Embed Size (px)
Citation preview
© Kat Schmoyer | Stock Imagery by @ScStockShop
B E C O M E A # B O S S L A D Y T O D A Y !
STARTING YOUR BUSINESS IN
5 SIMPLE STEPS
© Kat Schmoyer | Stock Imagery by @ScStockShop
T h e l e g a l i t i e s o f o w n i n g a s m a l l
business can make anybody cr inge.
L e t ’ s f a c e i t , I t ’ s c o n f u s i n g a n d overwhelming to f igure out what you
need to do to set-up the back-end of yo u r b u s i n e s s ! B u s i n e s s s t r u c t u re ,
banking, taxes… those details can look
l i ke G re e k to s o m a ny of u s ! We understand exactly how you feel and
created this 5 Step Guide to help you walk through the legal haze we often
f ind ourselves in.
1) DETERMINE YOUR BUSINESS STRUCTURE One of the most important things about your business is determining what legal business structure you wil l have. Your legal t i t le wil l affect
your taxes, your personal l iabil i ty, and perhaps in the future, how to make your business more profitable and more eff icient . There are four
primary business structures as determined by the United States Small
Business Associat ion.
• The most common structure for an entrepreneurial small business
is a LIMITED LIABILITY COMPANY (LLC) . This business structure is set to protect your personal assets in the case that something goes
wrong in your business. An LLC means that your business is a
completely separate entity from you. This also means that your business can manage and buy it ’s own property, assume it ’s own
l iabil i ty, pay it ’s own taxes, sue and/or be sued l ike an individual would. An LLC is simple to set up and relat ively easy to maintain,
just be sure that you have a special ized small business accountant
for when tax season rolls around.
• SOLE PROPRIETORSHIP i s the most bas ic form of bus iness
ownership and technically the easiest to begin: just start! However, the structure of a sole proprietorship t ies your business directly to
your entity, meaning that for taxes, legal, and other purposes, you
and your business are the same. By owning a sole proprietorship, you obtain 100% of the profits from your business, but you are also
100% responsible for any debt, losses, and/or l iabil i t ies of your business.
© Kat Schmoyer | Stock Imagery by @ScStockShop0 ! .3
• Addi t iona l ly, there a re two types of CO R P O RAT I O N S (C and S
Corporations) that are more complex. These business structures are recommended for more established and/or larger companies with
mult iple employees due to their administrat ive fees and complex taxing requirements. Corporations are highly regulated by federal, state, and
local legislat ion, which means a signif icant amount of t ime needs to be
dedicated to paperwork and the “behind-the-scenes” of your business. If you are planning on forming a corporation, absolutely consult a
lawyer and accountant that have special ized in small business law.
• Another option is a PARTNERSHIP . A partnership is a business structure
where two or more people share ownership, profits, property, labor,
sk i l lsets, etc . The partners share everything about the business; therefore you really should take care before start ing a business with a
fr iend. Partnerships have a structure similar to a sole proprietorship in that all part ies are l iable for the debts, losses, and l iabil i ty of the
business.
© Kat Schmoyer | Stock Imagery by @ScStockShop0 ! .4
2) REGISTER FOR LEGAL STATUS I f you are start ing an LLC, a Corporation, or a Partnership, you need to obta in LEGAL BUSINESS STATUS through the government . Th is
process is probably the most important for start ing your legal business (or, i f not, i t ’s a t ie with our next step, registering through the Internal
Reve n u e S e r v i c e ) , b u t i t ’ s a l s o i m p o r t a n t fo r i n te n t i o n a l a n d
motivational purposes, too! Registering your business is one of the most rewarding steps because you’ve chosen a path and you’ve
dedicated the t ime and effort to start – and that ’s often the hardest part!
• Put a lot of thought into your BUSINESS NAME and research your
options. Be sure to choose a name that isn’t taken by anyone else in your state (preferably the country) . Your name needs to include the
phrase “LLC” or “Limited Company” or similar vocabulary – it ’s as simple as being “Joe Shmo, LLC.” Some states also have restr ict ions
on words that imply a professional competency l ike “doctor” or
“ insurance” and are not allowed in LLC business names, so check that your bus iness name doesn ’ t conf l i c t w i th any ex i s t ing
legislat ion.
© Kat Schmoyer | Stock Imagery by @ScStockShop0 ! .5
• A f t e r c h o o s i n g a n a m e , y o u m u s t f i l e A R T I C L E S O F
INCORPORATION (also referred to as “art icles of organization”) through the Secretary of State. This document includes information
l ike your business name, location, any employees, and a general descript ion of what services you wil l be providing or what i tems you
wil l be sell ing. For Corporations, there are addit ional documents
necessary to identify directors, shareholders, and develop stock cert if icates. Registering your business makes you legit imate and is
crucial to the success (and legal i ty ! ) of your entrepreneur ial journey.
• Consider creating an OPERATING AGREEMENT . This agreement is
especially important for business with mult iple owners, but is useful for solo-preneurs as well . The operating agreement is a
standardizing document that provides an overview of the r ights and respons ib i l i t ies of each person , overv iews the f inances and
organizat ion of the business, and acts as a manual for your
business.
