Starting a Business

Do you have an entrepreneurial spirit? Do you dream of being your own boss? Many people have the desire and some solid ideas for starting a new business, but they either lack the courage to take the first step or they don’t know where to start. Here is some information that may help guide you in taking those first steps.

Develop a Business Plan
Registration of Business
Location of Business
Tax Considerations
Employees
Record Keeping
Start-up Costs
Capital Expenditures
Other Considerations

Develop a Business Plan

This is the blueprint of your operations for the next couple of years. You control the level of detail, but it should cover:

The type of business, product, or service offered
Types of customers
Pricing
Start-up capital
Forecasting of revenue and expenses
Marketing plans

Registration of Business

From a tax standpoint, you need to decide whether you’re going to embark on this endeavor alone, as a sole proprietor, or with others, as a partnership. You may also want to consider incorporating.

Location of Business

The location could be crucial, depending on the business type.
Parking, space, and cost are all important considerations.

Tax Considerations

Most businesses need an employer identification number (EIN). This number is the equivalent of the Social Security number for a business.
Additionally, your state will probably require state identification and/or sales tax number for the same reasons.

Employees

If you plan to have employees, you are generally responsible for:

Payroll taxes
Social Security taxes
Medicare taxes
Unemployment taxes
Collection of federal and state (where applicable) withholdings
Employee’s share of Social Security and Medicare taxes

Record Keeping

It is important to establish a good record keeping system early in your business. It is necessary to keep an accurate account of the following:

Payroll records
All income and expenses related to the business
Most businesses have the option of choosing the cash method, the accrual method, or a hybrid method of accounting.
If the IRS were to audit your return, you may have to prove expenses by producing receipts

Start-up Costs

You may need to separate some expenses. The two categories are:

1) Expenses you incur in exploring and setting up the business.

2) Expenses you incur from the time the business officially begins. These are currently deductible.

Start-up expenses may include training wages, pre-opening utilities, rent, advertising, depreciation, and any exploration costs.

Capital Expenditures

Not all of the expenses paid for a business are currently deductible.

Items that have a life of more than one year are currently depreciated or amortized rather than deducted.
Equipment and real estate are common examples of depreciable assets.
If your business requires you to maintain an inventory of the items you sell or use to make product, these costs become part of inventory that you will deduct as you sell the product.
It is necessary to keep accurate records of the beginning and ending inventory each year.

Other Considerations

Liability and asset protection.
Fringe benefits desired (if any).
State and local requirements, such as licenses, permits, and registration of the business.

This publication provides summary information regarding the subject matter at time of publishing. Please call with any questions on how this information may impact your situation. This material may not be published, rewritten or redistributed without permission, except as noted here.This email includes, or may include, links to third party Internet Web sites controlled and maintained by others. When accessing these links the user leaves this email. These links are included solely for the convenience of users and their presence does not constitute any endorsement of the Websites linked or referred to nor does NTB Consulting LLC have any control over, or responsibility for, the content of any such Websites. All rights reserved.

This newsletter is provided by
NTB Consulting LLC
Accounting, Bookkeeping, Taxes & Financial Staffing
3303 Sunset Avenue Suite J
Rocky Mount, NC 27804
ntbconsulting@embarqmail.com
252-443-4480
866-528-9242
www.ntbconsultingllc.com

1 Comment to Starting a Business:

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Sage on Friday, February 24, 2012 5:28 AM

These are great ideas on starting a business. What people truly need is the courage to start. Starting your own enterprise can be a pretty daunting task, especially when you consider the risks and responsibilities. Sage

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