I Just Started a Company. What Should I Do Now?
I get asked this question all the time, and the answer is – it depends. Let’s say you just started a company and you are not making any money, yet. First things first – do not stress. The IRS cannot take money you have not earned. So, there is nothing to worry about, and you don’t yet have to go “What tax structures should I have? Should I incorporate?”
You do not have to go into any of that until you start earning money. Once you’re making over $100,000 in revenue and over $50,000 or $60,000 in profit, you need to consider tax structures. Just start making money. If you have something to sell, a product or service, start selling it and bringing in money.
Yes, you should track it. You should get bookkeeping software or an Excel spreadsheet to track the money in and out. You should have a bank account. A personal account will do, but use it only for business in and out. Keep it simple.
You don’t have to go get a DBA. DBA stands for “Doing Business As” and it is a legal term used if a person or company does business under another name than their own. In order to get one, you would fill out a form and send it to the Secretary of State or similar government position in your state. A DBA can be used for opening a bank account. When you need it, a DBA is easy to get; you could sign up through Legal Zoom or similar websites. Or you can ask your Bookkeeper or CPA to file for you. Otherwise, just ask your customers or your clients to write checks made out to you, (even better, have them send money online straight to your bank account.)
You don’t have to do anything more until you are making more money. But, do keep track of money coming in and what you’re spending.
My motto is: “Keep it simple”. Keep it as simple as possible until you’re making over $100,000 in revenue, at which time you will want to look at incorporating as an S Corp. That is usually the best way to go.
At the point where you are hitting the $100,000 revenue range, a good CPA will be your best friend and help you plan your tax structure in the best way to achieve your goals.
After you incorporate, you will want to get a business bank account and to set up payroll, but that comes later.
To recap, if you just started, the first thing is don’t stress the legal structures, tax structures, and IRS. Don’t worry about any of that. Build your business; do what you need to do and make some money.
Maya Weinreb | Founder & CEO