The Rules of the Game

There are few, if any, situations in life which do not have rules. Sometimes the rules are vague, others are very specific. But there are always rules, although a new inductee into the field may not be able to discern them.

Business has its own set of rules. Some govern how we advertise our business – what we can and cannot say (for example, you aren’t allowed to make false claims about yourself). Others govern how we earn money – records that must be kept, files that must be submitted. Still others deal with the environment in which we can act – as a sole proprietor, a partnership, or a corporation.

What is common to all of these rules is that as new inductees to the field, we are not familiar with all the rules. We are, however, liable for failing to follow them. If you don’t file your taxes correctly, you can face significant fines, for example, despite the fact that you were not aware of the error in your filing at the time of reporting.

As a small business owner, we face significant risk on a daily basis. We have expenses to pay, clients to talk to, prospects to woo. Often, especially at the early stages, we’re worried about the success or failure of our business as a whole, and just how long and hard the crash and burn might be.

For this reason, we need to mitigate risk as much as possible, especially for the things we know we don’t know about. So, if you’re starting a business, make sure you have the following resources available to you:

  1. Lawyer: Every business has paperwork that needs to be drafted, filings that need to be made, and, if you’re successful, complex negotiations with investors. You need someone who knows and understands the law as it relates to your business, and who works with other businesses of your size and type. (Divorce lawyers are out unless your business deals with breaking up relationships.)
  2. Accountant: You will have to file income returns every year. You will have to pay taxes – certainly income taxes, but if you have employees, you may be required to withhold tax, or you may have to submit sales tax at regular intervals. You will want to structure your revenue and expenses in such a way to keep your taxes down.

Ideally, your accountant and lawyer should be in touch with one another, to set up your company in the most strategic way possible. Naturally, they both have fees which may make such coordination prohibitively expensive, but you should certainly dedicate part of your budget to planning with both. At a minimum, you should have their phone numbers available when you need them – and they should know who you are when you call.