Staring your own business can be one of the most exciting experiences of your life, but it can also be the most stressful. Far too many people try their hand at entrepreneurship without first fully understanding the risk they’re about to make. Starting a business is extremely time consuming, and it can also be expensive. There are many factors you first need to consider before taking the plunge. If you are teetering with the idea of being an entrepreneur, here are three things to consider when starting a business.
Starting a business costs money, and it’s important that you determine just how much this business is going to cost you upfront. Unfortunately most banks and loan companies will not provide loans to start-up businesses. This means that you will either need to have the required money on your own, use the equity in your home to do so, or be willing to ask friends and family members for help.
Along with the initial cost of the business, you also need to understand that your company may not be profitable right away. For this reason, you need to either start the new business before you quit your current job, or you’ll need to have enough in savings to continue paying your bills while getting the company up and running. Be sure to go through your finances with a fine-toothed comb before making any drastic decisions.
Along with your typical business expenses, it’s also important you remember to include insurance in this figure. Not only will you need to have insurance for the company, but you may also need to provide yourself with health insurance since you will no longer be on a company’s plan.
If you have employees, you may need to provide them with insurance. The Affordable Care Act only requires companies with more than 50 people to provide insurance, but this is still something you’ll want to consider.
Even though you may not have to provide health insurance, you should consider worker’s compensation insurance. This will protect your company in case any of your employees become injured while on the job.
It’s very important that you do everything you can now to protect the assets of the company in the future. Be sure to have all the right paperwork in place to keep your company up and running. You also need to be sure to file your company taxes on a regular basis, stay up to date on health codes (if necessary), and follow all the small business rules and regulations.
You should also protect your company from personal relationships. For example, if you start the company with a spouse, it’s a good idea to have a contract written up to protect both of you in case of divorce. This way, you both know what to expect in case the marriage dissolves and you two have a common interest in the business. According to George C. Malonis, attorney, “Even when a couple in the midst of a split agree on many of the issues or decisions that need to be made to dissolve a marriage, the process is still complicated and expert legal guidance is needed.” Although you hope that the business is successful and your marriage stays healthy, it’s always best to be prepared.