Starting a business is a lot like starting a new romantic relationship. It often comes with intense excitement about the future and some degree of personal risk. If you let your emotions dictate how you behave, you might eventually find yourself in a situation where you aren’t fully in control and have a lot at risk.
Entrepreneurs hoping to start their own businesses need to plan ahead to minimize the possibility of major issues flaring up and endangering them or the company that they want to start. What are two important steps that people should take when starting a new business for their own protection?
1. They should start a bank account
As soon as you need to perform financial transactions on behalf of your business, you need to separate the company’s finances from your own. Even if you simply use cash and maintain receipts initially, you want to avoid using your personal credit cards and bank accounts.
Otherwise, even if you start a formal business entity later, your personal accounts could be at risk if creditors or plaintiffs in a product liability lawsuit can’t recover enough from your business.
2. Look into appropriate insurance
Exactly how much insurance you need and what kinds of business coverage you required depends on the industry in which you want to operate and numerous other factors. You may eventually require more insurance than you do initially.
For example, as a small startup, you may only need basic business and liability coverage. Once you have your own facilities and employees, you may need workers’ compensation, premises liability and product liability insurance. Appropriate coverage will help protect the business and also you from financial losses related to the company’s operations.
Taking the right steps when you decide you want to start your own business can protect your personal resources and set the business up for success.