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Starting a new business comes with a number of important decisions. From tax preparation to networking, the life of a business owner is full of new responsibilities. Here are four crucial pieces of knowledge that new business owners need to have.
Your professional connections are some of your most valuable business assets. The relationships you’ve cultivated throughout your professional career could end up leading to new customer referrals, valuable partnerships, or new ideas to grow your business.
If you’re feeling like your professional network is lacking, networking events might help you make new connections. Note that not all networking events or groups have “networking” in their name. Conferences, social media groups, trade associations, community events, and your local chamber of commerce can all create valuable opportunities to meet people who can help your business thrive.
Hiring and firing might be new to you, especially if you weren’t in a management role at your previous jobs. Finding the right employees and contractors can be a challenge. If you’re looking for a new staff member, this may be a good opportunity to call on your professional network.
A personal referral can provide you with much more information than you’d get from an applicant on a job site. Trusted friends and colleagues will be able to give you an assessment of the candidate’s strengths and weaknesses, and given that their reputation is at stake, they’ll be more likely to be more honest. Plus, if you end up hiring someone through a personal referral, you’ll build a stronger connection with the person who made it.
Being a small business owner can mean more complicated taxes, especially if you have employees. While it might be possible to do your taxes on your own in your first year, if you’re not very confident about your tax prep skills, hiring a professional with experience in small business tax returns might be the way to go.
In your first tax season as a small business owner, you might be understandably anxious about getting taxes done on time. What happens if you file taxes late? Luckily, the IRS allows you to apply for an extension if you think you won’t be ready to file on time, and there’s no penalty for doing so. To file for an extension, you’ll need to estimate the taxes you owe (if any) and pay that amount. Just don’t file late without letting the IRS know about your plans. This could cost you penalties depending on how late you file and how much you owe.
Even if your new business is financially healthy, you’ll need a plan to keep it that way. Business plans aren’t just for starting a business. Business owners should create a plan to guide them through each stage of running a business, from initial idea to thriving company. A business plan can include an analysis of your market, an outline of your business structure, a description of the product or service you offer, a marketing plan, financial projections, and more.
In addition to these basic elements, a business plan should include strategies to deal with unexpected events, positive and negative. What if another business moves into your sector of the market? What if there’s unexpectedly high demand for your product? What if your business is affected by natural disasters or new legislation? Make a plan to deal with these events so they don’t take you by surprise.
