“A penny saved is a penny earned.”
– Benjamin Franklin
Starting a business requires money, time, and commitment – and no business owner can waste any of it. Fortunately, there are ways for some business owners to save money during the startup process, especially through hard work.
Save on Hiring a Lawyer
The best way to start a business is with sufficient capital (i.e. loads of cash), a lawyer, marketing team, accountant, and a slew of mentors eager to give you their time. For most, these are unreasonable expectations. Businesses generally have to place their limited resources where they are most needed, which is not usually spending too much on legal.
Some companies should hire a lawyer out of the gate, but most business owners or entrepreneurs are able to handle the most essential items first. A business owner is perfectly capable of setting up an LLC or applying for an EIN or even drafting contracts, provided he or she understands a few things.
Contract drafting can be complicated, but simple vendor agreements or filing documents are perfectly easy for most people to handle. Find the right agreements for you business here.
Save on Registered Agent Fees
Every new business entity needs a registered agent within the state it is registered in. The registered agent is the person the government contacts with questions about compliance, lawsuits, or taxes – and mail, tons of mail. It’s also the person named publicly. Many businesses name someone outside the company to serve in the professional role. Typically, the professional registered agent is hired for several hundred dollars annually (this is one of the tricks played by LegalZoom to get money from businesses yearly).
One way to save money is to name an owner as the registered agent. In most states, you can change the designation later on, but serving as the registered agent for a business doesn’t require much. Besides, most business owners want to be fully informed as quickly as possible of both the good and the bad.
There are, of course, some benefits to using a registered agent, such as privacy, but this is a great place to save on money if those benefits are not particularly important to your business.
Save on Taxes
Consider tax options. This is an area where a thoughtful approach can save you thousands of dollars. You can hire someone or simply learn the requisite details, but don’t default on tax issues – make an intentional decision in this area.
For many companies, a limited liability company (LLC) paired with an S-Corporation works very well because it allows for pass-through taxation and flexible management options.
Additionally, understanding business expenses and what it means to “write” them off is a valuable way to save. Check out our article on write-off for more information.
Save Money by Shopping Low-Interest Loans
Shop around for the lowest interest loan you can. Most bootstrapping businesses know to do this, but even cash-heavy companies could save tremendous amounts by having access to low-interest rate loans. While this is certainly not legal advice, fiscally responsible moves are crucial for business success.
Save Money by Avoiding Fines
Business owners need business licenses, an EIN for federal taxes, certifications, and handle other compliance issues. For instance, a restaurant may need a beer and liquor license. It is your responsibility to know what steps you need to take to comply with local, state, and federal laws. Failing to comply could cost you money or restrictions that will hurt your business. Don’t run a risk, find out what you need to do and do it. You can learn more about licenses in our Business Law 101 Course.
Owning and operating a business is a fulfilling venture. Apply the above cost-saving tips to help make your business a success. For more information on the cost of starting a business, check out our blog articles to learn everything from how much to budget to other ways to save money.