© Kat Schmoyer | Stock Imagery by @ScStockShop0 ! .6
3) F ILE YOUR TAX STATUS AND APPLY FOR AN E IN Finances and dealing with the Internal Revenue Service ( IRS) is
probably one of the least-fun parts of creating your business. However, this is such an important part of owning a business.
• All business structures, with the exception of a sole proprietorship,
need to obtain an EMPLOYER IDENTIFICATION NUMBER (EIN) from the IRS. This federal and state tax number operates similar to a
social security number for individuals. You can register onl ine for your EIN for free, and it automatically wil l update for federal and
state tracking. Be sure to print out the EIN number and keep it in a
safe place for your records.
• Hire a great ACCOUNTANT . Unless your business is an accounting
business (and even then), you absolutely need to hire a small business accountant. Experts wil l be able to determine if and when
you should be paying quarterly estimated taxes, discern between
what does and does not count as a business expense, and guide you toward f inancial goals for your business . F i l ing taxes is
complicated and should be left to the professionals. Trust us on this one!
© Kat Schmoyer | Stock Imagery by @ScStockShop0 ! .7
4) OBTAIN NECESSARY PERMITS , L ICENSES , AND INSURANCE Some local jur isdict ions require addit ional business l icenses and/or
zoning permits, depending on whether you are going to own a storefront, sell a specif ic product, or offer a part icular service.
• Read up on LAWS AND REGULATIONS that apply to your business.
For example, there are intellectual property laws, onl ine business laws, and employment and labor laws, among others, than could
affect how you structure and operate your business.
• C o n t a c t y o u r c i t y o r c o u n t y ’ s C o m m i s s i o n e r o f R e v e n u e ,
Depar tment of F inance , and/or Zon ing Of f ice for add i t iona l
PERMITS, LICENSES, OR REQUIREMENTS based on your business type.
• Please, please, please get INSURANCE . Insurance is cr it ical for businesses and it could very well save your business in the future,
should something go wrong. Look into what types of insurance your
current insurance company offers and what others in your industry recommend. For example, general l iabi l i ty insurance is pretty
standard, but product l iabil i ty insurance or addit ional property and casualty insurance could be equally important depending on your
profession. Addit ionally, some vendors or cl ients refuse to do
business with entit ies that don’t have insurance.
© Kat Schmoyer | Stock Imagery by @ScStockShop0 ! .8
5) PLAN OUT YOUR BUSINESS BANKING
Finances are stressful even without adding a business into the mix. Be sure to have a plan for your businesses f inancial resources. Research
options for funding your business, how to manage any profits, and (hopefully) your next research wil l be on how to grow your business!
• Est imate STARTUP COSTS AND INITIAL FINANCIAL FUNDING .
There are always costs associated with start ing a business. From brand ing and market ing mater ia l , to a t tend ing conferences ,
workshops, and mentoring sessions, and from your custom URL to off ice supplies, you wil l ult imately need to spend money to get your
business going. Ideally, you wil l save, save, save, and use the init ial
profits from your f irst few sales to pour back into your business. I t ’s very r isky to borrow money, but should you want to, i t is very
important to determine whether or not you wil l take out a small loan or use a credit card to start your business venture.
• If you own a business that is not a sole proprietorship, start
BANKING for your business. Open a business checking and savings account with either your current bank or a new, business-fr iendly
bank. If your current bank doesn’t have any business-banking options, consider opening an account with another bank. Open a
checking and a savings account, a l ine of credit ( i f you want one),
obtain a debit card, credit card, and checks. Doing business as your business is not only professional, but i t also helps your accountant
when it ’s t ime to determine your break even analysis, develop a f inancial plan for your business, and f i l ing taxes.
© Kat Schmoyer | Stock Imagery by @ScStockShop0 ! .9
Here is a SIMPLE checkl ist to ensure your business is ready to take cl ients!
Choose your Business Name
Select Your Business Structure (LLC, Sole Proprietor, etc. )
Create an EIN (Electronic ID Number)
Obtain necessary local permits (Example: Business License)
Get Business Insurance (General Liabil i ty and/or Professional Liabil i ty)
Create a Business Bank Account
Create a Contract (or purchase a verif ied template here!)
Purchase your Web Domain (You can do this via GoDaddy)
Create a Website OR a simple yet professional Landing Page for your website
Create a Business Email Account
Create a Package Guide and/or Pricing Guide for your Services/Products
Create your Business Social Media Channels (or change your personal to
your business name)
Google +
Upload a professional headshot to all Social Media Channels (Try to have the same photo or similar photos for all platforms)
Write a professional & branded “About” for each Social Media Channel (They
can be the same for all channels; be sure to include your website!)
Create a Content Calendar for all Social Media Channels (What wil l you post?
When wil l you post?)
Create a Cl ient Onboarding Workflow (What wil l you do when a cl ient
inquires? What is your process l ike?)
Set up an Invoicing System (Will you be doing this electronically or via check?)
Email and Introduce yourself to businesses you’d love to connect with and/or work with!
© Kat Schmoyer | Stock Imagery by @ScStockShop0 ! .10
