GETTING STARTED

Often the first step in getting started is obtaining an occupational license. This varies from one community to another. When I lived in Tampa, Florida it was necessary to get a license to operate any business. When I moved to Austin, Texas years later it was not required. It is important to check the requirements in your community and adhere to them to avoid problems after you have started your business.

What about the name of your business? I suggest you simply use your own name and add words that identify what you do. However, you can also create a name for your business. For years I operated as the Cabinet Doctor. If you don’t use your own name, remember to register the name as a fictitious name with your County Clerk so that no one else can use the name. When you do this you will also discover if anyone else is using this name. This is important to avoid infringing on someone else and getting involved in costly legal actions. Registering a fictitious name is easy to do and the fee is usually quite reasonable.

Sales tax is another requirement you will have to consider. This can be confusing. In most states you will need to charge sales tax on the sale of almost all products. You should register to collect sales tax as necessary and then pay the collected taxes to the state on a monthly or quarterly basis. Depending on your volume, you will be required to pay monthly, quarterly or annually. Always pay the collected taxes when due. Using these funds for other purposes can create serious problems for your business.

To handle the income and expenses of your business, open a business checking account and a savings account. These accounts should be separate from your personal accounts and used exclusively for your business. Use the checking account to deposit income and pay bills. Use the savings account to save the funds you will need to pay your taxes and to keep a reserve fund for unforeseen situations. I also suggest that you maintain a small petty cash fund to pay for small items that may become necessary.

Purchase or make your own business cards and stationery. There are many inexpensive software programs that do this easily. You probably have one on your computer right now. Also purchase some accounting software to keep track of all your income and expenses. I highly recommend Quickbooks but there are many others including Quicken and Money.

Before purchasing your accounting software, check with your bank. Many banks now allow synchronization of your accounting software with your bank records. I did this for many years using Quickbooks Pro. There was a small additional fee for this service but it allowed me to easily balance my accounts. It is also wise to use this software to write the checks for your expenses. This allows for one time posting and avoids having to enter information later. You should also use this accounting program to handle your invoicing and to maintain a customer list with complete details. This way you will not have to purchase printed invoices and your sales will be automatically posted to your accounting software when the invoices for each job are created. All of this valuable technology will save you time and help you make more money but it can become a waste of time without proper backup.

Make certain that you backup your accounting software every time you use it. It is not uncommon for people to use good accounting software for years and never make a single backup. Losing all this information after several years can be a disaster. In most cases, the backup of an accounting program can be done onto a floppy disk. Don’t depend solely on one floppy disk if you are using them for backup. Create a set of four disks and rotate them making certain to take one of them off property for safekeeping.

If you have a different work and home location, keep rotating one to the other location. If not, do the rotation into the glove compartment of your car. The important thing is to keep a recent disk in some other location in case of a disaster that destroys your computer and backups. Don’t lose all your important data because it can be a serious problem.

Initially, you can avoid the expense of accounting software by taking advantage of online banking. With online banking you will get a record of every payment and deposit. This record can be printed weekly or monthly and become your accounting record. To use this method, devise a numbering system for your expenses. For example, use 1 for auto expenses, 2 for utilities, 3 for rent and so forth. Once you print out your online transaction record, identify all the expenses with the appropriate number and place the form in a folder. At the end of the year you will have a record of all income (deposits) and all your expenses (payments). You can then separate the expenses into the correct categories by using the code numbers and this will provide you with the information you need for your income taxes and will serve as evidence if necessary. Using this method you will have to handle your invoices manually but it will save you money. Once you are established, you can purchase and use accounting software.

If your work requires a large financial commitment for materials or supplies, prepare a simple contract document for your customers to sign before beginning the job. It is essential to get a signed contract together with a 50% deposit with every job before you start. You will probably hear or even believe that it is difficult to get a 50% deposit from your customers. I did this for over 20 years and seldom met with any resistance. Even when I was first starting it was no problem to get a deposit as long as I carefully explained the work, and a fair contract form. Once you’ve developed a reputation it will be even easier to obtain a 50% deposit from your customers.

A contract with a customer is based on trust. If a customer is unwilling to sign a contract and give you a deposit, then trust does not exist. The customer does not believe that you will follow through and perform as you promised. On the other hand, if you proceed without the deposit, you can’t be certain that you will get paid. The 50% deposit is a compromise of sorts. The owner will be certain that you will deliver in order to get the rest of the money. You will be certain that you will get paid because the owner has contracted with you and given you a good faith deposit. If this much trust doesn’t exist, you are better off not dealing with the customer.

For many kinds of businesses it is important to obtain a liability insurance policy to cover you for any potential problems that may arise. This policy should include coverage for completed and installed products. It should also cover anything that may happen during the installation process in the home. Shop around for this insurance coverage because the rates vary enormously. Unless you plan to do some very high dollar jobs I would start out with a $100,000.00 policy.

Have a phone installed with a number especially for your business as soon as possible. Considering present low cost contracts, I suggest a mobile phone so that you can keep it with you when you are on sales calls or deliveries. This way you will not miss any potential customers.