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Lower Your Risk With The Liability Checklist
Approach your business and your assets as if you are already wealthy
.Entity Structure:
1.Never operate as a sole proprietorship, period
2.Do a trademark search before you form the Corporation or LLC
3. DBA's (doing business as) make sure the applicant of the DBA is linked to the entity
4.Open a new bank account in the name of the new legal entity
5. Switch over all automated, monthly expenses to either the business credit card under the name of the entity or the business checking account under the EIN number of the new entity
6.Obtain a separate business license in the name of the new entity
7. Obtain a 411 listing for your business phone number
8.Obtain an 800 number for your business and a fax number
Capital/Financing:
1. Separate your personal and business credit with a business credit builder program.
2. Develop your business credit profile
3.Obtain a business credit card under the EIN number of the separate legal entity
4. Work with vendors that report to the business credit bureaus
Websites/Blogs:
1. Make sure you have the proper documents in place on your website. The law requires them and many of you may be violating these laws without knowing about it
Content/Marketing:
1. Make sure when you write content or someone writes it for you that you give proper credit to others intellectual property
2. If you get the rights to an information product make sure you have full rights in writing
Business Plan:
1. A solid business plan will help lower your risk by you having a clear direction of where you think the business will go and if it does not, you can make changes or shut down the business before the losses destroy you personally
Accounting:
1. Knowing your numbers will help lower your liability
2. The IRS expects you to track your financials
3. Knowing when your business produces a profit, return on investment and its cash flow are three critical metrics to keep your business on track
4. A budget is a key component to success and failure
Insurance:
1. Your business may need some type of business liability insurance, especially if you lease office space and have employees
2.You may need errors and omissions insurance if you are a professional giving advice
3.Insurance can be dangerous if you only reply upon your insurance policies to protect your assets. They can even encourage lawsuits is that is the only protection you have. There is also product and general liability insurance. Now, even home-based businesses have their own insurance (typically that is not covered by a homeowners liability policy)
Legal:
1. Make sure you have the proper legal agreements in place especially if you have any partners or investors
2.Before you sign any agreements on behalf of the new business, have a lawyer review them
3. Before you sign any agreements on behalf of the new business, have a lawyer review them
Taxes:
1. The IRS may be the biggest liability your business has behind the day you hire your first employee
2. Do not wait until the year is over to determine what you owe in taxes
3.Know if your entity is a calendar year end (December 31st) so you can meet with a CPA in late October or early November to determine how your year is looking to determine the profitability or loss of your business. If you are keeping up on the books along the way this should not be a problem
4. Everything from business expenses, employment taxes, plus state, and local taxes are critical. You must be on top of these or your CPA to budget in for these taxes, because the penalties and interest can be a killer
Intellectual Property:
1. Most small business owners do not trademark the name of the business. It is not necessary. At a minimum you should find out if your business name is violating someone elses trademark
2. Do you realize that those who trademark their name have a responsibility to protect the mark by going after any company that is violating their trademark
There is a reason only 5% of businesses make it past 5 years. The liability and expenses are massive. It takes massive effort, work, skill, focus, and some luck to be a success. If you are going to go for it and continue your business, make sure you reduce the liability, your downside, as much as possible first. Do not live in a fantasy land, where nothing could ever happen to little old you. That is not reality. Protect yourself and move forward to develop massive profits for you and your family. You deserve it!
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