STEPS TO MAKE YOUR BUSINESS LEGALLY AND FINANCIALLY STRONG
STARTING A SMALL BUSINESS COMES WITH A NEW SET OF CHALLENGES. YOU NEED TO GATHER FUNDS, ACCOMPLISH ALL THE LEGAL FORMALITIES AND MARKET YOUR FIRM. HOWEVER, AS PER RESEARCHERS
29% of small businesses fail in their first year
30% in their second year
50% fail after five years
WHY?? As they were unable to manage funds for their business OR their business was not legally compliant.
IN A NUTSHELL, TO SURVIVE IN THIS COMPETITIVE MARKET MAKING YOUR BUSINESS FINANCIALLY AND LEGALLY STRONG IS ESSENTIAL FOR A LONG-RUN.
WHAT ARE THE FUND SOURCES FOR SMALL BUSINESSES? All businesses need finances sooner or later. To set up your business you will most probably need money for purchasing land, building, machinery, paying employees etc. As the business grows, you may require the latest technology to maintain a smooth workflow and improve overall business productivity.
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So below I’ve outlined some crucial sources for small business that can help for funding: Bank Loan A bank is a very first place that entrepreneurs usually prefer for funding. Funding from banks involves valuation details, project report and other mandatory documents as per required guidelines.
80-90% of entrepreneurs
take
funding from banks and create an effective plan as a part of the financial application.
Commercial Loan Commercial loans are the second most common source for funds that you get from any financial institution for a long-term loan or short-term loan as per your requirement.
Get Angel Investors Find an angel investor who will not only invest in your startup business but also provide you with solid advice, be a mentor, and provide access to their network. Angel investors have helped some prominent companies, including Google, Yahoo & Alibaba. This is an alternate form of investment, which is also a good choice to finance your business.
Crowd Funding Option This is the new idea for gathering funds for your startup like preorder, contribution or investments. Search a suitable platform and write a description including all your requirement and what kind of business you want to initiate. As per search, estimated fundraising was $34 billion in 2015 and $25 billion included in P2P lending that falls under crowdfunding category.
Government Programs In the US, there is a small business lending fund and a dedicated portal for Government grants that are available for local businesses. SBA loan programs provide a guarantee to banks and lenders for the money they lend to small businesses owners. This guarantee protects the lenders' interests by promising to pay a portion of the loan back if the business owner defaults on the loan.
HERE’S THE WAY TO LEAD YOUR BUSINESS TOWARDS FINANCIAL GROWTH: Flexible Business Model/ Remodeling of Business Plan Remodeling your business plan is a key to gain financial security, thereby ensuring the growth of the company. Flexibility in your business model requires continual experimentation to take your business to the next level.
Proper Cash flow Management
It is essential to keep a track of all the records with separate entries of incoming and outgoing cash in your business. It helps to better understand the financial position of the business and take an informed decision.
Streamline Accounts Receivable and Payable Track money that your customers owe you and send them reminders, invoices, or take all possible measures to maintain accounts receivable. Also, overview your expenses by keeping a track of accounts payable and avoid late payment charges.
Determine Your Profit Margin Calculate your profits by reviewing your production and overhead expenses. This will give you a clear picture of your business finances.
Use Latest Accounting Software QuickBooks , Xero, Zoho Books, Fresh Books, Wave, and Sage are the top-rated accounting software in the business world. Now Oracle has also introduced AI in NetSuite. Choose reliable software for your business as per your
Owner Equity
needs and budget.
It is important to understand the amount of share each stakeholder has in the business if you have multiple shareowners. The owners’ equities are counted as the assets for business.
Seek Help of Experts It is best to seek the help of experts who will suggest you better where to invest, take care of your finance and accounting, generate financial reports, and help you streamline your business process.
HERE ARE SOME WAYS TO MAKE YOUR BUSINESS LEGALLY STRONG:
Choose Your Business Structure Wisely: Choose your business structure as per your current requirement and future goals. You can choose any of the following business structure:
 Sole Proprietorship - Single person as the owner Partnership - One or more people as owners Limited Liability Company (LLC) - Very flexible for a wide range of businesses
Obtain Federal Tax ID Number It is really important to obtain a federal tax ID number (also known as Employer Identification Number (EIN)) to distinguish your business as a separate legal entity, which helps to track company’s transaction by IRS. Remember, you are not obligated to get tax ID number if you are a sole proprietor.
Learn About Employee Laws When you hire an employee, it is important to understand all the employee obligations. Take the help of an employment law professional, and learn about federal and state payroll and withholding taxes, wages and hours requirements.Â
Get Business Permits and Licenses Depending on your business type and location, you need to obtain business licenses or permits from the state, local or federal authorities. Some of the common licenses are zoning and land use permits, sales tax license, occupational or professional license, etc.
File for Trademark Protection Before registration, you need to register on “Doing Business As” (DBA) or “Factious Business Name” (FBN). You should register your trademark for proper legal protection as it further becomes easier for you to claim and recover your properties. Suppose someone uses your company name on twitter and if you have the right documentation then you have the legal rights to take action against them.
Open Bank Account for Business Credit When you apply for a personal loan then your personal mortgage, auto loan and personal credit cards all can affect the quality of business loans. So it is better to open a separate bank account in the name of your company and use it to seek loans, handle other legal processes, and pay taxes.
TIPS
ADDITIONAL TIPS TO HELP YOUR BUSINESS GROW: • Consider your staffing needs and always keep backups • Revisit your existing business plan • Invest wisely • Focus on existing customers and customer retention • Keep tabs on your competitors • Adopt the latest technologies • Ensure proper quality of your deliverables • Expand your product range and introduce new services from time to time • Evaluate yourself where you are • Work in a team and imbibe this culture in your workplace • Streamline your operational processes
STILL CONFUSED ON HOW TO TACKLE FINANCIAL OR LEGAL BUSINESS PURSUITS? LET THE EXPERTS DO THIS ON YOUR BEHALF!
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