Financial Considerations when Starting a Business
Starting a business is both an exciting venture and a significant ordeal. You’ve finally taken your passions and ideas from “one day” to “soon.” But there’s a lot of preparation ahead.
Here are some financial considerations to remember as you are getting ready to introduce your business to the world.
Tax Implications Based On Your Business
How much you’ve prepared before starting your business is a crucial indicator of your potential for success. In addition to knowing who you are, what you do, and who you serve, you must determine what type of business entity you will operate under.
There are several different business structures to choose from, such as an LLC, partnership, S Corp, or C Corp. The taxes and liability are different for each of these entities.
Researching these options can help point you in the right direction, but this is a great place to consult a financial advisor. The decisions you make here will determine how you’ll be taxed.
Limit your fixed expenses where you can, especially as you are just getting your foot in the door. It’s easy to overspend for the sake of “looks.” You may like how the huge, fancy office looks and feels — but will clients and investors care more about how many new computers you have or how you can make a difference in their lives?
Focus your money on growing your business and bringing in revenue, and the perks will follow.
Track Expenses and Monitor Cash Flow
Many startups fail, not because they do not have a great idea on which to build their business, but because they run out of money. You give yourself a better chance of success when you know and understand where every dollar is coming from and where it is going.
Keeping track of spending and cash flow is a big task with a new business. If you don’t have space for an employee to handle your books, consider accounting software to help you stay organized.
Maintaining Credit and Cash Reserves
After your initial investment, there will likely come a time when you need access to additional funds to keep your business going. Here is where a line of revolving credit can help. Two options are credit cards and business lines of credit.
With these, a lender will set a credit limit based on what they think you are capable of borrowing. You can then borrow from this limit whenever you need to. If you don’t use any of the limits, you won’t have to pay it back or pay any interest.
Liquid assets are another great way to provide additional financial resources for your business.
Talk to an advisor to determine which long-term strategy is right for your business!
Investing in the market is a great way to invest in your business. Where are you now, where do you want to be, and how can a strategic investment plan help you reach those goals sooner?
OneAscent also believes in a values-based investing approach, where business owners and individuals can invest their money in companies that align with what matters most to them. You can avoid profiting from something against your beliefs without sacrificing your own goals or profit opportunities. Learn more about what it means to maximize your business for Kingdom impact.
Wise investing provides a solid foundation for your business and a catalyst for long-term growth.
Set Long-Term Goals
There are many short-term goals on your to-do list when starting a business. You’re rightfully focused on getting the proper documents together, refining your product or service, and counting the days until the doors are officially open. But there’s immense value in setting aside time to set clear and practical long-term goals.
If you know where you want your business to go, it’s much easier to take the right steps to get there.
If you’re in the process of starting a business and want to learn more about creating a financial plan for your business, contact us here!
Past performance may not be representative of future results. All investments are subject to loss. Forecasts regarding the market or economy are subject to a wide range of possible outcomes. The views presented in this market update may prove to be inaccurate for a variety of factors. These views are as of the date listed above and are subject to change based on changes in fundamental economic or market-related data. Please contact your Financial Advisor in order to complete an updated risk assessment to ensure that your investment allocation is appropriate.