Before Operations Begin
Coordinate entity formation with regulatory counsel, because licensing and ownership requirements shape what structures are available. Register with the appropriate state and federal agencies, and establish banking relationships early, since the process can be lengthy.
- Entity formation coordinated with regulatory counsel
- Employer identification number and state registrations
- Banking and payment processing relationships
- Insurance and workers' compensation coverage
Systems Selection
Choose a general ledger with department and location dimensions, an inventory or point-of-sale system capable of batch-level tracking, a payroll provider that serves the industry, and a document retention approach that will survive an examination.
Pre-Revenue and Start-Up Costs
Costs incurred before operations begin have specific tax treatment, and capital expenditures during build-out require a capitalization policy. Establish both before the invoices start arriving.
Early Controls
Even a small team can implement segregation of duties, approval thresholds and dual custody over cash. Retrofitting controls after a loss is far more disruptive.
Frequently Asked Questions
- What is the most common startup mistake?
- Using a generic chart of accounts that does not separate production from selling and administrative activity, which makes the first tax year unnecessarily expensive to document.
- How should build-out costs be handled?
- Under a written capitalization policy that distinguishes capital improvements from repairs, with leasehold improvements tracked separately.
- When should professional accounting support be engaged?
- Before the first transaction if possible. Setup guidance costs far less than remediation.