Among the many factors potential business owners should consider when deciding whether to start a business are tax implications. As your clients’ tax expert, it’s important you know the fundamentals of business structures and different ways to secure financing.

Knowing how to advise your clients in these matters allows you to expand your services and enhance your client relationships. Here are four tips to help you guide aspiring entrepreneurs.

#1 – Help clients create a business plan

The professional plan should map out various subjects including:

  • What the business is
  • Who operates the business
  • Who the competitors are and what differentiates each one
  • Where the business will operate
  • How the business will be marketed
  • How much startup costs may be
  • What the stages of growth are and the timeframe for each stage
  • Financial projections

Defining parts of the business plan early on in the process may be challenging but providing as much information as possible helps convince lenders that the company is viable and has a strong chance to succeed.

#2 – Educate clients about the different business structures

Your knowledge of the tax and liability implications for each business entity is invaluable. Be sure to explain the differences between a sole proprietorship, LLC, general partnership, C corporation, and S corporation to help your clients make the best informed decision.

For example, explain that sole proprietors may use their personal credit cards and keep all the profits, but their personal assets will be at risk if their company goes in the red. On the other hand, LLCs are not responsible for taxes on its profits because personal assets are separate from business liabilities.

#3 – Discuss potential sources of startup capital

Compared to the early 2000s, many lenders now use tougher criteria when approving loans.

Big banks often require two to three years of financial statements and usually prefer to award loans of more than $2 million to these established businesses. Although big banks typically have more than $10 billion in assets, they approve less than one out of four loan requests.

Small banks use more flexible lending criteria and grant almost half of funding requests. According to Biz2Credit’s Small Business Lending Index, big banks approved about 21.9 percent of small business loan applications, while small banks approved 49.5 percent.

Small banks often grant SBA loans, which are backed by the Small Business Administration but not made by the agency itself. While these are attractive loans, there is more time-consuming paperwork because of government requirements.

Fortunately, many new players have entered the lending marketplace, making small business financing more accessible. Institutional lenders like pension funds and hedge funds on platforms such as Biz2Credit’s online marketplace approve more than 60 percent of requests at lower interest rates and longer terms than other non-bank lenders.

The online platforms used by lenders like Biz2Credit also offer streamlined documentation and quicker time to funding.

#4 – Remind clients of ways to increase cash flow

Lenders like borrowers who have a consistent cash flow. Remind your clients of good practices such as paying invoices up front in exchange for pre-payment discounts. This can also eliminate black marks on credit records for late payments and reduce inventory cost.

Additionally, remind clients of the advances to shopping for more affordable lines of credit and working capital. Smaller lenders are often seeking business and will offer more attractive lending rates. When your clients’ monthly costs decrease, cash flow increases, which makes it easier for them to expand.

For resources to help you better advise your clients, check out the content, tools, and financing options at