I’m hearing more and more about employees that “post pandemic” have decided to change jobs, and sometimes even careers. There’s nothing like being stuck in your house, or working in conditions you don’t feel safe in to prompt you to re-evaluate life and your career choices. I’ve had many conversations personally with those around me that have mentioned their own priorities have shifted in the last 18 months. And since our work is such a huge part of that, it’s natural to expect that those shifting priorities would bleed into our professional worlds for those still in their working years.
So you’re thinking about starting a new business, now what?
All the buzz these days is around marketing and social media…It’s obvious that this can be crucial to a business start-ups success but what else should you be mindful of as you navigate this significant life change? It will after all affect your professional and personal financial life.
Here’ is a financial planners’ perspective, and checklist on what to consider as you are deciding to make the jump, and setting yourself up for success in your new future if you do.
- The legal side. Likely the least fun step, but arguably one of the most important. You’ll need to decide how you want to be set-up, and get registered with the appropriate authorities. The Secretary of State, the IRS and whomever else may be important for the line of business you are looking to go into.
- Bank accounts. PLEASE PLEASE PLEASE do not use your personal banking accounts for your business. Even if you are starting small, you will do yourself many favors by starting off in a completely separate business bank account.
- What’s your budget(s)? Are you quitting full time outside work entirely or taking on this new venture on the side? Either way, you’ll want to get clear on what you have and how to make it last in the months to come. Two budgets are important here: personal and business.
- Bookkeeping. What’s your plan? If you are going to be starting a business with very few expenses, you may be able to do this yourself. If not, I highly recommend you consider hiring this out soon. This is a task that can easily get you caught up in the weeds and unable to focus on actual revenue making growth. Come tax time, bookkeeping done right could also save you HOURS of work…that again is NOT revenue making work. A bookkeeper, and a tax preparer can also help you understand how best to set yourself up for future tax filing. (Example: Deducting mileage has several requirements that you’ll want to be aware of in case you ever have to answer to the IRS).
- Payment processing. So many options. In full transparency here, I do not have much experience in this space but a bookkeeper is someone that can give you guidance on what to consider depending on the type of business you plan to be running.
- Insurance. From liability coverage, to industry requirements to health and disability. There are several forms that you may need to consider. Liability is one that, especially for the smallest businesses, I often see overlooked, but it can be life changing if something happens and you don’t have it.
- Your current retirement accounts…Don’t forget about those. I’ve seen that 401(k)’s and other retirement accounts often go untended to once an employee leaves a company. What are your options when you go? How do you make sure you can keep retirement on track with this new business venture? You’ll want to make sure you give some TLC to this as well.
Just because we are good at doing ‘a thing’, does not guarantee success with a business at it. I’ve witnessed first-hand that being an entrepreneur requires a skill set in and of itself. It’s not easy to run a business (and even harder to start one) but I personally will testify that in my life, it’s been the most rewarding thing I’ve ever done. I wish you the same, and much success in your professional years yet to come!
Do not hesitate to reach out to if you have any questions or would like further clarification on any of the items listed above. And if you find yourself in need of a referral for help with any topics listed here, we’re here to help.