| Step 1 Define Your Business Intro
This mini-course will explore the reasons and benefits of creating your BUSINESS PLAN, will provide templates and examples, and guide you through the process of defining your business.
Ideally, you should complete this process PRIOR TO STARTING WITH ANY BUSINESS ACTIVITIES. It is important that you begin recording your expenses and income IMMEDIATELY! This can be done with pencil and paper, with free tools like Google Sheets (a spreadsheet program), Microsoft Excel, or using an accounting package like Quicken or QuickBooks. UNTIL YOU HAVE MADE YOUR FIRST SALE, all of your expenses up to that point are considered STARTUP EXPENSES, and the Internal Revenue Service (IRS) has very specific rules about what would be considered legitimate startup expenses and how they are treated in accounting and tax reporting. The question of LEGAL STATUS and LEGITIMACY comes into play so it is important that you get any business licenses and permits PRIOR to conducting any business transactions. The next issue is satisfying an ACCOUNTING ISSUE on how to transition from STARTUP status to NORMAL BUSINESS. This important point here is that you are considered in STARTUP until you make your FIRST SALE. It is very important to earn your first dollar of REVENUE because all expenses up to that point should be CAPITALIZED, which means that those expenses are AMORTIZED over a period of years. Why is this important? MONEY. CASH IN YOUR POCKET. PAY LESS IN TAXES, LEGAL LIABILITIES Since we have talked about MONEY, you MUST keep your PERSONAL assets and expenses separate from BUSINESS assets and expenses FROM THIS DAY FORWARD. Even with a sole proprietorship, your BUSINESS is a SEPARATE LEGAL ENTITY. You should record when personal assets are used in your business, because they are to be treated as EQUITY in your business.
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| Formalize Your Business |
| A Business Plan needs to be a WRITTEN document, and it is EVERGREEN. I recommend to my clients that when changes are made to your business or strategy, a snapshot of your EXISTING Business Plan should be archived, and a NEW VERSION of your plan be created so you have an AUDIT TRAIL (did I mention that I was a consultant and auditor, among other things I did in my extensive career(s) before retiring for the third and final time according to my wife).
You will get details about each section, and a template to use to start building your OWN Business Plan. |
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