Accurate Legal Paperwork Means Your Business Has Access to More Money
I was talking to a friend of mine who is an accountant, and he told me a story about a business owner that came to his firm and asked him, “Can you write the check out to my personal name?”
The accountant replied, “No, I can't do that.”
The owner asked, “Well, why not?”
The accountant replied, “Number one - I'm a business, and I've got to write a business check to pay you for your services. Number two - and even worse, if I do that, it makes me look like I don't know how to do my job or that I'm trying to hide and funnel money away.”
If you are trying to establish your business to grow and show that you're serious and you're making an impact in the world, off the books is not for you.
Get on the books, good and legit, mainly because it’s not that difficult. If you don't like filling out paperwork, looking at pages and pages of this stuff, it's okay. I got you.
Let’s say you have an order payment with a $20,000 check, or somebody wanted to invest in your business -- are you set up to receive capital like that? If not, no matter what opportunity comes your way, nobody's going to invest in your business.
What if you got on Shark Tank and didn’t have anything set up? Do you think Daymond would listen when you ask, “Can you help me with my product?” Daymond's not going to talk to you.
You want to be able to get money and funding. You want to be able to talk to Daymond, Mr. Wonderful, Oprah, and whoever else you want to talk to. Trust me when I say, they are not going to talk to you about business because their people will Google you to see if you’re legit and find out that you’re not.
They will actually go onto Google, and they will go onto the state incorporation sites to check to see if you are registered and if you are not registered, that is a red flag.
You do the same thing -- you check people out on social media first before you make decisions, and investors do the same thing for business.
Even if you're just getting started, testing out an idea, it’s still important if you’re deciding to build a business.
For example, I have seen many people cooking in their homes trying to start a catering business. They’re already not legit because they are operating commercially out of a residential building or an area that's zoned residential and not zoned for commercial or dual use.
That’s out of order.
I know many of you are spending a lot of money to build your business. You have coaches; you have mentors. So how are you deducting that on your taxes?
You can't legally deduct it off your taxes until you have a registered business, at least as a Sole Proprietor. So you've spent thousands of dollars on mentorship. You spent thousands of dollars on equipment, and there’s no way to keep it from turning into a loss because you’re not legit.
I know a person who owed the IRS $55,000 in back taxes, and they received a phone call one day from the IRS, you know, Uncle Sam.
“Mr. Brown, we need to schedule an appointment with you to talk about your taxes.”
Then the IRS said, “Well, I've been out to your house and knocked on your door.”
Mr. Brown said, “You've come to my house???? Don't come to my home. I don't want to see you here.”
Think about this...the IRS will actually come and knock on your door.
If somebody wants to invest $10,000, $20,000, or you want to get a sponsor (especially for those of you out there taking programs to learn how to get corporate sponsors), they're not going to sponsor you unless you have a legitimate business.
If you want to become M/WBE (minority and women-owned business) certified so you can get access to government contracts, guess what? You need to show a track record. In New York City, the minimum length of time for a legitimate track record is one year.
And do you know how they check? They want to see your tax returns. They want to look at your bank statements, and it can't say “Amy Brown” unless that's your business name and it is legally filed.
They want to see when you filed, and they want the corporate formation papers. They want to see your stock/ membership certificates They want to look at licenses. They want to see all of that and more.
There are opportunities that you will miss being able to capitalize on; such as growth and money and grants, sponsorships, corporate and government contracts all of which require that you show legal documented paperwork.
If you already know this and haven’t done it? What you've been doing is you've been sticking your head in the sand like an ostrich saying the business will magically form later, or many people think, well I haven't done it yet, everything is ok. Think how much farther along you could be, if you were prepared and eliminated that one thing from hanging over your head in the background.
If you have fear around it, they say the best way to deal with it is to address it and get it done.
So let's get it done. Let's get your business legit. Let's get you ready to accept money from people that don't know you.
We've got to get you that peace of mind so that you can focus on your brilliance and the gifts that you bring to the world, and you don't have to worry about all this other crazy paperwork stuff that you don't understand.
You don't want to understand it, I know, but you’re fortunate because I live in this. I love this. I eat, sleep and breathe it, so let me carry the weight for you.
If you need my help, I've got you.
Let's chat about getting your business legit.