Starting a new business doesn’t have to be stressful.   There are a number of things new businesses can do to reduce stress during the start up phase, and minimize stress on an ongoing basis.

Corporate Formation and Taxes

Tax issues should guide your choice of a corporate structure.  At the early stages of an online company, any corporate structure, other than a sole proprietorship, provides sufficient protection for your personal assets.  However, the choice of corporate structure can have significant tax consequences that are not easily undone. 

Figuring out corporate formation issues is not the only reason find a good tax advisor, simple tax and accounting issues should be reason enough.  As you begin your business, having a thorough understanding of the tax implications of capital leases, different types of revenue recognition, and owner compensation are critical to avoiding costly or time consuming corrections as your business grows.

A savvy tax advisor can also help you avoid one of the largest problems companies make:  no metrics.  A good tax advisor can help you come up with easy strategies to track metrics like this.  They can also help you avoid revenue recognition and other accounting problems that make it difficult for you, or another advisor, to answer the perennial question “what is my company worth?”

Contracts

There are two aspects to this issue:  vendor contracts and your contracts.  One of the first ways I start to do work for new clients is when they have a contract problem with one of the vendors they’ve been using since formation.  Generally, clients begin to have problems with price escalation clauses, long term contracts with onerous early termination clauses, or license compliance issues.  When starting out, many companies negotiate on one issue only:  price.  When reviewing vendor contracts you need to look at some other contract terms with the understanding that as your business grows, the contract should grow with you.  So while your bandwidth vendor may say “sign this 5 year contract, and we’ll be your long term partner” you need to make sure that the contract is flexible enough to respond to changing business needs, and not lock you in to a static contract that you’ll have to pay to exit.

You also need to create contracts for your customers.  For most new companies, this means stealing the contract used by one of the companies they aspire to be.  Putting aside the ethical issues associated with this, the main problem is that most larger companies have tailored their contracts to meet their unique needs.  Using their contract exposes you to risks that the company may have decided to accept and insure against.  It also leads to a situation where your contract does not support your brand.  I am willing to work with new companies to design contracts that work for the company and have creative fee arrangements that may make a good contract feasible.

Staff and management

Most hosting companies start with at least some staff.  It’s important to understand your employment obligations when hiring and firing.  Generally a local general practitioner can help you understand the basics of human resources law.  While it’s important to understand things like your state’s anti-discrimination laws, it’s more important to know how you are required to compensate your employees and what you are required to withhold.  Dealing with a tax lien for unpaid withholding taxes is a problem that is almost impossible to resolve.

You should also spend some time thinking about your management philosophy.  While you’re focused on simply getting your business off the ground, your management philosophy will directly support your brand.  This can be as simple as only hiring people who are friendly, or understand your support philosophy, or it can be more thought out.