Headline: We mean Business
Date: 1/4/2021
Body: I was reading a wonderful article in the Penny Hoarder. It is linked below: How to Start a Business in 10 Steps: Ideas, Plans & Funding (thepennyhoarder.com)
I have to say, I both love and loathe this article.
Make up your dang mind!!
I really can’t. Starting a business is very much like deciding to start a family and have a baby. The article seems to say how easy and rewarding it is: Rewarding it is, easy, not so much. So, I salute the author for encouraging people to start their own businesses, but at the same time, I think that caution might be important. Let me explain.
Step #1 is to “Come up with Business Idea.”
OK, this is true, as far as it goes. But, to stand a chance of having a successful business, you must have more than this, even emotionally. To stand a chance of gaining success, you must be passionate about your idea. When you wake, you should have an idea or 2, at another job you should feel compelled to draw a picture or write something in support of your idea. When you get home, you should relish the idea of hours of research on your idea, and dreams should bring you related themes. THIS is how dedicated you have to be. They also forget the corollary, “Don’t let ANYBODY tell you otherwise.”
Step #6 is to “Secure Startup Funding.”
This is a necessary evil. But, the article forgets a few things that should be considered. First, startup funding might not be possible. You might have no option but to work out of your home. Assuming that zoning laws allow for this, it is important to understand that this IS a valid place to begin. (I grew up with 2 sisters as neighbors, and for 10 years, they ran their soap-making concern out of the basement of their parents’ house. Now, they have their products available in many Whole Foods locations, and have been featured on Maryland Public TV several times.) So, these humble beginnings can be entirely possible. But, the article also forgets one of the major forms of currency that the startup has: barter. Very often, as an entrepreneur, you have some expertise that is needed by another professional, who in-turn could be important to the business. Said differently, if you have a writing business, and you need help with constructing your website, you can always offer the programmer a trade of professional services, and avoid the outlay of cash. I have known many entrepreneurs, and so many have regaled me with stories of effective (and unexpected) partnerships.
Step #9 Make Your Website and Social Media
This step suggests that these are easy to do, and it is not. In my case, I found a coder on the suggestion of an entrepreneur I happen to know. My logic was simple: to get the website, I MUST expend money or time (to obtain expertise.) I am by no means wealthy, but to obtain expertise sufficient to construct the site, it would take a copious amount of time, and the money was more available to spend on my enterprise. So, I paid a pair of programmers to construct the rudimentary site. (Their skills are excellent: All mistakes made are my fault, as I did not give good instructions.) Your situation might differ, but if you already have that full-time job demanding your time, your calculation might be similar.
Step #10 Register with the Government
Yeah, no, not simple. There are multiple levels to government, and you must look at all 3. On the Federal level, you must obtain an FEIN from the IRS (don’t sweat it, it’s not too hard.) This is your account number for the business, so that if you have to withhold employment taxes, this can be done: You also use it on your business return, or personal return. You also need this FEIN to open up a business bank account. Once the Feds are happy, you have to register with the Secretary of State of your individual state. (Requirements vary, so be sure to do your research.) In Maryland, it costs only $25 to register a “Doing Business As” (DBA) name, but $300 per year if you want the protection of an LLC. Be aware that the state could (probably will) require insurance in some cases. Finally, you must make sure that your local municipal government doesn’t have any zoning restrictions or other regulations that would make your business not permissible.
The Verdict
Starting a Business is NEVER simple. In addition to the hoops mentioned above, you might have to obtain licensure (e.g. a CPA license or a cosmetologist license) in order to begin your business. All of these regulations make starting a business challenging, but if it is your burning desire to do so, it is possible. The bottom line seems to be to do your homework carefully, and talk to other people who have done something similar. There will still be surprises, so, as the Boy Scouts would close a meeting, BE PREPARED!!
Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice. Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.