Advice from your local CPA About Starting a New Business or Developing a New Product?

05 Feb Advice from your local CPA About Starting a New Business or Developing a New Product?

As a CPA located in the greater Asheville, NC market, I meet a lot of creative and adventurous people who have visions of the next great product or service. Those visionaries will also need a strategy to bring their idea to market here in Western North Carolina. Of course, along with the dream there comes a host of additional responsibilities. The very first product prototype or service idea is only the first step in a very long journey. Eric Ries, author of The Lean Startup states “The products a startup builds are really experiments; the learning about how to build a sustainable business is the outcome of those experiments. For startups, that information is much more important that dollars, awards, or mentions in the press, because it can influence and reshape the next set of ideas”

The goal of any entrepreneur is to minimize TOTAL time spent going through this product (or service) development loop. The faster you gather feedback from your test market (data) the faster you can learn and take your ideas to the next level.

And while you are in development mode it is also important to keep your finances in order. Below are some accounting tips:

• Decide how your business will be organized (sole-proprietor, partnership, LLC etc)
• Obtain a separate Employee Identification Number (EIN) specifically assigned to your business
• Open a separate account in your businesses name with your new Employee Identification Number (EIN) specifically assigned to your business
• Keep track your expenses specifically to this new product or service. At the bare minimum use a notebook but you can also use Excel spreadsheets or QuickBooks
• Develop a bookkeeping system with a customized Chart of Accounts that will help you track your income, expenses, assets and liabilities.
• Hire a Certified Public Accountant to learn about important tax issues relating to your new product or service to include local, state and federal tax obligations
• If you have employees, you will need to setup or hire a payroll service
• Calculate your gross margin and cost of goods sold so you can get valuable feedback on how your product or service is doing.

Here are a few of my favorite quotes about learning. I hope they inspire you as much as they inspire me:

“Genius is one percent inspiration and ninety nine percent perspiration.” Thomas Edison

“Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations.” Steve Jobs

You build on failure. You use it as a stepping stone. Close the door on the past. You don’t try to forget mistakes, but you don’t dwell on it. You don’t let it have any of your energy, or any of your time, or any of your space.” Johnny Cash

“Experience is simply the name we give our mistakes.”          Oscar Wilde

 

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