If you are anything like me, you could stay in the experimental business phase forever. This is the place where you can have lots of fun but you don’t have to think about boring things like taxes and permits and registered agents. The problem with staying in the experimental phase forever is that it is not real. It is like a little make-believe land that you hang out in when it suits you. Another fun fact is that it is pretty hard to make money said make-believe-business-land. If you are going to be a real business, a business that actually makes you money, at some point you need to take the steps to make it official.
Admittedly, this is the least fun part of the whole process. At least it was for me. It requires very little creativity and a whole lot of persistence. You must be prepared to research and research and research some more. There are hoops to jump through, business structure options to consider, and legal documents to read. Oh…and money to spend. It feels like every single important person you need to consult with during this phase is all too excited to take your money. Which naturally makes you question if you are making the right decisions or if you should really commit to doing this whole business start-up thing at all.
At best, making your business official is intimidating. At worst, it is the piece of the puzzle that is most likely to prevent you from actually following through with your dreams.
Before we move any further into this topic, let me offer one big, fat, gigantic disclaimer: I am so uncomfortable with this part of the process! It has sidelined me for at least 6 months. So please, please, PLEASE do not blindly trust what I say. You need to seek professional guidance when going through the process of making your business official. And I am NOT a professional.
With that in mind, I am going to keep this simple and short: You need help.
Up until this point, you have probably been able to build your business relatively independently. You have read some books, made mock-up logos, built a functioning website…and you did all of this with little to no help. But again, this is a make-believe business world. Real businesses need real support systems and teams to help them function effectively (and legally). My recommendation is that you seek advice from at least 4 different professionals:
1. A lawyer
2. An accountant
3. A banker
4. A business mentor
If just the list of these professional titles alone makes you shudder, know that you are not alone. It is a scary list. But I think these professional are scary mostly because, until now, you have probably had very little reason to ever require their services. They are unfamiliar to you. But here is the thing: their job…the whole reason they collect a paycheck…is to help YOU! This is their JOB! Don’t be scared of them! Let them help you!
So here is a little bite-size summary of why you need these professionals in your life and what you might want to look for.
Your lawyer is the person who will file all the appropriate paperwork to get your business licensed. They will make sure your business is in good legal standing and will be the first person you contact if (God forbid) you were to ever get in any sort of business trouble. With sites like Legal Zoom and Incfile it is very tempting to not employ a lawyer to help you to set up your business. Lawyers are expensive and inherently a wee bit hard to trust. But the amount of time and money they can save you down the road is arguably priceless. You know what they say, the best time to hire a lawyer is before you actually need a lawyer. You might save 500 dollars by not hiring a lawyer up front but you may end up spending 10 times as much in legal fees and fines if you don’t set up your business properly or you get sued etc. A lawyer will give you peace of mind.
If you are lucky enough to have a lawyer in the family…great! Use them or their referrals and get started. If you are like me and don’t know a single lawyer, try and search for lawyers that work specifically with small business owners. Often your local chamber of commerce will have a list of lawyers to do exactly this kind of work. They may even have programs that set you up with lawyers to use at a discounted rate. Take full advantage of these programs! Again, they are there to help you! Not going to lie, walking into my lawyer’s office was way up there on my intimidating-life-events scale…it actually wasn’t horrible. I might even argue that I kind of enjoyed myself. Kind of.
While you are meeting with your lawyer, ask them to refer you to an accountant. Chances are they have a list of people they work with regularly to get businesses up and off the ground. Again, you could try and do all of the accounting yourself by using QuickBooks or FreshBooks but come tax time, you are probably going to need some professional help. You might as well line all of that up BEFORE you open your business and BEFORE tax season rolls around. That way you can set up systems and procedures within your business that will help tax time go smoothly.
Taxes are serious. And seriously complicated. Know your limits and have an accountant in place that makes sure you are tax compliant from day one.
To be a operate your business efficiently, it is advisable that you have a separate bank account and credit card in your business’ name. This helps to simplify all things and separates your personal life (and spending) from your business life. Once you have your business license you can open a business bank account. I’m sure there are a million and one reasons why some type of accounts or banks are better than others. I can’t even begin to advise you on what you should choose, as I have yet to complete this step myself. What I can tell you is that you should shop around. Again, use a bank that caters to small business owners. They know exactly what needs you will have and ultimately they can serve you best.
A Business Mentor
Perhaps the best thing you can do during the stage in the starting a business process is to find a mentor. Like anything else, having someone show you the ropes is invaluable. This person can be your dad, a friend, or a complete stranger you stumbled upon online. If they have started a business and they want to help you… LET THEM! It doesn’t really matter if their business is in the exact same industry, they just need to be willing to share their expertise. You can be certain that if they themselves have started a business, they are going to have something to offer you. Something that you currently do not have: experience, contacts, and proof that starting a business can work.
If you can’t find a business mentor right away, don't worry. You will. Just keep your eyes and ears open for people who might make a good candidate. And don’t be afraid to ask! I have a theory that people secretly love being the expert in the room and derive great pleasure from giving other people advice. I know, I do! Too bad I am no business expert or I could be your mentor!
But seriously…y’all…I am such a ROOKIE at all the business stuff! You really shouldn’t listen to me at all! Which brings me back to my main point: GO GET YOU SOME PROFESSIONAL HELP!
You can do this!
Okay, now someone do me a solid and tell me that I can do this too! ;)