The Simple 5-Step Guide to Start A Business

Step 1: Decide on Your Business Structure (and Don’t Overthink It)

Do I need an LLC? What about an S-Corp? These are common questions, but let’s break it down:

• LLC vs. Self-Employed: For taxes, they’re treated the same if you’re a solo owner. The real benefit of an LLC is legal protection, which may matter depending on your industry and risk level. For most, good insurance offers plenty of protection.
• S-Corp Election: Generally speaking, this starts to make sense as you hit the $80K+ net profit mark and want to reduce self-employment taxes or separate your business filings. But beware:
  • You’re committed for 5 years.
  • You must pay yourself a reasonable salary.
  • Distribution rules get tricky with multiple owners.
  • Some states/cities charge hefty S-Corp taxes (i.e. California, New Hampshire, NYC, Philadelphia)
  • Use our advanced SE vs. S-Corp Calculator to calculate potential tax savings of electing S-Corp.
  • Talk to a qualified tax advisor before making the election (more on this in Step 4)

Pro Tip: You can DIY your LLC setup, but it’s smart to consult a pro or use a startup service. Also, consider a registered agent to help with state compliance.

Step 2: Set Up a Bookkeeping System That Works

This is non-negotiable. You need financial data to grow your business, make decisions, and stay out of tax trouble.

• Separate Finances: Open a dedicated bank account (personal for self-employed, business for LLCs). No mixing personal with business.
• Use Bookkeeping Software: QuickBooks is the gold standard. Learn to use it yourself in the early stages. You’ll save money and gain valuable insights.
• DIY First, Hire Later: As you grow, hire a bookkeeper. But early on, managing your own books helps you understand your numbers and make smart choices. Empowered business owners make better decisions.

Pro Tip: Don’t immediately outsource everything. Learn the basics so you can lead with confidence and clarity.

Step 3: Start Saving for Taxes Immediately

Taxes can sneak up fast. Here’s how to stay ahead:

• Open a Separate Tax Savings Account: This keeps your tax money out of sight and safe. Use a high-yield savings account (business or personal) to earn while you wait to use these funds.
• Use our Business Tax Budgeter every month to create an easy tax savings system.

Pro Tip: With a proper budget, you can use some of the tax savings for tax planning purposes. It takes money to save money!

Step 4: Get a Trusted Business & Tax Advisor

You’ll hit questions you can’t Google your way through. A good advisor will:

• Help you navigate challenges as your business grows
• Guide big decisions (like S-Corp elections, hiring, expansion)
• Keep you compliant and proactive, not reactive

Pro Tip: Your advisor should be available year-round—not just during tax season.

Step 5: Hire a Pro to File Your Taxes

Your tax preparer is not always the same person as your advisor—and that’s a good thing.

• Having two independent professionals creates checks and balances.
• Your tax preparer should focus on accuracy and compliance.
• Your advisor helps with long-term strategy, planning, and decision-making.

Pro Tip: As your business grows, you’ll eventually add lawyers, financial planners, and other pros to your circle. Think of it as building your dream team for success.

Final Thought: Start Smart, Build Strong

Starting a business is exciting, but the key to long-term success is setting up a solid foundation. You don’t need to have it all figured out today—just take the first step, and keep building from there.

Need help? Our parent company BizTax Advisory LLC offers startup services and advisory guidance to help you established a streamlined foundation you can self-manage until you reach the outsourcing level.