So youre looking to start a small business, congratulations! Becoming self employed and running a business is a satisfying and fulfilling experience. Every decision you make will directly impact your business and youll see what works and what doesnt. There is a tremendous amount of learning that happens as well as professional growth.
This article outlines the playbook on starting a small business and all the tools youll need to get up and running so you can focus on your craft. Lets get started:
Its tempting to just jump right into things and build the parachute while jumping. From experience, its helpful to take a step back and spend some time thinking about what you will be building.
Taking the time to think about these questions as well as your business will really benefit in the long run.
Now that you have a better idea of what your business and core offerings will be, its time to come up with a name that embodies what you are trying to be.
Branding firms are great, but are very expensive. If you are creative and good at coming up with a name, fantastic!
For those that need some help, even a service like Fiverr can help with this at a very reasonable price.
Now comes the part that no one likes, but is very important - incorporating your business and handling all the legal things necessary for establishing and running a business. If you are raising money from investors, then youll want to set up a Delaware C Corporation.
For the majority of small businesses, the decision will be between an LLC vs S Corporation. The S Corp and LLC corporate structures are both quite popular among small businesses. A large majority of small businesses will choose the simplicity of an LLC to protect personal assets and to streamline bookkeeping. Both of these types of corporations provide one level of tax and also provide that layer of protection from personal liability.
LegalZoom is a great service to incorporate your business accurately and reasonably in price for $79 + state filing fees.
You will receive an Employer Identification Number (EIN) number from LegalZoom. Keep this number safe and accessible as youll need it when trying to set up business accounts, taxes, accounting, etc.
Why not use your personal bank account for your business? Through a lot of learning, separating personal finances and business finances will benefit you, save you money and headaches down the road.
If you jumble together personal and business finances this could pose a lot of trouble if you undergo an audit by the IRS for your taxes. It would be your responsibility to show proof in the form of receipts or invoices that can support your claims. If you cannot, then I have seen people who have been fined hundreds of thousands of dollars - so not worth the risk.
Here are banks with their respective benefits of each:
When youre starting a company it might seem ok to use your personal phone number for your business. You can do this, but from our experience using your personal phone becomes a nightmare as your business grows.
Heres what you can expect when using your personal phone for business:
What we recommend is setting up a business phone. It's a pain to carry 2 phones around all the time, but whats great is there are services out there that allow you to have a business phone on your existing cell phone.
Riser is a great service to separate work and personal calls easily with two numbers on the same phone.
Nowadays consumers have so many options at their fingertips, it becomes table stakes for your business to have a website. It establishes trust and confidence with the customer and since you have your own business domain, having a business email account looks much more trustworthy and professional than someone using Yahoo or Gmail.
Squarespace provides awesome small business specific websites for as low as $12 / month.
Getting business email through Gmail is another $6 / month and will establish professionalism that is appreciated by customers.
Now you are ready to get customers and start getting paid! Getting customers is a huge topic and weve put together another article focused on this.
At a high level, there is Free vs Paid customer acquisition. Investing in strategies to get you more free customers is ideal, but takes time and effort.
If you can get good conversions through Paid marketing channels this can also be very lucrative. Heres our breakdown of the strategies involved and how you can lower your customer acquisition cost (CAC)
Accounting is another one of these topics that is easy to push aside and not deal with. From our experience, setting this up earlier can save you so much time and money in the long run.
Now that you have a separate bank account and credit card, there are reasonable services that offer bookkeeping and accounting services.
Bench.co is a service that is slightly cheaper in price ($149 / mo) to CPAs ($365 / mo) where you can also get taxes done as well for additional fees.
This seems steep especially in the beginning, so if you want to hold off on this expense you can. However as soon as you have good cash flow you should set this up.
Hope this was helpful, these are practical steps to take in order to start your small business. Thanks!