STEP 4
Planning For Retirement Prepare A Schedule Of Monthly Business Expenses.
Going back to fundamentals, you need to generate positive cash flow, which is not the same as generating revenue. Positive cash flow occurs when your revenue exceeds your expenses. Your net cash flow must cover your personal expenses. If these numbers don’t work, you’re going to put stress on yourself and nothing positive comes from stress. That’s why I strongly suggest having the 1-year expense cushion.
These numbers are only estimates, your actual expenses will be different. I highly recommend overestimating these. Inevitably you will get hit with unexpected expenses, both business and personal.
MONTHLY BUSINESS EXPENSES
CATEGORYAMOUNT
So, you crunched the numbers and are determined to move forward. Many times, I have found that entrepreneurs move forward despite what the numbers look like. I’ve done it and learned very expensive lessons. Some of those lessons turned out to be invaluable lessons, on what not to do, while some worked out proving my intuition was right all along. If you are one of those that choose to move forward, despite what the numbers look like, I highly suggest you read my book “From Myths To Money” available on Amazon. Have faith and tenacity, you’re going to need it!
STEP 5
Legal Structure
These are your options when it comes to your legal structure as a business. If you don’t formally choose one of these, you are a Sole Proprietor by default. If you create a Not-For-Profit and don’t set it correctly, you can face some serious legal repercussions. Before you do anything, seek the advice of a good accountant and/or tax attorney. I say accountant and/or tax attorney. Because most attorneys are not versed in tax strategies. Choosing the wrong structure can cost you a significant amount of money.
- Sole Proprietor
- Partnership
- Corporation
- “S” Corp
- LLC
- Not for Profit
Most starting business checklist and small businesses should be structured as an “S Corp” for legal and tax planning purposes. I’ve seen many new business owners and business ideas, choose to be structured as an LLC without knowing the tax implications. I have included an article on being taxes as an LLC and self employed vs being taxed as an “S Corp”. For more information download my FREE copy of Business Structures
joe@bedrockbusinessbuilders.com
(661) 752-5639
Hey Joe,
One year of expenses should be a good cushion to have! Do you recommend this in cash in a bank or could this be in a higher interest paying account?
Are all of these legal structures typically just for Americans. I have heard of these names floating around but being from the UK I don’t know much about them.
Our current property business has been set up through a limited company so I’m not sure if that’s the same thing as any of these structures?
Thanks for sharing
Mike
Hey Mike, would glad to be of assistance. These are USA laws, don’t know the UK tax structure. As far as where you should park you money, just make sure it’s liquid. Any other questions feel free to reach out at http://www.timewithjoe.com Thanks! Joe
Some very useful tips here. This is something that is very relevant to me at present and your tips provide a sense of clarity when considering starting your own business. A monthly expense report is something that I use on a weekly basis purely for keeping tabs on my expenditure – it’s something that everyone should integrate into their daily lives and really helps to control your finances. Thanks for the information.
It can certainly be overwhelming to start out on the journey to owning your own business. I can certainly see how one could easily overlook things like tax status and expense cushions. I am very grateful I came across this site and will book mark it to follow your future articles. As someone who is new to the whole business ownership game I will need all the help I can get.
You have given me some great tips that I hope will help me as I am almost 50 year old and have no retirement in place. I am worried about what I will have when that day comes or will iI have to work the rest of my life because I have nothing in place.
As someone who is learning about being an entrepreneur and having my own online business, I am not sure as to what I need to do .
I see that you recommend “S” Corp structure. Is that the recommendation for any small business?
I will be checking the rest of your site for more useful information as you have given such great advice.
Hey Joe!
Cashflow is so important to a business! Right now I work as a main manager for a Startup and this is one thing we focus on constantly! When you don’t got it, it makes things really stressful!
Chris
LOL Yes! You have that right Chris. Let me know if you have any questions.
Cashflow is very important and the most difficult part for everyone. You give me a good guideline for me. I believe a 1-year expense cushion is reasonable for everyone. A monthly expense is quite difficult to estimate precisely.
The legal structure teaches me a lot. I have totally no idea about that before.
Thank you for your sharing.
You are welcome CT! Let me know if you have any questions. Joe
Hi Joe, I will be using your checklist as I’m starting up my own business soon. Thank you for sharing this with me.
Habib
Awesome! Let me know if you have any questions. Joe