Starting a new business is exciting. You have an idea, you decide to put money and time into building it into a company, and (at least hopefully) you watch your business grow as customers discover you and spread the word.
Becoming an entrepreneur is even more exciting if your goal is to get out from under a corporate day job replete with red tape and redundancies. To that end, it’s understandable that most entrepreneurs don’t want to spend time focusing on things like legal red tape and accounting paperwork.
And, as a small business owner, you shouldn’t be putting time into those things. Your time is better spent growing your business and making your customers happy. But the fatal mistake that a lot of entrepreneurs make is that they ignore legal and accounting best practices altogether. This is a recipe for disaster – not just because you may be opening yourself up to liability or financial penalties, but because good legal and accounting work can save you thousands of dollars both in the short and the long term.
So what are you supposed to do? The answer is as obvious as it is unpalatable: you need to find a good lawyer and CPA and put them on speed-dial. For small business owners, especially those going at it for the first time, good legal and accounting advice is invaluable – and a lot cheaper than the alternative.
The biggest challenge in developing a relationship with an attorney and a CPA is finding someone that’s a good fit for you. Most importantly, it’s critical that you connect with professionals who make small business their bread and butter. This doesn’t mean that you pay a corporate lawyer $600 an hour to form your LLC, nor does it mean that you hire the personal-injury lawyer who just happens to list “business formation” as one of his services on his website. When starting your business, it’s important to find someone that’s both competent and cost-effective. If you find a lawyer that you think is a good fit, but who’s a bit out of your price range, ask about deferred fees (which may become due when you hit a certain revenue target or receive investment of a certain amount), or paying her with equity in your company.
The same is true of CPAs. There are plenty of great accountants who only handle personal returns; these won’t be a good fit for your company. You’ll need to find an accountant that handles business returns, and especially one who can advise you as to how to handle expenses in a way that saves you as much money as possible within the confines of federal and state tax law.
There are lots of good online directories for accountants and lawyers, as well as platforms that will match you with a professional in your state and who practices in your chosen area. It’s also a good idea to ask other entrepreneurs if they can recommend someone.