In Part II of our series based on attending David Durick of Paychex’s workshop at the Small Business Expo 2016, we will dive deeper into the first two of the ten critical steps to building and protecting your business.
If you are not sure which steps apply to you, please join Traklight here and take the free Business Risk Assessment with our compliments. The Risk Chart on the dashboard will help by linking you to Paychex partners who can help minimize your risk to increase your chances of successfully launching your business. Plus, our Traklight Assessment Grade automatically updates as you tick off all the completed tasks.
Step 1: Choose a Legal Structure
Many people mistakenly think that they can just start a business out of their garage without any formalities. When you do that, you are risking everything you own. Regardless of the type of business, you need an entity to protect your personal assets.
The Traklight checklist flags that you need a business entity. As it shows above, this is a high risk item. It’s best to do that from day one. There is a choice of entities. You can use Paychex’s partner MyCorporation to assist with both the choice between a C corporation, a Limited Liability Corporation (LLC), or others and the formation of the entity.
Once you have formed an entity, it’s very important to operate your business only out of the company bank account. Likewise, business expenses should not be run through your personal accounts. The Traklight strategy report includes more explanation on why and how you can address these risks.
Step 2: Build your Team
Once you have set up your entity, finding others to help with your venture is the next critical step. Don’t go it alone!
Finding a co-founder, employees, or contractors is not necessarily the best place to start. Once you have an idea, reach out to mentors or advisors. SCORE can be a great free resource for early stage companies. Having advisors to help with the first hires and sourcing good resources helps the risks when launching your company.
After you find your core team, surround yourself with good professional help for accounting, banking, legal, and marketing. David recommends listing out the four things where you have expertise and then four things that you have the least knowledge about. Find help with the latter and make sure you are not taking on too much with the former. Remember the old adages: penny wise, pound foolish and you get what you pay for when hiring anyone.
Your choice is to find employees or contractors to help with your core business. However, it’s not your choice whether someone is a contractor or employee. Seek professional help!
If you are worried about keeping all of this straight, that is reasonable. There are many steps but our checklist approach can get you started on the right trak!