This is part six of ten in a series on foundational principles of being an entrerpreneur.
As a small business owner, money is always tight—particularly at the beginning. Starting a business requires cash for things like business formation, inventory, and marketing. The list goes on and on.
If you’re short on cash, you make up for it with sweat.
The simple solution to the many demands on your wallet is to do it yourself. For many of your business needs, this can be productive—in others, very risky, particularly when it comes to legal and accounting.
Legal and accounting issues have the potential to scare off those who are contemplating entrepreneurship. Questions arise such as: what if I get it wrong? How much is it going to cost? Is following my dream really worth all the red tape?
The good news is that you don’t have to do it yourself; lawyers and accountants are there to handle the red tape for you.
Even still, many entrepreneurs worry about the cost of seeking expert help; it’s easy to question whether the investment is worth it.
But small investments up front will set your business up for success. Get your legal structures and accounting systems in place—correctly—from the beginning. Failure to do so can kill your business before it even starts.
Consider:
Initial decisions have long term effects.
While choosing a legal structure or how to set up your books might seem like minor concerns, the decisions you make now will impact your business for years to come. They’ll determine what sort of partners you can have or sources of money you can tap. They will dictate how profit is determined, what you owe in taxes, and how you will be paid.
These decisions will ultimately affect your bottom line. When money is scarce, you need every dollar available. If you set up your business structures correctly, you’ll keep more money in your business. Over time, those dollars add up.
Experts are experts for a reason.
One of the great things about the digital age is how readily information is available. Google “What legal structure should I choose?” and hundreds of articles will appear. With so many resources, it’s natural to be tempted to figure it out yourself..
But legal and accounting are highly complex areas. Lawyers and accountants complete years of schooling in their fields and must pass difficult exams in order to practice. Their job is to understand the nuances of the law and how they will impact your business. Getting their expert advice—specific to your business and situation—will position your business to thrive.
Granted, not all professionals are equal. When choosing a lawyer or accountant, make sure you do your research and ask other business owners about their experience. If another entrepreneur raves about their lawyer or accountant, that’s a great place to start.
Focus your energy elsewhere.
Even with everything stated here, you may still be tempted to save the money and do it yourself.
Pause for a minute. Do you really want to?
Yes, you can do it. You can spend time and energy doing the research. Filling out the forms. Configuring the systems. Making filings. Calculating estimated taxes. Evaluating reports. Wondering if you did it right.
Let’s be honest. Trying to figure out these complicated systems is stressful. Self-teaching takes significant time—time that will ultimately cost you more money than you would pay upfront for expert help. Time you could be investing elsewhere in your business, on things only you can do.
You are not starting your business because you want to learn legal or accounting (unless that is your business!). You want to wake up every day doing something you love. Focus your energy on that and leave the other stuff to the experts.
Because when you get that government letter stating that you missed something, you’re going to call a lawyer or accountant to fix it. And it will cost more than avoiding the mistake in the first place.