Contemplation of a New Business

new business

By Dawn Wattie 

In contemplating a new business endeavour, the potential business owner needs to take into account initially broad considerations such as: (a) who and how are the business accounting and bookkeeping responsibilities going to be handled; (b) who and how is the business going to be structured; (c) where and how will the product(s) and or service(s) be sold; and (d) how will the business make money. In seeking answers to these broad considerations, it is helpful for the potential business owner to consult with accountants, bookkeepers and legal counsel.

Consulting with an accountant and bookkeeper will assist in determining what accounting and bookkeeping system and software best fits the size and complexity of the potential business enterprise.

Consulting with legal counsel will assist in determining what is the appropriate business structure (ie sole proprietorship, general partnership or limited liability partnership, limited liability company or special purpose company) and how to structure the business to limit exposure to liability and risk from the business endeavour and to maximize the tax planning capability within the business structure.

Identifying the jurisdiction(s) and sales channel to the marketplace for the products and services of the business will assist in determining the nature and type of contractual arrangements with suppliers, distributors and clients, what certification, permits, research and development and other activity is required to produce the products and services and how the business will be conducted.

Determining how the business will make money will assist in determining what working capital will be required to initiate and operate the business, what is the proposed burn rate for the business, what is the cycle for accounts receivables and how many individuals are required to successfully operate a profitable business.

 

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