This is our second installment of our four weeks to start your own business. In the first week you chose your business, named it, did your fist financial projections and completed a business plan. This week we will be working on some of the legal components that are needed to set up your business along with your logo, website and email list.
Week 2 – Day 1: Set Up Your Businesses Legal Structure
There are essentially four flavors you can use to set up your business. All of them have benefits as well as disadvantages that you will need to consider. These are the different types of business entities:
This is the most popular choice because it is low cost and very easy to set up. For many home based businesses you might even be able to set up as a sole proprietorship with no cost. The big downside is that all of your personal assets and business assets are co-mingled, so if you were to get sued or suffer from big losses your home, car and other personal assets could be on the line.
The cousin to the Sole Proprietorship and is used when the company is owned by two or more people. The partnership can be fairly easy to set up, but it can be harder to insure than a sole proprietorship and just like the sole proprietorship, personal and business assets are pretty much the same, which means all partners can have their personal assets in jeopardy in the case of a lawsuit or business losses.
LLC or Limited Liability Company
This option offers protections for personal assets, but it will cost you more and take more time to set up. There are plenty of resources that will show you how to do this yourself, but you may choose to use one of the many websites that specialize in this or an attorney. You will also need to pay some sort of fee to the state to set this up.
INC or Incorporation
If you have investors or a number of partners this option might be best for your business. You can incorporate in the state that you live in or in some cases incorporate in a state that offers the best tax advantages for your business. You can do this yourself, but because of the complexities that come with investors and multiple partners you may find it beneficial to use an attorney. You will need to pay state fees to incorporate and file articles of incorporation with the state.
Week 2 – Day 2: Permits and Licenses
Almost all businesses need permits and licenses to operate within a municipality. Depending on the kind of business you have you may need multiple permits and licenses.
- Business License: This is the basic license you will need in order to operate. You can usually find all of the information you will need on your county or city web site. The cost for this license will depend on where your business is and sometimes even on what kind of business you have, many places license home based businesses for free.
- Sales Tax Permit: If you plan on selling taxable goods or services you will need to get a sales tax permit also called a re-sale certificate. You can check with your states tax authority to apply for sales tax permit.
- Occupation Specific Permit or License: You will find details on what businesses in your area require an occupation specific license on your states website under occupational licenses. Typically you will need one of these licenses if you do grooming for pets or people, provide child or eldercare, food and beverage, and financial services. To find out if your business needs an occupational permit it is best to check with your sate.
- DBA also called a Fictitious Name Statement: Unless you are using your own name for your business you will need to register a Doing Business As or Assumed Name with your city or county. You may be able to do this in the same step as getting your business license.
- EIN or Employer Identification Number: This is one is free and you can get find it on the IRS website. Not all businesses need this, but if you are planning on having employees or paying people for work you will want to have this. You will also be able to use number instead of your social security number when filling out forms and doing other business related activities, which can help protect you against identity theft.
- Business Bank Account: Once you have your licenses and permits you will be able use them to open a business account. No matter how you have structured your business, it is very important to set up a bank account that is specific to your business. Comingling of funds can spell trouble with the IRS and for your business, so this is one of the most important steps your business can take.
Week 2 – Day 3: Set up a space to manage your business
This is where you will manage the finances and day to day operation of your business. Make sure you have a comfortable chair, a desk to work at, as well as some space for filing. At this step you will also want to choose an accounting system that will help you manage your business finances including accounts receivable and accounts payable. Many business die because of a failure to do regular bookkeeping, so it is important you set yourself up to succeed.
Week 2 – Day 4: Brand Your Business
This step can be really fun, so take a deep breath. You need a business logo, business cards, and maybe even some flyers and swag. If you aren’t artistic you can find any number of companies to help you create a logo. You might even find a company like Vista Print or Moo, which are better known for making business cards, can help you with your logo. Keep in mind that your logo will also go on your website and all of your marketing materials so make sure you own your logo and that you can get in a format that you can use on websites, flyers, business cards, etc.
Week 2 – Day 5: Build Your Website
I know that seems really scary, but it is now really easy to do even if you are on both a time and dollars budget. Even if your business is small, even if it is local, even if… you still need a website. You already purchased your domain in the first week, so you have already taken the first step needed in your website set up.
There are a lot of great options, you can do a simple WordPress site to let people know who you are, what you do, where you are located and when you are open. If you want to be able to sell your products on-line you might use a service like Shopify or Squarespace to easily set up a site and list your products.
We have allocated two days to setting up your website, so don’t worry about getting all of this done in one day, but on this first day of website set up you should have chosen a format, found hosting for your website and adding things like your logo and business information.
Week 2 – Day 6: Build Your Website, Day 2
This is your second day of working on your website. This is when you want to add some content like an about us page and contact page. If you are selling items on your website start uploading pictures and adding descriptions to the products you are listing. If you don’t know what SEO is, you might want to read a couple articles so that you can start building some Search Engine Optimized terms into your page and making sure make your page friendly to web crawlers so that you show up in web browser search results like on Bing and Google.
Week 2 – Day 7: Start Building Your Email List
You want to start building an email list on day one for your business. Too many business owners get months or even a year or more into doing business and realize that they do not have a consistent way to collect email address of customers and potential customers. The best way to start building your list is to offer something to your client audience, that could be a discount, a free service, free shipping, access to tutorials, or anything that your customers will find has value to them which has a low or no cost to you or even helps you convert possible customers into dollars in your pocket.
After you have figured out what you will give away you want to set up a list service, to manage your different email campaigns. These services can also help you manage spam and take care of things like auto unsubscribe so you don’t send emails to people who simply don’t want them. For smaller business MailChimp is free for up to 2000 email address, if you think you will quickly outgrow that look at Constant Contact or Aweber.
Make sure you have an easy way for people to subscribe to your e-mail list on your website. Now you are well on your way to making sure you can always market to people who have signed up to hear from you.
Reward yourself; you have made it through the second week of starting your business. This is your foundation for success and we will keep building on it in the next couple of weeks.