Over the past few years, we’ve seen world governments go above and beyond to help companies receive grants, investments, vouchers, tax breaks, bonuses, and lump sums of money to bail out businesses from going under. Once your start-up/company/brand reaches sky-high heights, you’ll be able to pull a Bezos or even a Musk.
And as much as we’d like to give you the direct route, this topic relies heavily on your ability to network, build relationships based on trust, and be at the right place at the right time. Luckily, there are also loopholes, legislation, and deductibles that only a finance officer with the sharpest mind will pick up on to set it up.
By gaining insider knowledge at your bank and finance savvy gurus, and having a strong bond to your financial partner, you’ll be hitting the jackpot in no time. But until then, allow this guide of 12 things that will reap rewards in your company’s favor:
- Stick to the plan: Follow through on a proper structure from the beginning. For example, in the short run, an LLC is an easy method to balance losses with regular income, but it may not be the ideal structure in the long run.
- Separate Work/Life: Separate personal and business expenses so they don’t merge to become a problem down the line. Save yourself that headache!
- Ace it: Get it right the first time by studying up what you need to know and designing an elaborate plan to be executed in order to attract the best types of investors your way.
- Payroll taxes: Starting a business and running into payroll-related tax difficulties might result in hefty fines for the company. As a matter of fact, it's a federal felony to willfully fail to file or pay payroll taxes — so never forget!
- Work from home deductions: Home offices are tax-deductible only if they are utilized exclusively for commercial reasons. Verify the rules for deducting a home office and what documents you should preserve first before claiming a tax deduction.
- Real estate property tax: It's important to know that the region where you wish to develop your business may have high real estate property taxes that may affect the cost of your operation. Make sure you're familiar with the tax regulations in your city.
- Hire consultants who have signed suitable contracts: To minimize misunderstandings, make sure you have agreements signed and confirmed in place before any negotiation begins.
- Hire seasoned tax specialists: If you want to take control of your money, investments, and taxes, get an accountant or other tax specialist as soon as feasible.
- Tax credits and write-offs: Startups may not be aware of the various write-offs and deductions available to them. Take an hour to speak with a tax professional to see where you may save money on taxes.
- Consider taxable benefits and bonuses: As opposed to established businesses, startups are more inclined to innovate outside the box when it comes to benefits and bonus systems – but they must still adhere to tax laws.
- File income & expenses: A large number of startups don't keep track of all of their income and deductible costs. Your business's income and spending may be tracked with ease and accuracy with accounting software such as Quickbooks.
- Angels: Investors that can come down from the heavens to bless your project with enough investment fuel to get your startup setup for launch. Keep in mind the three types of existing angels, pre-investor, passive investor, and active investor, to best fit your business style and their involvement.
Once you’ve reached financial paradise with angel investors, you can fly higher into venture capitals and eventually into public markets to become what you were born to be - a unicorn.
In the grand scheme of all things investing and taxing, it's quite important to wrap your head around these topics so you’re on top of it at all times. Knowing where your money goes, how it flows, and understanding how investments and taxes function on your behalf is one of your most important tools in your arsenal and is absolutely paramount to the survival of your business.
Keep your eyes peeled also for Vouchers / 200m / EU-Startup Funding and other opportunities and incentives that can help your funding rounds. Governments know the value of cultivating startups and are not shy in allocating funds into your account so you can get the ball rolling. Plenty of today’s unicorns were born from a bit of money magic.