Today it’s easier than ever to start a business. You have an idea, you set up a website, and BOOM – you have a business…right? Not exactly. Starting a business might be easier than ever, but it’s still hard. There’s lots of information you need to know about structuring your business, managing your money, using the right tools, and so much more. It’s also hard to know what to invest in, and what you can do yourself for free for a while. Well, here are 2 things every freelancer and business owner should pay for, right off the bat.
I should preface this article by saying I’m not talking to anyone who has a side-hustle. For those folks, you should keep track of your income and report it on your taxes. I’m talking to people who are running an honest-to-goodness business that accounts for most, or all of their income.
#1: An Accountant
Your taxes are about to get a lot more complicated. You need to report all of the income you’re making, you should be tracking all of your business expenses, and making sure you account for (ha!) anyone else you’ve paid. In the US, you’ll also be subject to self-employment tax.
An accountant will make sure you’re doing everything right – reporting the right expenses, filing the right forms, and asking the right questions to make sure you’re lowering your tax burden. My accountant saved me $10,000 one year. I’d say she is well-worth the investment. And as my taxes get more complicated, with dependents, child care, buying a house, and other variables, I know she’s going to make sure I’m doing all the right things.
This can be especially important if you’re selling products online. Did you know some states require you to charge sales tax on digital goods? Your accountant should be able to help you with that.
Accounting was the first service I invested in while I was running my web design business on the side. And I’ve never looked back.
#2: A Lawyer
Hear me out: you don’t need to have a lawyer on retainer to answer every legal question you have. BUT you should have a lawyer, in your state, who’s familiar with the type of business you do. Your lawyer will be able to help you with:
Filing in Your State
Don’t rely on Legal Zoom or some other cheap service for this. Most lawyers will likely have a standardized set of documents for this anyway. Talk to a professional and make sure you’re doing everything you need to do in regards to making your business official. There are a lot of options and ways you can file. Do it right.
Related Note: I learned recently that in certain states require businesses to have a Registered Agent if you don’t have a physical address within that state. I learned that thanks to my lawyer when I updated my business address to someplace that is not my house.
Look. We’ve all been there. We’ve googled, “web design contract” or “standard small business contract,” and decided to use that. Maybe you downloaded a free one that other web designers have used.
Here’s the thing with all of those contracts: they’re generic. That means they weren’t written with your best interests in mind, and they weren’t written with the familiarity of your business, service, or the state you operate in. Your contract needs to protect you first and foremost. And you should be able to explain your contract to someone who’s about to sign it.
If you’re going to download a contract (my friend Nathan is getting ready to release his contract soon), I would strongly recommend your own lawyer looks it over to changes it as needed.
Also…you DO have a contact, right?
This was something I wasn’t too aware of until I had my friend Rian Kinney on my podcast. But if there’s any information you want to protect through a trademark (or copyright), your lawyer can help you with the filing, or answer any questions you might have.
All-in-all your lawyer will make sure your protected and running your business properly. Just a couple of sessions with a lawyer can be incredibly helpful.
GDPR. CCPA. Both are privacy laws for specific places (The EU, and California, respectively). There will be more. There might even be a national law coming down the pike. Understanding what you actually have to do with regards to these laws can be confusing. Your lawyer can help.
Your Accountant and Lawyer will Protect Your Business
There’s a lot to know when it comes to taxes, money management, and various laws and paperwork. Having a good accountant will protect you from the ire of the IRS. You don’t want an audit.
Your lawyer will make sure you’re not leaving yourself open to certain liabilities, or making promises you didn’t realize you were making. Investing in both now will save you money and heartache in the future.