I have an addiction. I’ve had it for a while. They don’t make a support group for the kind of crave I experience. I’m a startup junkie! Some people get a thrill from jumping out of perfectly good airplanes, swimming with sharks, or scaling sheer cliffs, not me. My rush comes from logos, Quickbooks, websites, and operating agreements. It’s sick, I know. But show me a sport that offers the same level of challenge and opportunity and I’ll buy you lunch!
I’ve had the grand pleasure of being a part of seven start ups. Some failed and a few have risen to greatness. Luckily for me, I love to do what most people dread. I’m a sucker for operations and all of the dirty details that keep a business running like a well oiled machine.
If you’re like most solopreneurs your eyes glaze over the second you hear terms like accounting, contracts, taxes, and payroll. Unfortunately my friend, as mind numbing as these topics may be, they’re critical to your success. The trick is to surround yourself with people whose passion and expertise lies in doing the very things you find most tedious and annoying. In the interest of time and attention span, we’ll stick to the top five administrative topics critical to your business:
#1 – Business Entity
A Solopreneur can do business very simply under his/her own name. The IRS knows you as a Sole Proprietor. Sole Proprietorship automatically exists when you do business on your own. It’s super easy to be a sole proprietor but it comes with risk, unlike the more formal business structures.
Let’s assume for simplicity’s sake that you will do business under your name and social security number. Tax time is a snap with the help of online programs like TurboTax, they’ll hold your hand every step of the way. TurboTax even offers to do your taxes for you now, for a fee of course. As a Solopreneur you have the flexibility without the obligation and commitment to employees. When you’re ready for more permanent help or when you start making money hand over fist, it may be time to consider a more formal business structure such as a Limited Liability Company (LLC), Corporation or S-Corp. Sure, your taxes will get a little more complex, but from the perspective of personal risk, it’s like swapping your t-shirt for the Mithril Coat. A business structure limits your personal liability and protects your personal assets. Not sure which route is best for you? Let’s look at #2.
#2 – Legal Advice
If the idea of an attorney seems intimidating or just expensive, don’t tune out just yet. There are great law firms out there that charge a flat fee for some services, will disclose their fees upfront so you can make an educated decision, and use plain speak versus legal mumbo-jumbo. Do a little research and ask the right questions, an attorney can be your best friend when it comes to CYA.
#3 – Certified Public Accountant (CPA)
I don’t know a business owner alive who claims to understand tax law. But I guarantee if you ask a peer or mentor for tax advice you’ll walk away with a terrific CPA referral. A great CPA can help you organize your books and keep you on the straight and narrow with the IRS. And since they make a living actually knowing tax law, they’re invaluable come tax time or when deciding if you should set up an LLC with an S-Corp election, blah, blah, blah. You’re time is better spent doing what you know and love, and your money is better spent on professionals who can keep you compliant with the government, and save you money while they do it. So what about the day the day-to-day accounting? Keep reading.
#4 – Bookkeeping.
You have to know how much money you have coming in and going out. If you don’t know the answer to both of those questions, you’re in trouble – BIG! There’s no shortage of reasonably priced bookkeeping programs that are sure to get the job done and in a reasonable period of time. Quickbooks Online by Intuit is a trusted favorite, but up and coming solutions like Xero are grabbing attention and market share with sexy on-the-go and automated features. Assuming you’re running a for-profit business, this is not the place to skimp or improvise. If time or arithmetic are an issue, considering hiring a freelance bookkeeper to keep you in the black. And while we’re on the subject of freelance employees, let’s have a quick look at our last topic.
#5 – Payroll
Whether you’ve decided to roll up your sleeves and tackle bookkeeping on your own or you’ve hired a freelance bookkeeper, you probably have talented people you need to pay. You’re in luck! In addition to payroll services offered by Xero and Quickbooks, there are some other VERY cool solutions to add to your arsenal. Gusto is a personal fave. They have taken something complicated, bureaucratic and tedious and turned it into something that’s almost fun. Gusto is a fully automated payroll system that manages all of the paperwork, workers compensation, and all that legal, employment crap you don’t even want to think about. Plus, they manage your contractors and issue all of your year end tax forms. You won’t know what to do with yourself!
Do what you love, love what you do, and surround yourself with great people and support programs that help you run your business #likeaboss.
Image credit: Mirjana Jesic