Therefore, the fastest and most efficient way to change any organization is to exemplify the values and ideals you want your employees to follow. If you want employees to put extra hours in when a customer needs help, you must be the first person to volunteer to stay and complete the task. If you want your customers to receive great service, you must go out of your way for each patron you deal with. If you want your business expenses to go down, you must cut your own costs, reduce spending, and let your team know that frugal decisions are valued. The more your team has the ability to observe your values and the way your decisions are made, the faster they will learn what needs to be done and how to do it.
Of course, leading your business shouldn’t be limited to leading your employees. As a business owner, you need to make yourself visible and available to your customers and clients. It is equally important for them to see your company’s values. When you back up your company’s warranties and guarantee the workmanship, from whom are the customers really buying? From you! After all, if the owner stands behind his or her company, the customer will feel that any problem can be resolved and any wrong will be made right.
Most businesses aren’t likely to grow to stardom when the owner is uninvolved and uncommitted. If you think of any successful business — Microsoft, Berkshire Hathaway, Disney — you can usually name the committed business owner behind its rise to stardom: Bill Gates, Warren Buffett, and Walt Disney. Similarly, your commitment and dedication can drive your business to grow and be profitable.
1. Ben & Jerry’s, “Press Release — Ben & Jerry’s Chunk Fest,” http://www.benjerry.com.sg/moopress/081119_chunkfest.pdf (November 9, 2008).
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Comply With All Government Rules and Regulations
In business, government rules can be complicated and unclear, but they exist —and if you want your company to be successful, you better follow them. If you ignore government rules and regulations, you could jeopardize your business. With this in mind, before your company can begin to grow, you must first ensure that you don’t have any restrictions holding you back. For a company, these restrictions can take many forms. There could be government licenses that are not properly in place, fees and interest charges that are increasing, or regulations that are not being obeyed. Each of these areas need to be reviewed and resolved to ensure that the work you put into growing your business will not be in vain. There is no point in building a business only to have the tax people come in and seize all your assets. With a little preventative maintenance you can ensure that your business can grow and flourish.
1. Protecting Your Personal Assets
Years ago, when exploration was young and trade was booming, Europeans would send out ships to distant lands to open new routes and develop new business opportunities. However, when something went wrong, such as losing a ship and with it the cargo and lives of the sailors, the individuals that set up the voyage could become liable. This meant that their personal interests would be used to pay for the losses that were incurred. Unfortunately, this type of risk is too significant for anyone with any accumulated assets to take. If a ship was lost at sea, the individual’s home, business, and livelihood would all be risked. Therefore, to reduce this risk and encourage exploration, corporations were developed.
Corporations function the same way today as they did back when they were first created. Incorporating allows the business to become its own legal entity, which means individuals can invest in a new venture, but limit their risk to the money they have invested in that business.
If you are running your business as a sole proprietorship, even if you are the only employee, you are risking all of your personal assets if the business is held liable. To protect yourself, make sure that you are properly incorporated. Check with your accountant or lawyer to help determine the best business structure for your situation.
Lifesaver: There are a few different types of entities you can choose from when you incorporate. The type of entity you choose can impact your tax obligations. Make sure to talk with a qualified tax professional about the tax advantages of each type of incorporation before you choose one. The decision you make could save you a significant amount of money on your taxes.
After you have a properly incorporated business, make sure you run it as a business. This means that you must follow your state or province’s requirements regarding the organization and operation of a corporation. Although it may seem unnecessary, it is important that you hold the appropriate meetings and file the annual paperwork if required. Depending where your business is located and the type of incorporation you choose, these obligations can vary so make sure to work with an experienced professional to set up and manage your company.
Sometimes business owners are tempted to let their personal finances mix with their business finances. Once this happens, it can create all sorts of risks for the owners. The least of which is the tax risk associated with misallocated resources. If you are audited, your deductions can be rejected if they were not legitimately associated with your business. However, the bigger risk comes if your company is ever sued and found liable. If you do not keep your business and personal finances separate, it could be sufficient proof that you have not formally provided enough separation between yourself and the business. Once this is established, you can be held personally accountable for the liabilities of the business. Your personal assets, home, car, and investments will now be available to provide restitution for whatever financial award is decided.
To ensure you have properly separated your personal and business assets, there are a few simple things that you should do:
• Ensure your business is properly incorporated and maintains its incorporation status. Depending on the state or province in which you file, there are various rules that must be adhered to in order for a business to maintain its incorporation. If you aren’t sure how to do this, make sure you engage the services of a professional.
• Obtain and use a business Employee Identification Number (EIN) in the United States or a Business Number (BN) in Canada. These business numbers function similar to a social security number or social insurance number and are used for business bank accounts, tax identification, and lines of credit.
• Maintain separate finances. Each corporation that you own should have its own bank account. Further, financial transactions that occur in that account should be limited to those activities and purchases that are related to the business only.
• File business taxes. Your business should always file its own taxes using its own EIN or BN. Talk to a tax professional to make sure that this is done properly.
Of course, these guidelines are just recommendations. To ensure that you are in compliance with Federal, state, or provincial guidelines, regularly check with your lawyer or accountant. It will always be less expensive and easier to pay for advice up front rather than deal with the penalties later.
2. Set up Your Business Credit
Even if you have a business properly set up, you may find that you have to personally sign for credit for your business. If you have co-signed with your business, you are personally responsible for that line of credit. Eventually, if your business grows enough, there is an alternative to personally signing for credit. It is possible for a business to build its own credit rating and get its own line of credit. This type of credit can also be used to expand credit to vendors and to purchase goods and services from suppliers.
In the same way that individuals can monitor their personal credit, business credit can also be monitored. The leading agency for business credit monitoring is Dun & Bradstreet (D&B). Once