Real Answers to the FAQs Small Business Owners Actually Ask

Running a small business is both rewarding and demanding—a journey filled with victories and the occasional head-scratcher. Through countless conversations with entrepreneurs managing their ventures, we’ve identified the questions that surface time and again. Below, we address these FAQs with clear, actionable insights, delivered with a touch of empathy from those who understand the grind.

1. How Much Should I Reserve for Taxes?
Taxes are an inevitable part of business ownership, yet they often catch owners off guard. A prudent starting point is to set aside 25-30% of your net income—say, $12,500-$15,000 on a $50,000 annual profit. This estimate shifts depending on your structure: sole proprietors face self-employment taxes, while LLCs or S-corps may adjust the burden differently. Quarterly estimated payments add another layer, and misjudging them can lead to penalties. Regularly tracking revenue and expenses is key, and a consultation with a tax professional can refine your approach. It’s an investment in peace of mind.

2. Is a Separate Business Bank Account Necessary?
Absolutely—and the reasoning is compelling. Consider a scenario where personal and business funds intermingle: a single account muddies your financial records, turning tax season into a stressful ordeal. I’ve witnessed owners spend hours untangling transactions that a dedicated account could have clarified instantly. Beyond bookkeeping, it protects your personal assets if a legal dispute arises—imagine a supplier claiming unpaid invoices. Most banks offer business accounts with minimal fees. Setting one up takes an afternoon and pays dividends in clarity and security.

3. What Contracts Should My Small Business Have in Place?
Legal agreements might not be top of mind when you’re launching, but they’re foundational. At minimum, consider client contracts (outlining scope, payment, and deliverables), vendor agreements (defining terms with suppliers), and, if you have staff, employment contracts (covering roles and confidentiality). A handshake deal with a $10,000 client can unravel without written terms—I’ve seen disputes drain businesses over vague expectations. Drafting these yourself is possible via templates, but a lawyer ensures they’re airtight. It’s less about mistrust and more about safeguarding your hard work.

4. How Should I Address Late-Paying Clients?
Late payments test every owner’s patience—a delivery made, yet the invoice lingers unpaid. Begin with prevention: state “Payment due within 14 days” clearly on invoices. When deadlines pass, a polite email or text reminder a day or two later often prompts action—I’ve found a personal touch speeds things up. If weeks drag on, a phone call strikes the right balance: professional yet firm, as in, “I wanted to follow up on last month’s invoice.” For persistent delays, request deposits upfront moving forward. It’s not personal; it’s preserving your cash flow.

5. Do I Need a Lawyer to Form an LLC?
The legal landscape can feel daunting, and this question weighs on many. Filing an LLC yourself is doable—most states charge $50-$200, and online portals simplify the process. But errors, like a poorly crafted operating agreement, can expose your personal assets if a customer sues over a faulty product. Legal counsel ensures compliance and catches pitfalls—like a duplicate business name or weak liability protection. I’ve heard of solo owners regretting skipped steps when disputes arose. For a low-risk venture, self-filing might suffice; for growth ambitions, professional guidance is a wise bet.

These answers stem from real-world experience, but every business has its nuances. Have a question we haven’t tackled? Contact us at contact@dolevlaw.com—we’re committed to supporting small business owners like you. Reach out at contact@dolevlaw.com or visit Top Business Law and Estate Planning Services | Dolev Law LLC. What challenges are you facing today?

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The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.