Business Plan
Description of the Business
The business that I am creating is a massage therapy business. This is a one-person business-based having a portable massage table, and making client visits. As a trained massage professional, I will be able to provide massage therapy to a wide range of clients within a broad geographic area. There are only a handful of tools that will be needed -- the table, supplies like oil, a laptop, a phone and a car to use as transport to the client sites. The business will need a website and social media as well, for promotional purposes. This business plan will provide the information needed to obtain the necessary financing to start the business (Richason, 2016).
Business Form
The massage therapy business, Magic Hands LLC, will be registered as a limited liability corporation. The reason for this is to obtain the advantages of flow through income as a sole proprietor for tax purposes, but to obtain limited liability. Meier (2016) notes that the one-person form of LLC provides protection against judgments and liabilities that are related to the business. Examples of this might be a car accident heading to or from a client site, or any medical liabilities that arise as the result of patient care. It is necessary to use this form to protect personal assets in the event of adverse legal action, and this may also be a requirement of the bank, if those personal assets (house) are used as collateral for a small business loan.
Accounting
This form of business typically works on cash accounting. Generally accepted accounting principles are only a requirement for publicly-traded companies, and Magic Hands LLC has no ambition to ever become such a thing. Probably the most important thing for a sole proprietor is that separate accounts should be created for business and personal expenses. This will help when it comes time to file taxes. Taxes will be filed on the basis of personal taxes with the LLC form for a sole proprietorship because income and expenses flow through to the personal return. Business expenses can be deducted from income, but personal expenses cannot (Vitez, 2016). As an example, if the car is needed to reach client,...
The square footage associated with an office in the home that is used for business purposes is deductible, but the rest of the home expenses are not. The IRS publishes guidance with respect to deductions here.
Most sole proprietors use cash accounting for their businesses. Cash accounting is the easiest to utilize, and can be done on Excel, negating the need for more sophisticated accounting software. But accounting software can make the accounting process easier for those who do not wish to set up their own accounting file system. In cash accounting, all income and expenses are recorded at the time when the cash changes hands. Accrual accounting is more sophisticated, and might be useful if the business does a lot of work on credit (either borrowing money from the bank, or extending any sort of credit to customers). The timing of the entries is a little bit different under accrual accounting, and might necessitate a proper system of accounting software. Accrual accounting is recommended, but fluency in GAAP is not at all necessary for this type of business. IFRS is irrelevant because the business will be based in the United States, where IFRS is not an accounting standard. Since the business will not be using either GAAP or IFRS, convergence is not relevant.
Resources
There are basically two resources on which this business is based -- money and the magic hands. The proprietor is the laborer and thus the proprietor's hours are a key asset for the business. Beyond that, the money needed for start-up capital will be the other asset. The start-up capital will be used for the various massage supplies including the portable board, for a laptop with necessary software (mostly the accounting software and office software), a phone, and a car. A new phone will be acquired to maximize efficiency. A new car might be needed so that it can be painted to advertise the business, and be large enough to hold all the supplies out of sight. A small inventory of goods to sell to clients will be held as well, things like aromatic oils that might…
