Spring Cleaning Checklist for All Your Business’ Legal Odds and Ends
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Spring is well underway, and it isn’t only your home that could benefit from some good spring cleaning. Make this season the perfect time to address all the legal odds and ends, and create a long-term action plan. Because, let’s face it: These important tasks often take a backseat to your daily grind throughout the year. Not sure where to start? Here are a few administrative and planning tasks to make time for this season.
1. Audit How You Spend Your Time
Any small business owner knows just how many hats are worn on any given day. There’s always more work to be done than there are hours in the day. However, just because you might be “busier than ever”, it doesn’t necessarily mean you’re moving your business forward.
Step back and measure where you spend your time. I like to divide it into “working in the business” and “working on the business” tasks. Any small business owner needs some time to be creative and work on the business—meaning long-term growth strategies and business development.
Are you finding that your time is mainly sunk into reacting to short-term client requests? Map this out to see if there are any areas to outsource or delegate. And, start setting aside time (perhaps two hours every Friday) to dedicate to working on the business.
2. Meet with a CPA or Tax Advisor
Once taxes are filed, you might be thinking you can breathe easy and set aside tax concerns for another year. However, once the busy tax season is over, it’s a perfect time to sit down with a CPA or tax advisor. That’s because you’ll both have time to focus on long-term strategy rather than just slogging through another year’s tax forms.
If you don’t want to engage with someone to handle your books on an ongoing basis, you can set up a consultation to discuss specific questions you have: What’s the right business structure for your situation? Is there any way to legally lower your self-employment taxes? How should you be handling your inventory costs or preparing for future expenses?
3. Improve Your Financial Organization System
If you’re reading this blog and are part of the FreshBooks community, there’s a good chance you appreciate how useful cloud apps can be for managing your business. At its basic level, small business accounting isn’t particularly complex—you need to keep track of what your business spends and what it receives. But, all your other priorities don’t leave a lot of time for bookkeeping.
My suggestion this spring is to take one pain point—like a bookkeeping task that you’re still handling manually—and find a more efficient solution. For example, how are you tracking expenses for each project? Are you recording all mileage? Pick the right system that works for you. It doesn’t necessarily have to be the most expensive and robust software available; sometimes simpler is better if it means you’ll actually use it on a consistent basis.
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4. Evaluate Your Business Structure
Make this season the perfect time to address all the legal odds and ends, and create a long-term action plan. Because, let’s face it: These important tasks often take a backseat to your daily grind throughout the year.
Most small businesses begin as sole proprietorships; this is particularly true for service providers working out of their homes. But as you grow, it might be time to change from a sole proprietor to a Limited Liability Company (LLC) or corporation. This is because the sole proprietorship doesn’t offer any separation between you and the business, so all of your personal assets are at risk if someone sues your business or it can’t pay its debts. The LLC and corporation can help minimize your personal liability.
You should seriously consider incorporating or forming an LLC this year if any of the following are true: you’ve hired an employee or contractor to help you; you ever let clients into your workspace; you deliver some kind of product to clients/customers; you’re concerned about liability issues.
5. Separate Your Personal and Business Finances
When you’re a small business (particularly a solo business), it’s hard to see any separation between your business’ money and your own. But keeping a strict separation is essential to understanding your business’ cash flow and financial health. It’s also mandatory if you’re structured as an LLC or corporation.
If you haven’t already done so, you should open a business checking account, as well as a business credit card if needed. This will streamline your recordkeeping. At tax time, you won’t have to scroll through an entire year’s worth of account transactions to find any expenses made for the business.
If you’ve found yourself struggling to make tax payments, then consider opening a dedicated account where you can stash a percentage for each client payment as your own tax withholding. For example, set aside 25% of each check into this dedicated account – and you should have no trouble making your quarterly and year-end tax payments.
6. Make Sure Your Business is Compliant with Its Permits and Licenses
Virtually all businesses need some kind of business license and/or permit, although specific requirements will depend on what type of business you have and where you are located. In addition, most licenses need to be renewed on an annual or biannual basis (but again, specific schedule depend on the license type and local law). This spring, check to make sure that all of your permits/licenses are up to date. If you’ve never bothered checking about licenses in the first place, this is a good time to get your legal ducks in a row. You can find out what permits you need by contacting your local government or an online legal filing service.
These six steps will help you clean and take control of your business operations, but while you’re at it, you might as well take the time to physically clean your office (or hire a cleaner) this spring. After all, who knows what’s lurking behind the filing cabinet?
about the author
Nellie Akalp is a passionate entrepreneur, small business expert, professional speaker, author and mother of four. She is the Founder and CEO of CorpNet.com, an online legal document filing service and recognized Inc.5000 company. At CorpNet, Nellie assists entrepreneurs across all 50 states to start a business, incorporate, form an LLC, and apply for trademarks. She also offers free business compliance tools for any entrepreneur to utilize. Connect with Nellie on LinkedIn.
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