Most entrepreneurs who form an LLC or incorporate a business are not aware of their tax and government filing requirements. Entrepreneurs often think there are no filing requirements because they are in the startup phase and there is very little or no financial activity. Unfortunately, this often costs the startup thousands of dollars in penalties and can really mess up a future angel financing or venture capital financing.
Frequently, I find that startup ventures simply do not have a financial plan. They know their business in and out but when you ask them about their financial methods of keeping track of operations, they look at you like you asked them how many planets are in the galaxy.
Agreeing on a structure, having a plan, and making sure there are checks and balances can help mitigate a lot of issues in the near future. It is stated that approximately 80% of small business fail within their first year with the primary reason being the lack of cash. Here are a few suggestions to help keep your business from going under:
Most often individuals who start companies do not necessarily have a strong financial background. Having a general understanding of the fundamentals can help prevent potential problems in your company. Here are a few guidelines that can help with the finance side of your venture: