Starting a Small Business in NJ: Do I Need an Attorney or CPA?

small business in nj

 

It’s the quintessential American dream to own a successful business. No matter what product or service(s) you’re eager to provide, every empire starts somewhere. While the popularity of Shark Tank has captured the spirit of the American entrepreneur, the statistics for success are quite grim. Over 627,000 new small businesses are started each year; however, 535,000 businesses close each year. To help your small business in NJ beat the odds and become a fixture of growth, it is important to start off on the right foot. Knowing where to begin is not always easy. You’ll need to hire the right professionals to help you navigate New Jersey’s complicated tax and business laws.

As a business owner, you’re the salesman, head of marketing, technical support provider, customer service representative, bookkeeper, debt collector, human resources department, and CEO. You need to either be an expert in each area or hire people with the expertise you need.

 


How to Jump-start Your Business


 

STEP 1: Decide on a business structure.

Some common business structures are sole-proprietorships, partnerships, limited liability companies (LLC), corporations, non-profits, and cooperatives. You can review the specifics here. This is a crucial decision, and making the right one without being informed would be a grave mistake. For this first step, you should consult with both an attorney and a CPA. Veitengruber Law can help advise you on what type of structure would best suit your business model. A CPA will advise you on how to minimize your tax burden when choosing a business structure.

 

STEP 2: Become an operating business entity.

To do this, you must file formation documents with the state, register your business name (for tax purposes), and obtain an employer identification number (EIN). Without all three, you cannot become an operating business entity in the state of New Jersey.

During (and beyond) these first steps, you’ll find the advice of both an attorney and a CPA invaluable in getting your business off the ground. Each provides important expertise and the right professionals will work together on your behalf.

 


The CPA and Your New Business


 

Not many people spend their leisure time brushing up on the ins and outs of business tax law. Even as a business owner, you’re probably unfamiliar with your tax exposure. A CPA is your translator and is ethically bound to give you sound business advice. Don’t try to navigate the tax code on your own.

Sales Tax

States, especially New Jersey, are notorious for changing sales tax on a whim. Is your product subject to sales tax? The NJ sales tax rate has changed twice in the last two years. Certain products are sales tax-exempt as are non-profits. A CPA can help make sure your sales tax charges are correct.

Payroll

If you have employees, you’ll need to accurately reflect payroll taxes, social security, and disability on pay stubs. For a first-time business owner this can all be very overwhelming. A CPA knows how to get your pay system up and running.

Income Tax

Sound financial planning is a necessity for a new business. A CPA will help determine your tax liability and set you up with a payment plan for quarterly tax payments to help you avoid an audit. They will also help maximize your deductions. A lot has changed in the allowable deductions since the changes in the 2018 tax code, so review with your CPA what you plan to deduct.

Growth

Many small businesses require an investment from outside parties in order to grow. A CPA can help create a financial plan to make the numbers look most attractive to investors. Your goal may even be to sell your business outright, and the process of reviewing your accounting books will determine your profits.

 


The Real Estate Attorney and Your New Business


 

Location, location, location

One of the first decisions you’ll make about your business once you’ve given it a name and registered it is where you will be located. Sometimes you start out in a home office. Hopefully the business will grow to the point where you’ll need to determine an outside location. Finding the optimal space that will boost your chances of success can be a daunting task as a business owner. You’ll work with a real estate agent to help you find the right space, but your attorney will be reviewing all contracts, leases, inspections, and will look for liens on potential locations.

Room to grow

There are many factors you’ll need to consider like whether to rent or buy. What size space is best suited for your current needs but can also accommodate future growth? Locales with heavy foot traffic, access to major roadways, proximity to your client base, and low crime rates may be more expensive but will be give your business the best chance for growth. Should you decide to rent a space, your real estate attorney will assist with any issues that arise with your landlord.

Veitengruber Law can also help your business in areas outside of real estate law, such as:

Liability

A common misunderstanding among many small business owners is that by incorporating into a formal business structure (as mentioned above), you’ll be free from all personal liability. While there are instances where you can be held personally liable, they are specific, and Veitengruber Law will spell out your personal liability as a business owner so that you don’t end up getting sued. Knowing the rules is very important!

