Establishing A Sturdy Keel

Ahoy!

Welcome to the first port on your pathway to success. In this message, we’ll focus on setting up your business structure and separating your personal and business finances—a crucial step for building a strong foundation.

Define Your Business Structure

Choosing the right business structure is essential. Whether you're setting up as a sole proprietor, LLC, or corporation, ensure it aligns with your long-term goals. This decision impacts your legal liability, taxes, and operational flexibility. But which one is the right one for you?  The internet has a plethora of resources that can help you make this decision, but it's always recommended to consult with a legal or financial advisor who can guide you in the right direction. We have provided a brief description below, to get you started. As your business grows and evolves, you may need to re-evaluate your structure, so don't be afraid to make changes down the road. 

Separate Finances

Creating an LLC (or corporation) establishes a "corporate veil" between an entity and its owners. It is imperative to open dedicated business accounts to maintain that separation between the business owner and the business itself. This separation not only simplifies accounting and tax preparation but also builds credibility and sets the stage for professional growth. While an unintended personal expenditure is bound to happen on a business account, it is still an instance of "piercing the corporate veil". While rare, the IRS may take issue if your business and personal finances are not kept separate, which can lead to potential audits and penalties. In short, keep your business finances strictly for business purposes.

Building a sturdy keel for your business requires careful planning and informed decision-making. Establishing the right business structure and maintaining separate finances are critical steps towards achieving long-term success. By doing so, you not only protect your personal assets but also enhance your business's credibility and operational efficiency. As your business grows, remain flexible and open to revisiting these foundational elements to ensure they continue to serve your evolving goals.

Disclaimer: the material in this message is intended for informational purposes only. You should always consult with a legal or financial professional for specific guidance related to your business. Perrywinkle Accounting LLC is not liable for any actions taken based on the information provided in this message.