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There are many important legal, financial, and operational factors that one should take into consideration before starting a business. Knowing what business issues to expect in advance and preparing for them before they arise can mean the difference between a financially and personally prosperous business, and one which incurs financial and personal damages.
The first and most important considerations when starting a business are the legal aspects that govern companies in the state or province where the business is based. To ensure that you are on the right side of the law with your company, become familiar with your state or province’s business legislation. For example, laws surrounding the frequency and amount of taxes that must be remitted by a business vary depending on its location, and may also depend on the company’s revenues, products and services. You should also ensure that your company is registered with your province or state, a service that is performed by the government, typically at a cost of less than $100 US Dollars (USD). If you plan on staffing your business, there are a number of labor laws to take into consideration, such as minimum wage rates, payroll deductions, workplace safety, and other labor standards.
When it comes to the financial considerations of starting a business, the most important factor to determine is your company’s profitability potential. Financial projections which match your cost of overhead and other expenses against your company’s revenue are important in determining the most important factor: whether or not your business will at least break even. In order to keep your company’s finances in shape, you might consider hiring a financial professional, such as a bookkeeper or accountant, on either a regular or interim basis.
The location of your company is a big decision to make before starting a business. Business owners who neither operate a consumer-facing business nor handle a large amount of revenue typically opt for their own home as the location of their business. Working out of your own home can also be advantageous for tax deductions, as you can then claim a portion of your rent/mortgage on your tax return.
The best way to get familiar with the many considerations of starting a business at-a-glance is to read the contents of a business plan template. With chapters on everything from risk mitigation to marketing, business plans provide a comprehensive overview of what it takes to start and run a company. Having your business plan in order before starting a business is also effective in getting others onboard to help grow your business, whether they be lending institutions, investors, or other potential business partners.
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