Question: I have been working for a Distributor for a few years, but am thinking of leaving them and starting out on my own. What steps should I take?
Answer: Starting a business from scratch has many variables to be addressed, here are four from the accountant’s perspective.
1. Be sure you are free of any non-compete agreement restrictions.
2. Some of the large distributors who take very large fees from you to be part of their business may have exit fees. If so, weigh the cost of those fees against the benefits of keeping the income you previously had to share. How long would it take you to pay yourself back for those exit fees? It might not be as long as you think.
3. Talk with your financial and legal adviser to find out what business structure is best for you.
4. Begin with a solid accounting system such as QuickBooks. Define your preferences, including sales tax rates, chart of accounts and customized templates set up for our unique business. Be trained to use the system and its processes to make your orders as simple and complete as possible.
Some distributors rely on spreadsheets to start and grow from there, but I believe starting out correctly is the better way to go. Your processes can be established to avoid errors, and you will look and feel more professional from the inside and outside.
Please email your questions to Harriet at Ask The Accountant.
QuickBooks Premier and Enterprise can be modified to better serve ad specialty distributors. Harriet Gatter is a QuickBooks ProAdvisor, a former accounting professor and a former ad specialty distributor. She advises ad specialty distributors to use QuickBooks Premier and Enterprise, often in conjunction with other industry-specific software, to manage the complexities of the ad specialty business, with the results being time saved, errors eliminated and an overall accurate accounting of your business. Contact her at [email protected].
