Tips for Successfully Opening a New Enterprise
According to statistics gathered by the Small Business Association, more than one of every three new businesses closes its doors within 24 months, and half fail within five years. Let’s take a look at some of the common mistakes that new business owners make:
- Choosing the wrong business form—It’s typically a more involved process to set up a limited liability company or a corporation, and it will usually cost more money, but there are benefits that come with that extra effort and expense. You can generally create a sole proprietorship or even certain types of partnerships without filing any type of paperwork, but you’ll be personally liable for the debts of the business. An LLC or a corporation, if properly set up, will limit your liability to the investment you’ve made in the business—your personal assets will be safe.
- Failing to hire competent professionals to handle things outside their area of expertise—When you’re starting a new business, you want to keep your costs down. That may lead you to try to handle things best left to professionals—legal or accounting matters are a good example. In the long run, you are better off paying an attorney or an accountant to ensure that everything is properly done. An experienced lawyer will not only help you set up the appropriate entity, but can help you avoid intellectual property issues and put effective agreements in place.
- Failing to pay yourself as an employee—Another common mistake many new business owners make is to assume that their compensation is what’s left over when all other expenses are paid. That can lead you to take too much when times are good and not have anything put aside for unexpected downturns. It’s a much better approach to pay yourself a reasonable wage and keep additional profits in the business.
- Failing to have effective and enforceable employment agreements in place—It’s usually a good idea to get things in writing—that includes the rights and responsibilities of all employees, including yourself. You can protect your company from potential liability and avoid controversies down the road.
- Not paying taxes—When money’s tight and you have to decide who gets paid first, there can be a tendency to put revenue authorities at the bottom of the list. That’s never a good idea. They have the power to bring your business to its knees.
At MCIS Law, PLLC, in Stafford, we aggressively advocate for businesses and individuals in southeast Texas. For a confidential consultation with an experienced and knowledgeable lawyer, email us or call our office at (346) 297-0121. We accept all major credit cards.