Starting a small business in Arlington (and for most of Northern VA too) doesn’t have to be complicated, but I haven’t found a definitive guide anywhere of the steps necessary. While most articles available online discuss the general needs of a small business including such popular topics as creating a business plan, choosing a legal structure and finding the right location, I’m interest in digging deeper to help my clients succeed.
Those topics are very important indeed, and most first-time small business owners do research on those topics before starting their venture. The following article series will be dedicated to helping small business in Arlington (and the rest of Northern Virginia) succeed on some of the more specific details with our area.
Know Your Local Laws
I specialize in helping both established and aspiring small businesses with their bookkeeping in the Northern Virginia and DC Metro area. In my initial interview I typically ask several question including: What is your organization structure, how do you plan on filing your taxes and do you have your required permits. Even if they say they have created an LLC… there is more to it than that and way too often I get a blank look!
Here are some quick and easy steps to get most small businesses on the right path:
- Create an LLC (It isn’t required but usually recommended). Head to the VA SCC to sign up, it costs $100.
- Register an EIN with the IRS (its free!). If you want to operate as a C Corporation (Form 8832) or S Corporation (Form 2553), then you should make this election now (more on these in a later article).
- Apply for a Business License from Arlington County. If you’re working from home, you MUST have a Home Occupation Permit. This is negligible in cost but important for you to remain in compliance.
- Arlington Home Occupants make sure to read your license! I work from my home office and there are several restrictions on what I can and can’t do. If you ever wonder why I have a PO Box, it is because I am not allowed for clients to visit me at home due to Arlington County regulations. This isn’t for every type of industry, but it is for bookkeepers!
- Open your business checking AND business credit card accounts. If you’re using the online banking feature in QuickBooks make sure there are no fees for your bank to connect. Most banks allow access to QuickBooks Online for free, but QuickBooks Desktop may have a monthly fee. If you’re not sold on whether you should open up separate accounts, read one of my previous blog posts… I highly recommend it!
- Purchase all required software and hardware: Computers, Monitors, Laptops, Phones, Printers, Office Supplies, QuickBooks, MS Office, Adobe, etc. The list can get pretty long but this is what your business plan was for to start! Make sure you put all of this on your credit card too and more on that later.
- Hire me as a part-time bookkeeper to help you monthly with your finances. I can be very beneficial as you progress your business; I’ll remind you to pay your taxes, of outstanding bills and help you set up your accounting software as needed. In fact, you don’t even have to purchase QuickBooks–I will keep track of your finances in my office and provide you with monthly reports. This is all included in my monthly charge as low as $100.
I could keep going on that list but it goes away from being Arlington/NOVA specific to just general small business items. Many starting small business owners in Arlington (and many other counties in NOVA) don’t realize that they have to pay a business property tax every year to the county, so keep track of all of your hardware items from #6 above. These are not expenses but fixed assets! The tax itself is very minimal but it must be paid regardless at the beginning of your 2nd fiscal year and each year thereafter.
The Importance Of Your Credit Card
Their are several important benefits to using your credit card on each transaction in addition to earning rewards and higher security. One of my biggest arguments for having a business-only credit card is the ability to track expenses, and then to pay those expenses off when you want to. Cash-flow is very important to both established and starting small-business.
At the start of your small business, cash is very hard to come by; it is possible you may not receive payments on an invoice for up to 60 days from the start of your first day for your first client. Even with fast-payment options like Paypal and the Intuit Payment Network, most vendors still pay by check and send it in the mail. Having the option to put expenses on your credit card and pay them off nearly 45 days later is invaluable (in case you’re wondering, credit cards have 30 day billing cycles and give you typically 2-3 weeks to pay your bill). I don’t recommend paying credit card interest and fees unless absolutely necessary, but having a small line of credit such as a credit card has provided me much needed financial security over the years.
There is so much on your plate when you’re starting your small business that it is easy to overlook any of the above steps. You could be tempted to “put it off until later” or even “wait until you generate revenue” but that could be too late.
Contact me for your free consultation and I will help you with your monthly bookkeeping.