Actionable Tips for Entrepreneurs to Support Startup Success

 

If you’re an entrepreneur or small business owner, you enjoy significant freedom in your professional life. You get to be your own boss. That freedom also brings great responsibility with it, however. Startup founders face unique practical and psychological challenges, from struggling to find reliable staff to dealing with imposter syndrome. One lesson every new business owner must learn is the importance of delegating. Many business-owners initially want to do everything themselves. However, this can lead to burnout.

Kimberly J. Howard, CFP invites you to read on for more actionable tips and tools designed to help entrepreneurs and small business owners succeed.

Create a business plan.

When you first launch your business, you want to have a business plan in place to guide your path forward. This is a comprehensive document that outlines exactly who owns and manages your business as well as how it’s run. It covers everything from market analysis and financial projections to marketing and sales plans. Your Story provides a comprehensive guide to drafting a business plan.

Create a legally recognized business entity.

Take the time to formally establish your company as a legal business entity, like a limited liability company. This provides added legal protection. For example, if someone sues your business, your personal assets will be safe. Incorporate explains additional benefits of an LLC, such as simplified tax and reporting paperwork.

Set up a dedicated business space.

From Amazon to Spanx, many major enterprises started out as home businesses. While there’s nothing wrong with this arrangement, you should designate a distinct space within your house as your workspace. You will be able to focus better when you aren’t distracted by household chores, pets, or kids. As a rule, create a home office that fosters productivity — for instance, by decorating with focus-boosting hues.

Get your finances organized from the beginning.

You want to organize your financial documentation now to streamline bookkeeping and tax filing later. One valuable step towards this end is setting up a business bank account, which allows you to separate your personal and professional funds. You can easily open a business bank account online. There are even banking services available that allow you to integrate your payroll software, allowing for more streamlined payments.

Foster positive business relationships.

Networking is critical to any business’s success. This is how you find new clients, meet potential employees, and get to know future business partners. CallRail has some tips on how small businesses can help each other through networking. Joining your local chamber of commerce is another option. You can find local events geared towards business owners and meet like-minded people who share your entrepreneurial spirit.

Promote yourself and your business.

As an entrepreneur or small business owner, you are the face of your company. You should promote yourself just as much as your business. Establishing yourself as an expert in your field can help attract new clients. Of course, you should actively market your business as well. From SEO practices to websites, digital tools are a great way to do this. If these aren’t your strong suits, consider hiring external professionals to help.

Running your own business can get scary at times. The above tips can help ensure things run smoothly and help you achieve the entrepreneurial success you’ve been dreaming of.

ROTH or Traditional IRA: Which Is Best?

What makes the most sense for you, staying with a regular individual retirement account or converting to a Roth IRA? This is not a simple question so there is no simple answer. But here are some things to ask yourself.

An individual retirement account is a great retirement savings tool for most individuals. Created by the federal government, IRAs are funded during your working years.  In your retirement, IRAs may help supplement your Social Security benefits.

Your retirement savings begin with your annual IRA contribution. If you are under age 50, the current maximum annual contribution amount is $5,500, according to the Internal Revenue Service.  For those 50 years and older, you can contribute an additional $1,000. So if you turn 50 this year, you are now eligible to contribute $6,500. The contribution amounts are adjusted for inflation each year by the federal government.

With a traditional IRA, you put money away and deduct it until you withdraw from the account in your retirement. You pay tax on withdrawals. Converting to a Roth IRA means you pay tax on your old account up from it, and from then on the account grows tax-free. Opening a Roth without converting is done with after-tax dollars, meaning you already paid the government.

To find out which of the two types, traditional or Roth, is best suited for you, here’s a quick way to weigh the pros and cons of each.

The advantages to a traditional deductible IRA:

Tax Deductible.  Your contribution is deductible on your federal income tax return for the year in which you contribute.

Tax-Deferred Growth.  Your contribution grows tax deferred until you withdraw the money. This means you do not pay any taxes while your money is growing.

Limitations to a traditional deductible IRA:

Adjusted gross income (AGI) limitations.  The amount you can deduct is limited based on your AGI and, if you participate in your employer sponsored retirement plans. Your contribution may be fully deducted on your income taxes, partially deducted or not deductible at all.

10% Penalty.  This is imposed to encourage IRA owners to keep their money in their retirement account until reaching age 59 ½. If you withdraw any of your money prior to then, you incur the 10% penalty on the amount you withdraw. There are some exceptions to the rule: educational expenses, first-time home purchase and certain medical expenses.

Advantages to a Roth IRA:

Avoid taxes in the future. Roth IRAs grow tax-free. Therefore, no taxes are due when you withdraw your money.

No Required Minimum Distributions (RMD).  Roth IRAs do not require RMDs after age 70 ½, so your money can continue to grow with the potential for larger dollar amounts to leave to heirs.

Limitations to a Roth IRA:

AGI limitations.  For high wage earners (2017 limits - single filing over $133,000 and married filing jointly over $194,000), Roth contributions are not allowed.

Disqualified distributions. The earnings in your Roth must remain in the account for five years (known as the five-year clock) and until you reach 59 ½ years. A 10% penalty is applied to earning distributions that do not meet these requirements.

Always consult a financial advisor or IRS publication 590 before you make your final IRA decision. Making the correct IRA choice now can benefit you down the road in your retirement.

Kimberly J. Howard,CFP

KJH Financial Services

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