When starting a business, there are many things to consider. But one of the most important is how to set it up legally. Unfortunately, many businesses make common mistakes that can cost them time and money down the road. Here are five of the most common ones.
1. Not Registering the Business Name
The first step in setting up any business is to choose a name. This can be a difficult task, but it’s important to make sure the name is available and that it’s properly registered with the state. Otherwise, the business could be sued for trademark infringement or could have trouble getting a bank loan.
2. Not Getting Permits and Licenses
Depending on the type of business, there may be different permits and licenses required. For example, a restaurant will need a food permit, while a retail store will need a sales tax permit. Failure to obtain the proper permits can lead to fines or even closure of the business.
3. Not Keeping Good Records
It’s important to keep good records of all business transactions, including income and expenses. This will come in handy come tax time, and it will also help if the business is ever audited.
4. Not Hiring an Accountant or Bookkeeper
Many small businesses try to save money by doing their own accounting. However, this can be a mistake, as it’s easy to make mistakes when dealing with numbers. It’s usually worth the money to hire a professional accountant or bookkeeper to handle the financial side of things.
5. Not Insuring the Business
Another common mistake is failing to insure the business properly. This can be a costly mistake if something happens, such as a fire or theft. Make sure the business has the proper insurance coverage to protect against any potential losses.
Avoiding these common mistakes will help ensure that your business is set up correctly from the start. Taking the time to do things right now will save you headaches and money down the road.