Startups are growing in number. The world is more open to business than in the 90s. And many factors have influenced that development. The easy access to the Internet, the smartphone industry, globalization, and the increasing economic welfare of all nations seem to form an ideal environment for people to start new businesses.
However, competition has become tougher each day. Companies who do not adapt to the latest marketing and management technologies will hardly survive. And here, we are going to discuss three ways to protect our businesses from impairing financial loss.
Incorporating the Business Immediately
Entrepreneurs use business loans to build their companies. But because of a limited budget, many startups tend to delay to incorporate their companies. As a result, the business is not formalized, and all the possession of companies’ assets is not acknowledged and protected by the state’s law.
Besides, the loan of a non-incorporated business will hold the founders as the liability. And the banks will define that loan as personal. The situation means that the liable individuals will not be eligible for any more credits, including the income tax loans. And if any financial disaster happens to the company, the credit scores of those individuals will get affected.
A shortcut to this incorporation problem is to hire a capable business attorney. First, you can use the Internet to profile all the available business lawyers in your region. If they have client testimonies, evaluate their method. And if they provide a free consultation, you should use it. Second, check the lawyer’s reputation from fellow entrepreneurs. The questions you should as will be, “How long the process is going to take? How much is the service going to charge you? And will the attorney be co-operative for future legal issues?”
Dealing with the Tax Issues Correctly
When a company makes income, or when it sells stocks to capitalist ventures, the company is subject to pay taxes to the state. However, the typical strategy to deal with taxes is to postpone from thoroughly calculating it. And also, most entrepreneurs are reluctant to admit their ineptitude in filing taxes.
First, allocate your budget for the taxing. It is an obligatory step to prevent tax penalties in the future. And remember, the fines do not care about your condition. Always consider the worst by simulating how bad the situation is going to be if the tax auditor fines you during a depression.
Second, you can try either a tax software or an advisor. The program may help you for a while. But as your inventories grow, you may need to buy upgrades. As for employing an advisor, it is not a lavish act for a startup. In fact, tax advisors may charge new businesses with a price lower than usual in exchange for a long-term partnership. If you can make that deal, it will benefit you continuously.
Partnering with Insurance Companies
The risks for new businesses are always out there. Sooner or later, lawsuits are going to come to get you. For example, PayPal faced many legal issues in its early establishment. In 2002, Paypal was sued for violating the Electronic Funds Transfer Act (EFTA) because the company did not create law-compliant dispute resolution procedures.
Paypal was among the first e-payment companies. But they could outmatch the others because they were the first to innovate their system to be integrated with credit cards and US banks. And because e-payment was relatively new to the world at that time, law violations appeared as the company was expanding.
If your business deals with innovation, you are most likely to break the law in one way or another. To overcome that risk, you should have a policy of general commercial liability insurance. The second insurance you will need is the professional liability insurance. It protects you from professional negligence lawsuits.