountant regarding how to benefit the most from your business and avoid tax pitfalls.

Talk to Your Insurance Agent--Let your insurance agent know if you're running a business from your home. At the very least, you may need a rider to cover computer equipment used in your business. If your business involves inventory, you'll probably want it covered by insurance, and if you have employees, you'll need workers compensation insurance and liability insurance.

Contact Your State Government--Contact your Secretary of State's office to find out if there are forms you need to file. If you're selling a product, you may need a vendor's license and you'll also need to register to collect and submit sales tax. If you have employees, you'll need to register to withhold and submit income taxes to the state and federal government. You may also need licenses from the state or your city or town.

Determine If You Need a Federal ID Number--If you're a sole proprietor (no employees) and are not incorporated, you probably don't need a separate Federal ID Number (FEIN), but if you're incorporated or have employees, you do. You can download the form from the IRS Web site.

Familiarize Yourself With the Law--You'll need to educate yourself about laws that you'll be required to follow, which may include OSHA (Occupational Safety and Health) regulations, Workers Compensation laws, Unemployment Insurance, employment laws, etc. Don't jeopardize your business and your personal assets by being ignorant of laws governing hiring and firing, hours worked, employing minors, overtime, safety regulations, tax filings, etc.

Learn About Filing Estimated Taxes--You'll have to file quarterly estimated income taxes and self-employment taxes to avoid penalties at the end of the year. Contact the IRS and your State Income Tax Department for forms and instructions.

Automate Your Accounting--No matter how small your business, you can benefit from automating your accounting. QuickBooks and Peachtree are great systems for small businesses and are non-accountant-friendly and easy to use. You'll manage your business better with the reports generated by these software programs.

Give your business a fighting chance by building a good foundation with these basics for getting started in your own business. The links below are a great starting point.

Workers Compensation Info
Business License Info
Incorporation and Business Name Info
State Tax Info
IRS Small Business Resource Guide
SBA Small Business Start-up Kit
What You Should Know First
Incorporating
Insuring a Home Business
SBA Publications

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