At Fragnoli & Company, CPAs we frequently are engaged to consult with new businesses/ start up companies. We truly enjoy working with these enterprises as the future is a challenge and the prospects and pay-offs can be both financially and personally rewarding.
The reason the client prospects come to us is because they don’t know where to begin or want to get off on the right foot. Accordingly, we almost always tell them that they need to establish a relationship with a banker, attorney, CPA/ accountant (which they have already done, hopefully), insurance agent and investment advisor. At some point in their respective business development they will almost certainly need to engage the services of these individuals and businesses.
The second step is to decide their business organization structure. That is, are they going to operate as a sole-proprietorship, partnership (if more than one owner), limited liability company or a corporation. If they choose the corporate formation, then they have to decide if they want to operate as a subchapter S corporation or a C corporation. The entity structure decision is based upon a number of operational, tax and liability factors and is a critical decision and should be discussed with both legal counsel and with a CPA.
The next thing they need to do is obtain all the needed licenses and permits. This step should be reviewed by their CPA and/ or legal counsel as needed. Many businesses fail to get all the required licenses and permits required for their respective operations. Failure to properly license and permit one’s business can result in serious fines and other legal actions.
The set-up of proper accounting systems and recordkeeping is the next required step in a start-up business. One thing that many new clients are surprised to hear is that if they have a corporate structure, for tax purposes pursuant to Internal Revenue Service requirements, they are to keep a full set of accounting records and a general ledger. That being said, we always recommend that all business structures maintain a full set of books. Proper accounting records are such a valuable tool for planning, budgeting, financial projections and operational decision making. Selecting the best accounting software package is a very important decision for a new company. There are desktop software packages as well as software packages operated in the “cloud”. Cloud based software packages have a primary advantage that they can be accessed from different operating devices besides one’s computer, such as tablets and smart phones. However, they can be a little slower in processing and a little more cumbersome to operate. At Fragnoli & Company, CPAs, part of the NOW in our tag line is our experience with many of the different offerings, both the desktop products as well as cloud based programs. Costs can vary, but for the most part the cost of the software is very reasonable. Training in the utilization of the software and proper set-up is very important and if done at the outset can be a big cost saver. Most software products are user friendly. In most cases the business owner or a staff person can operate the software with the oversight of their engaged accountant/ CPA.
Once the above processes have been performed, the business is pretty much ready to move forward, and can do so with piece of mind and proper direction. We wish all new businesses good luck and great prosperity.