Common Mistakes New Businesses Make

You have a brilliant idea for your new business – now what? There is so much to think about when starting a business. Here are the top five considerations to keep in mind & common mistakes new businesses make.

1. Choosing the Right Company Entity

What type of company entity do you want? Options include a Limited Liability Company (LLC), a Corporation (Inc), a Partnership, or a Limited Partnership (LP).

The type of entity you choose can affect the rules you have to follow and what you can do with your company.

2. Handling Taxes Properly

How are you going to handle the taxes for your profits? You have to consider Federal Tax, State Tax, City Tax, CAT, Payroll taxes, and Sales Tax.

Not handling the tax payments correctly can derail your business before you start.

3. Managing Employees vs. Contractors

What about employees? You will need a handbook, a job description, and maybe even an employment contract.

Are they going to be employees or Independent Contractors? How you hire and pay them depends on what the person’s employment status will be.

4. Contracts for Services

Are you selling a service? You will need forms for estimates and contracts for services with your clients and maybe even your suppliers.

5. Tracking Your Money

When you make money, how are you tracking it? You want provisions in place to keep your personal and business finances separate.

You want to make sure that you are availing yourself of all the legal income/profit tax deductions. Crucially, you want to be able to prove that you have not commingled your personal and business funds should you ever be faced with a lawsuit.

Work with an experienced attorney. These are the top five considerations, and working with an experienced attorney can help you avoid the pitfalls of business ownership. To read more about starting a business, see the most frequently asked questions with the State of Ohio Business Gateway.