The New Business Owner Playbook
Starting my firm was the result of 10+ years of hard work, setbacks, and problem-solving. When I put in my two-week notice at my corporate job in May 2024, I thought I was ready for anything. As my to-do list started to grow exponentially, it quickly dawned on me that I was stepping into the deep end of the pool.
The truth is, being a new business owner can be both exciting and extremely overwhelming. There are so many new problems to navigate every day, and you’re expected to wear all the hats. Here is a simple, step-by-step plan to help get your business off the ground, covering the basics.
Step 1 - Figure Out Your “Why”
Before you go out and register your LLC or design a logo, I think it’s important to take a step back and ask yourself:
“Why am I really doing this?”
Some people start a business to achieve an uncapped earning potential. Some are chasing a better work-life balance. Some see an opportunity to deliver value in a given market. For me, it was the result of seeing how traditional CPA firms are run. I thought there was a better way to modernize the client experience.
Whatever your reason is, the most important first step is having one. The most successful business owners I’ve met built with intention. Having consistent values makes it easier to make decisions and set goals. It’s become a lot easier to say no to things that don’t align with my own core values. That may be something you know straight away, or it may develop over time. The point is, you need to take that time to self-reflect.
Step 2 – Make a Plan
Speaking of goals, now is a good time to set them. This doesn’t need to be as much of a chore as it’s commonly made out to be. After all, your goals will likely change as you get more experience and progress through your first year.
There are entire books on goal setting, but here’s my advice: make it simple, and make it work for you.
There’s no perfect format or formula for planning out your first year. The idea here is to give yourself direction, not to create a checklist that adds pressure and ultimately gets ignored.
As a professional services business, it may be easy for me to make measurable goals. How many clients at what price point do I want in 12 months… in 24 months… and so on. If you’re like me, though, you might also have qualitative goals. I want my clients to feel like they are receiving a modern, white-glove level of service. You can see how that ties into my mission, and that helps create a core value that I base future decisions on.
This simple exercise works best for those pursuing a lifestyle service business. However, if you’re applying for funding, looking for outside investors, or pursuing government grants, you most likely will need a formalized written business plan.
In these cases, the Small Business Administration (SBA) offers free resources and templates to help.
Step 3 – Pick a Structure & Register Your Business
Here’s where things start to get a little complex. The business structure you choose for your business may dictate two things: tax treatment and personal liability. Talking to a CPA and a lawyer can help make you aware of both, respectively.
In general, there are five basic ways to structure your business:
Sole Proprietorship
Limited Liability Company (LLC)
Partnership
S Corporation
C Corporation
I want to specifically talk about LLCs for a moment, because they are commonly misunderstood. An LLC is a legal designation, not a tax structure. As a result, an LLC may be taxed like a sole proprietorship, a partnership, or a corporation (S or C). You do not need an LLC to start a business. Whether or not it is a good idea to have one has nothing to do with tax.
After deciding on a structure, you will need to register your business with your state or county clerk’s office. In many states, you will have your own corresponding state ID. If you are a freelancer and deciding to operate under your own name and social security number, you won’t need to register with the state and can skip to the next step.
After registering with the state, many business owners choose to apply for a free Employer Identification Number (EIN). This is an ID number for businesses and tax-exempt organizations. You do not necessarily need an EIN if you intend to operate as a sole proprietor without employees. If you choose to form any other business structure, however, you will need one. More information on how to easily apply can be found on the IRS’ website here.
It's worth noting that some industries and states call for specific licenses and permits. I highly recommend working with a lawyer or researching your local/state laws to determine if there’s anything else needed to start operating your new business.
Note: You might have noticed I have not mentioned anything about coming up with a business name, creating a logo, or setting up a website. I think a common trap to fall into is spending tons of time and energy on these things that, in the grand scheme of things, don’t matter. What’s important is getting started. You can always iterate upon these things later.
Step 4 – Separate Business & Personal Expenses
By now, you’ve adopted your core values, determined some short and long-term goals, picked an optimal business structure, registered your business with the state, applied for an EIN, and kept copies of all this documentation for your CPA. Thank you in advance!
You’re ready to open your doors, but before you do that, we should talk about separating your business and personal expenses. This is heavily dependent upon the needs of your business, but it can be simple to start. For most service lifestyle businesses or freelancing arrangements, I recommend starting with a standard business checking account and credit card. Business expenses can be paid using a credit card to earn rewards points, and the checking account can pay off the balance each month to avoid interest.
If you’re planning to hire employees, I would also recommend a separate payroll account. This may be used solely to pay your employees and contractors. Keeping separate operating and payroll accounts can help streamline your bookkeeping and provide some security in protecting employee wages.
There’s no clear “best” account or credit card, but I would look at things such as fees, minimums, transaction limits, convenience of mobile banking, and credit card rewards.
Step 5 – Bookkeeping & Taxes
You’ve set up your business accounts, and the last key step is making sure you’re staying organized and ready for tax time. One of the costliest mistakes a new business owner can make is neglecting the books. It’s a shame because of how avoidable this is.
You don’t need to become a full-time accountant, but you need to have a reliable system of tracking your income, expenses, and other financial activity. Depending on the complexity and number of monthly bank transactions you have, you will want to choose one of the following:
Excel is a common starting place for many. However, this option is more prone to errors that can cost more money to clean up when filing your taxes. If you’re just starting out or freelancing, Mazz CPA provides free templates for its clients.
Bookkeeping Software like QuickBooks Online can sync your bank and credit card transactions automatically. This helps ensure nothing is missed. You can easily add an accountant user, such as Mazz CPA, to manage the books for you. As a ProAdvisor, I can help get you set up, provide guidance, and even offer discounts on subscriptions.
In addition to tracking your finances, you’ll need to stay ahead of tax deadlines. Many business owners must make quarterly estimated tax payments to the IRS (and possibly the state) to avoid penalties. This can be a big shift for those coming from a W-2 job. A CPA can help you understand what you owe, when it’s due, and how to budget for it.
Putting it Together
Starting a business is like learning by drinking from a fire hose. There is so much to do, and most of it is unfamiliar. This can cause people to overanalyze and never take any action. When I’m talking to clients, friends, family, or other colleagues, my advice with any pursuit is to just get started. By taking action on the above steps, you’ll gain confidence and momentum in getting your business up and running. These cover the most important and fundamental areas and will give you a solid base to start.
Good luck out there!
