Six steps to a solid back-office foundation
Anna Mazig, founder of A.M. & Associates and Elevate Hennepin advisor, has a keen eye for details that most people avoid.
Her Minneapolis-based consultancy helps clients build a solid back-office foundation that can both protect business owners but also ensure that their business is running as efficient as possible.
“Everything builds on itself. With a robust structure, you can build your business up and you're on solid ground moving forward,” said Mazig.
She has six essential steps to build that solid foundation that apply to every business.
Step 1: Register your business
Registration is critical to create any formal business. It’s necessary for many further steps and to shield business owners from liability if something goes wrong or the business becomes unstable. While there are many types of registration that advisors like Mazig can help owners decide between, the limited liability corporation (LLC) is by far the most common.
“It's best to have it separation of liability. So, creating an entity separate from oneself like LLC is a good option,” said Mazig.
Step 2: Get your EIN
Every business should have an employer identification number (EIN), which is necessary for all manner of business activities like getting a bank account or applying for a loan.
“It's the Social Security number for the business,” said Mazig.
Step 3: Open a business bank account
A dedicated business bank account is useful for both keeping owner and business finances separate and keep a transparent view of business health and profitability. To Mazig, this is the real start of the businesses “financial life.”
Step 4: Set up accounting
“After you get your business bank account, make sure that you have some type of like bookkeeping or accounting software to track your expenses so that you don't get overwhelmed by that later on,” said Mazig.
QuickBooks is popular, but there are many options from spreadsheets to accounting apps. Advisors with specialties in financial planning can help guide business owners in building the right system for their unique business.
Taking this step will ensure that tax time is easier and nothing gets lost when applying for loans, taking investments, or selling a business.
Step 5: Complete necessary licensing and certifications
Many industries require specific licensing and certifications to operate legally. Mazig advises owners to talk with a compliance professional like her or do the research to make sure everything is properly licensed before making any sales.
Step 6: Find the right business insurance
As a compliance professional, Mazig advises business owners to think about those what ifs and find insurance to match.
“As a compliance attorney, I think a lot about risk mitigation,” said Mazig.
While it can seem daunting, these six essential tips should be top of mind for anyone creating a new business or trying to formalize business processes. Accomplishing these six key tasks will make things much easier in the long run.
“Creating some of those efficiencies up front can make a difference in the long run,” said Mazig.
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