As published in the Winter Park/Maitland Observer, Thursday Jan. 3, 2012 Edition Offers... Read More »
59 Tips for the Self-Employed
Getting Started
1. Incorporate Don’t operate as a sole proprietorship
2. Hire a professional bookkeeper
3. Outsource your payroll
4. Buy an accounting software package
5. Attend local new business owner courses
6. Don’t hire your relatives
7. Think twice
8. Don’t start a business just because you have a cool sounding name for it.
9. Get a line of credit
10. Don’t work out of your home
11. Don’t hide cash
12. Have an exit strategy
13. Set up a retirement plan
14. Lease your employees
15. Invest in brochures, business cards and stationary
16. Establish a website
17. Take vacations
18. Establish internal controls
19. Hire a tax advisor/return preparer
20. Prepare a Last Will and Testament
21. Get insurance
Get the Right Attitude
22. Expect setbacks
23. Treat your new business as an adventure
24. Be creative
25. Smile though your heart is breaking
26. Create a logo
27. Don’t bring your work home
28. Be proud of yourself
29. Be humble
30. Read, read, read
31. Be patient
Pubic Relations, Personal Development
32. Find a mentor
33. Be a mentor
34. Help others
35. Ask for feedback from your customers
36. Implement the good feedback
37. Always be learning
38. Think big
39. Follow the Golden Rule
Operations
40. Prepare a business plan
41. Under promise, over deliver
42. Be honest
43. Always be selling
44. Keep a detailed customer list
45. Become an expert in your field
46. Start a blog
47. Issue press releases
48. Check the backgrounds of employment candidates
49. Get involved in the community
50. Give customer loyalty discounts
51. Train your employees
52. Supervise your employees
Maximizing Revenues
53. Don’t let accounts receivable get stale
54. Mine your customer data base for new work
Minimizing Costs
55. Negotiate terms with vendors
56. Take advantage of early payment discounts
Accounting and Bookkeeping
57. Reconcile your bank accounts every month
58. Produce a detailed profit and loss statement every month
59. Analyze your monthly profit and loss statement and compare it to previous month
This is generally good advice, but I have to wonder about the bit about working from home. I guess it depends on the business — I wouldn’t want to start manufacturing in my kitchen, but lots of software and service businesses can do very well starting from home. It keeps overhead low, at least.
Taxrascal,
Thanks for the comment.
If you’re just starting out and are used to having a boss instill discipline in you, I think its a good idea not to work at home.
For many people the distractions of the TV, the dog, the baby crying and the refrigerator are too great to ignore.
But times are changing and working from home is gaining in popularity.
No disrespect meant, Pete, but I am not surprised that a lawyer would list “incorporate” as #1. As a general rule lawyers often get a huge fee for having their secretary type up some proforma papers and selling a corporate “kit”. Incorporation is not always the best way to go for the self-employed – what is wrong with the one-man LLC. Incorporation involves a lot of extra, often unnecessary, paperwork and federal and state filings and corresponding expense. And, like marriage, it is a lot more expensive to get out of then it is to get into. Lawyers also love it because they make themselves the “registered agent” and charge an unnecessary annual fee for so doing.
Item #2 is a good idea if you have a more involved activity. I believe that it should read “Hire a good accountant” instead. And item #3 is unnecessary if you do item #2 as I have amended.
I do wholeheartedly agree with items #6, 8, 11, 13, 16, and 19 (although 19 and my #2 should be the same). And, of course, #42.
Why #10 – if your business, and home, is so suited. Here I agree with “rascal” – I would say it depends on the type of business. Working at home works for me.
TWTP
Robert,
I should have said don’t operate as a sole proprietorship.
Somewhere on the order of 80% of new small businesses fail within the first year of operations.
I don’t think you should start your own business unless and until you have sufficient funds to lease at least a small office.
Handling your books and records on the top of an ironing board is a disaster waiting to happen.
Of course, that doesn’t mean nobody can handle having a home office. As with everything else in life, there are always exceptions.
The reason it makes sense that a lawyer is the registered agent is twofold:
1. The lawyer has a fully staffed office with someone available to receive service of process within the prescribed statutory time frames; and
2. If someone is suing you, the first person you want to know about it is your lawyer.
Lastly, you seem to be suggesting that tax lawyers are in business to make money and other tax professionals are not.
I find that both cynical and naive.
Incidentally, I don’t make any extra fees for being a registered agent.
Pete-
Chill, man. Sorry if I hit a nerve. It was not my intention to imply that you personally are anything but ethical and honest.
Obviously I am in the tax business to make a living – I enjoy it and am good at it.
However there is a big difference between charging a reasonable fee appropriate to the services provided and gross overcharging or selling a “product” solely based on the potential for income to the seller and not to properly meet the genuine needs of the client.
I am incensed when I see what Henry and Richard and their ilk charge clients for even simple returns. And I truly believe that more often than not when a taxpayer uses a CPA to prepare a 1040 (and not as part of a total business relationship) the client pays twice the price for half the service.
As for attorneys in general – I admit that, based on 37 years of dealing with the public, I am not the biggest fan of members of the legal profession.
A former Director of Practice of the IRS once told the story of a high-priced lawyer, a reasonably-priced lawyer and a ghost who were locked in a room with a pile of money overnight. In the morning when the room was opened the money was gone. Who was the thief? Obviously the high-priced lawyer, as the other two are figments of the imagination!
I certainly agree that one should not be doing “the books” on an ironing board – obviously an appropriate, segregated area is required. However depending on the type of business, and with the proper discipline and set-up, a home office is a very viable option.
Sorry if I ruffled any feathers. I consider you and other fellow bloggers with certain credentials, like Kelly Erb, Joe Kristan, and others, to be among the “good guys”.
So are we good?
TWTP
Robert,
Sure, we’re good.
I like a little disagreement on my blog.
It’s good for business.
Ha! Ha!
Incidentally, for every story you can relate about an unethical tax lawyer, I can give you 3 about unethical non-lawyer/non-CPA tax preparers.
There are bad eggs in every profession.
Now, if we can just get non-lawyers to stop screwing over other non-lawyers, we can get rid of the legal profession entirely.
[...] Returning to Peter Pappas – he gives us another blog list with “59 Tips for the Self-Employed” at THE TAX LAWYER’S [...]
some good tips there I wish I’d been told before starting out, and a few I will take on board from here on in.
Regarding finances, I’ve found the best Online Accounting Software package in the UK to be Arithmo, closely followed by Kashflow and QuickBooks – any of these will help you greatly running your day to day finaances, and you don’t have to be an accountancy background either.
[...] here’s a comment Robert left on a post I wrote titled 59 Tips for the Self-Employed in which I listed as #1 “Incorporate:” No disrespect meant, Pete, but I am not [...]
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[...] someone who believes in the Pay It Forward Paradigm and then follow it yourself. In the article 59 tips for the Self Employed. A mentor can help you avoid several mistakes because they went through them and have the [...]
I went the LLC route and like the fact that I can add on DBA’s as I grow.
Getting an accountant was a big step for me, I always did my own taxes and thought I had it figured out. Boy was I wrong.
The incentives for me to continue my business are pretty strong with all of the tax breaks, and my accountant showed why and how.