Asset protection

In addition to lawsuit risks, you can also run into contract disputes and torts (actions that result in damages) when you own a business. Protecting your business assets is key, and this is one area in which Veitengruber Law is proud to be extremely well-versed.

Debt Negotiation

As your business attorney, we will form an important relationship with you throughout the life of your company. When your business hits a bump in the road, such as taking on too much debt, Veitengruber Law will be just a phone call away to assist with difficult creditors. We can help you formulate a plan to avoid getting into too much debt in the first place, but we do recognize that debt happens.

 


Attorney and CPA: Working Together


 

It is important that your CPA and attorney work well together. Veitengruber Law can recommend several experienced and trustworthy local CPAs from our extensive professional network. Together we can create a top-to-bottom budget that will fit your business needs.

Drafting the right Attorney/CPA combination is one of the most important steps you can take as you start your small business. Although it can be tempting to “do it yourself” in order to save money, the investment of hiring experienced professionals like Veitengruber Law will give your business a much higher chance for long-term success.

 

 

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Budgeting for NJ Business Owners

NJ Business Owners

If you’re a NJ business owner, you know it is essential to find efficient ways to keep track of your finances. Establishing a business budget can help you track and organize your financial resources so you can make informed decisions about how to run your business. But not every budget is the same and different budgets work better for different companies. There are a variety of budgets to help you manage your spending and utilize successful strategies in order to maximize your assets and revenues. Here, we lay out some of the most popular budget plans for your business:

  1. Master Budget

Your master budget is the big picture. It combines all of a company’s individual budgets (sales, operating expenses, income streams, etc.) to help business owners evaluate the overall performance of their business. This type of budget will give you a comprehensive overview of your company’s general financial health. This budget is best utilized by larger companies, allowing different managers to see how their departments’ progress aligns with company goals.

  1. Operating Budget

An operating budget is typically what business owners think of when they hear the word “budget.” This type of budget is a projected forecast of income and expenses over a specific period of time. An operating budget allows business owners to get an understanding of their business’s financial health on a weekly, monthly, and yearly basis. Over time, owners or managers can analyze this data to figure out in what areas overspending is occurring.

  1. Financial Budget

Unlike an operating budget, a financial budget looks beyond income and expenses to assets, liabilities, and equity. Typically, data for a financial budget is laid out in a balance sheet to provide an overview of the financial health of the business. This kind of budget is very important for determining a business’s value relative to public stock offerings, funding opportunities, or for a merger.

  1. Cash Flow Budget

A cash flow budget allows business owners to project how and when cash comes into and out of a business during a specific time period. This helps a business understand if they are managing their money efficiently. In analyzing a cash flow budget, a business owner can see whether or not upcoming financial obligations will be met or if they need to look into other financing options.

  1. Labor Budget

If your business has employees, creating a labor budget is important to help you determine how many workers you need to employ to achieve your desired level of productivity. This budget is helpful for establishing payroll costs of running your business and, in some cases, planning for the hiring of seasonal workers.

  1. Capital Budget

This budget is helpful for business owners preparing to purchase large assets like expensive machinery, new technology, or a bigger work space. This kind of budget establishes what the cost of the new asset is and analyzes whether or not the predicted return on investment is worth the expense of the purchase. This can help business owners plan for a big purchase as well as determine cost effectiveness.

  1. Strategic Plan Budget

Most businesses work under the vision of a strategic plan. A strategic plan sets up the long term goals of a business—but doesn’t always include long term budget goals. Make sure you don’t make that mistake. By including financial information in your overall vision for your business, you can better understand how you need to plan in order to create financial growth.

  1. Static Budget

A static budget is a financial plan that remains fixed. This a good budget for businesses that have very predictable and consistent income and expenses. Business owners are able to judge the performance of their business by comparing their static budget to the actual financial performance of their business. This can be particularly useful in monitoring a increase or decrease in sales performance.

Budgets are important to the success of any business. Besides allowing you to track your success internally, a well maintained budget can help you attract investors or secure business loans in the future. Don’t overlook the importance of creating an effective financial plan for your business. Veitengruber Law offers the long-term planning you need. Our experienced team can help you devise a sound financial plan to protect your assets and grow your business to new levels of success.