I am taking a business class to get my business plan set up and complete to hopefully start my business soon! I'm working on my financial section and have a couple of questions..... hoping someone might take some pity on me to help be my cake mentor and give me some info
1. Accounting- do you hire an accountant, use Quickbooks, or both? If you have an accountant can you give me a rough cost of hiring one? Do they just go over everything once at the end of the year? Just trying to get an idea of the cost of accounting.
2. Legal- did you hire someone to become a LLC or do it yourself? How much did it cost?
3. Bank Fees?- What do you pay in bank fees? Is there really any free banking available for small businesses? Do you recommend/ not recommend any specific banks? (I live in Rhode Island)
4. Any other helpful tips or things you can think of that someone just getting started might need to know
I can answer some of your questions hopefully
1. Since your taking classes, add an accounting class in there. Basically that's all you need. I do my own books. I have taken some business classes and accounting was one of them. It helped alot
2. I haven't gone LLC yet. I am sole proprieter. I will go LLC when I need too. I can't justify the expense right now and haven't got the need for LLC at the present. When the time comes, I will research it on the net, with my CPA and with my attorney
3.I pay no bank fees. My bank does not charge any for a small business until your profits are over a certain amount
4.My advice would be to keep up on your books. It's easy to get behind on them and then it's a pain to get caught up again. Have fun at what your doing and don't let anyone guilt you or take advantage of you and youir prices
i have totally free banking too....when i started i was an s corp, but i couldn't stand how complicated that was, so now i'm a sole prop...so much easier.
I kept my own books for 3-4 years, but it's to the point now that I just can't do it all. I got a great referral from a local bakery (and CC'er!) for an accounting firm. Cost can vary. I interviewed a couple of accounting firms. Most looked at my mess, figured how many hours it would take to do my stuff and quoted me $600 a month. The guy I went with has a system we follow which makes everything easy for both of us, and the cost is no where NEAR $600 a month. I get monthly reports from him, he does my tax returns, reviews things with me quarterly, does my payroll and handles any IRS audits. It's WONDERFUL!!!!!
One thing he did tell me is that Quickbooks is a great tool, but if you don't have an accounting background, you're going to screw it up. So the above advice is correct ... take a few classes so you know what you're posting where and why you're doing it.
I started as sole prop and am now LLC. I had an attorney do it all. In the words of Martha Stewart (you may have heard of her ... self made BILLIONAIRE???? ), if you think you're saving money by not hiring an attorney at the front end, you'll pay for it at the back end. He charged me $800 to set it all up which included name registration and all that stuff. he also reviewed my contract and made sure it was written properly. (Note: Just because you write it down and both parties sign it, doens't mean it will hold up in court.) Well worth the money to know it's done right and I'd pay it again in a heartbeat.
I also have free checking at my bank.
Set aside one credit card for business purchases, then pay that off at the end of the month. Use it for NOTHING but business purchases. This helps you have just one transaction to post instead of 45 debit card slips. (If you go with an accounting firm that charges by number of monthly transactions, this will save you money. I find I have better control over where my money is going, too)
(MnSnow ... how does your bank know how much PROFIT you're making? Are you required to give them a copy of your tax return or something?)
Thanks for the help ladies! I know it varies greatly, but it's nice to have an idea of what to expect! I always thought I was pretty smart when it came to numbers and financial stuff.... but taking this class has really opened my eyes to how involved it all is! I think I will have to look into taking some classes or maybe just hire someone...
I'm meeting with legal council in a couple of weeks (I get a free 1 hour appointment with my business class through the SBA) to talk about what legal structure to choose. I'm thinking of probably starting as a Sole-proprietor until I get established since I don't own a house right now, but want to make sure thats the right thing to do.... Any tips on questions to ask or things to bring?
Thanks again for all the advice and tips! I am determined to do this right, and make this successful!!!!
Ask him about the cost for if/when you convert from sole prop to LLC. I already had an EIN as a sole prop, but when I switched to LLC, I had to cancel that one and get a new one issued in the LLC name. Had to change my bank accounts (new EIN) and re-issue it with a number of others. Plus there was a fee to do that.
If you're going to go there anyway (LLC), I'd just do it now. I dont' notice any difference in the paperwork or taxes between the two, so you might as well go there right from the start.
But since you have some free time with him, get his advice.
Also ask about checking to see if your company name is registered, protected or already taken.
Thanks, those are some good points I didn't think of. I was worried about the cost of becoming an LLC, but if it's that much of a hassle to switch, I think I might look into just starting off as one. If you think of anything else-let me know!!!!