As a business owner, you’ll be able to offer the products and services you believe will benefit your customers. You’ll be empowered to make decisions about the strategies, messages, branding and marketing used and the employees you hire.

Starting a business requires a lot of important work to launch successfully. Many of those initial considerations are financial in nature.

Here is a closer look at some of the fiscal considerations to keep in mind when launching a business.

1. Planning Ahead

Before starting your business, you’ll need to do some research. Before opening your doors, you’ll want to understand the markets you’ll be entering. What are the demographics of your likely customers?

You’ll also want to understand the price points at which you expect to offer to your customers and whether they’re likely to pay those prices.

Understanding your competition is an important part of this research. You need to know who else is selling what you’re planning to offer and how you will position your items as different, unique and of a higher value.

Knowing your markets, customers and competitors allows you to position your business in the best way possible.

2. Building the Right Business Structure

The business structure you choose is the legal process under which you operate. There are many different business structures to consider, each with its own advantages and disadvantages. Many of these differences in traits revolve around operations, taxes and liability.

A limited liability company (LLC) is one of the most common business structures for new small businesses. It’s a popular choice because an LLC has pass-through taxation, allowing for profits, losses and deductions passed through to the owners’ individual tax returns.

In addition, an LLC provides personal liability protection. In most cases, if there is an adverse judgment against the company, creditors and courts cannot come after your personal assets, such as your home, car or savings.

Understanding the cost of forming an LLC leads many business owners to use a trusted partner to file the paperwork to ensure full compliance and accuracy.

3. Developing an Accurate Budget

Many business owners underestimate the costs of running their own company. Knowing the full extent of your business costs helps you understand the amount of money you’ll need to launch.

Among the initial costs to factor into your budget planning are:

• Rent and utilities for any physical space you’ll use. Some small businesses start in the owner’s home for this reason, but for some types of companies, this is not a feasible option
• Equipment and supplies necessary to produce products
• Inventory to resell
• Marketing costs to publicize your company
• Salaries for yourself and any staff you plan to hire. If you hire staff, you’ll also need to factor in the costs of any employee benefits you offer and cover insurance expenses, especially Social Security, Medicare and unemployment obligations
• An emergency fund for unexpected expenses

Your initial budget should also include your projections on revenue. By making an initial budget, and adjusting it over time, you’ll have a clear handle on your costs and financial needs.

4. Obtaining Funding

Many businesses choose to seek funding from other sources rather than maxing out credit cards and using up personal savings.

There are many options when it comes to securing funding for your business, including:

• Bank loans, including loans designed specifically for small businesses
• Venture capital, which are investments made in return for an equity stake in the company. Investors have requirements for the kinds of businesses in which they invest when those investments are made and the expected returns
• Crowdfunding involves asking for support from friends, family and strangers to support your business. Crowdfunding happens on websites designed to help businesses and individuals raise money
• Grants, certain businesses may be eligible for grants from state agencies or private grantors. These grant programs are rare, but it’s worth looking at your state’s business development agency to see if there are special programs for which your business qualified
• Friends and family contributions, which can be a good option if you’re comfortable asking those closest to you for money. However, be cautious as these financial obligations, if they are not gifts, can strain relationships

No matter how you plan to finance your business, it’s important to consider the options.

5. Understanding Tax Obligations

You will need to consider all the tax obligations you’ll face when running your own business. Among the most common business tax requirements are:

• Federal, State and Local Taxes. These taxes and the rates paid will vary based on where your business is located
• Sales Taxes. If your business sells products or services, you are likely to have to pay state sales tax. You will be required to collect sales taxes from your customers and, in some cases, will need to file taxes quarterly. Be sure to know your state and local sales tax laws
• Payroll Taxes. You will need to deduct taxes from employee paychecks to cover the payroll taxes noted above or other local payroll tax levies
• Estimated Taxes. Federal and state agencies require those who are self-employed and therefore are not subject to paycheck deductions, to file estimated taxes quarterly

6. Factoring in Personal Finances

Starting your own business is full of possibilities. However, until you are regularly bringing in revenue, you will need to have a plan to cover your personal finances. You’ll still need to pay for housing, food, transportation, clothing, entertainment and other expenses.

Having a corporate job means having a reliable, predictable and consistent paycheck. When running a small business, income is often variable.

You need to have a good handle on your monthly personal expenses and plan accordingly. Ideally, you’ll have a reserve of cash available before you start.

On average, your personal emergency fund should be able to cover 3-6 months of expenses. However, when launching a business, you may need to plan for an even longer time without a steady income.

7. Keeping Good Records

Having accurate financial records is a key to financial success as a small-business owner. Consider the following best practices for financial record-keeping:

• Record every transaction to understand cash flow and profit and loss monthly
• Track your expenses with bookkeeping software or hire a professional to manage how much money is going out and your spending rate
• Know sales and revenue to calculate your net income and create projections of future earnings. These insights can help you adjust your budget as necessary
• Separate personal and business finances. Blending your personal and professional finances can get messy quickly. It can also lead the IRS to “pierce the corporate veil” and go after your personal assets. Having separate business finances makes analysis and tax preparation much easier

8. Applying for Business Credit

When you start your business, financial institutions will base their decisions on your personal credit history. However, as soon as possible, you want to establish a separate business credit history.

To do so, open a business bank account and obtain a business credit card. Good business credit allows you to qualify for better loan terms, insurance premiums and credit lines. It will also allow you to work with suppliers to have favourable credit and payment terms.

All these business credit steps help to improve your bottom line and better manage your company’s finances.

9. Establishing Financial Metrics

Measures matter in any business. You want to determine your success by establishing key performance indicators (KPIs) or other business measures.

These metrics can focus on your customers, website activity, revenue, income and other important factors.

For example, knowing how many new customers and sales your company generates, and the average sale per customer, helps you calibrate your business. You can adjust your marketing and sales budgets, offer or discontinue new products or services, and make important decisions that are backed by data.

The measures may change over time, but having a planful approach to metrics ensures that you capture the right data to track those indicators. The important thing is to plan, measure, analyze and use the data to better your business.

Finances are such an essential aspect of managing your business. The work you do on your company’s finances before launch will allow you to focus on other core details of your business.

By planning, you can launch your business with confidence that you’ve worked on the financial factors that can make or break any new company.