We are coming to the end of this series about making a Start Up Business Plan. If you have missed any articles, you can find them here:
Now that you have a pretty good idea of what your business idea is and what you are going to do with it, it’s important to give yourself the right business structure. Since you are starting up a business, you may not want to invest too much in your business setup. Here are a few tricks for what you can do.
Legal Structure: Corporation or Self–Employed?
This is probably the first question that comes to mind when we discuss the “structure” of a business. Do you need to create a corporation right away? The simple answer is no. However, the corporation can have several advantages (laws differ from one state to another so I’d rather leave you find out about everything you can or can’t do with a corporation).
The corporation will enable you to create a “second” entity as the corporation stands as a separate individual. Therefore, it earns its own income and has its own expenses. If you think you will grow your business into a serious venture, you should consider incorporation up front. The major downside of creating a corporation is the fees attached to it (registering, accounting, etc.).
If you are not too sure about whether you want to spend money creating a corporation, you might as well go with the self-employed route. This is quite simple as you collect revenues and bill expenses under your own name. Therefore, any income earned from your side business will be added to your personal income.
Who’s going to work with you?
The other point that is very important to consider is to determine who will work with you. Will you need an accountant? A lawyer? A part time employee? A virtual assistant?
At first, I suggest you try to do most things on your own. You will learn the ropes while saving cash. Then, you can take a pause to determine what are “added value” activities and what you can outsource to a third party. Accounting and admin work seem to be the easiest tasks to outsource. You can actually find great resources through a virtual assistant. I personally use ODesk a lot. This is a place where you can post your jobs and hire the right individual for what needs to be done.
Make it as simple as possible
What is really cool about start ups is that they are quite simple. Keep your business structure as simple as you can so it remains flexible. Flexibility is definitely one of the key points you are looking for when creating a small business. If you have any questions about creating a start up business, feel free to send me an email at thefinancialblogger at gmail dot com.