July 18, 2019 / Chelsea Lamb - Business POP
Starting a business is a maze of filings, permits, and applications. While navigating the legal side of getting your business off the ground, you also need to find and furnish an office, develop a website, and decide how you’ll actually run your business from day to day. It’s enough to send anyone running back to the job boards, but you shouldn’t let early obstacles stop you from pursuing your entrepreneurial dreams.
Instead of getting overwhelmed when starting a business, use this guide to tackle some of the most challenging decisions you’ll encounter on the road to small business ownership.
How to Structure Your Business
LLC, C-corp- S-corp, or partnership? Business structure affects taxation, record keeping, and risk, so it’s important to choose carefully.
If you’re starting a business on your own, you can structure as a sole proprietorship, LLC, or S-corp. A sole proprietorship doesn’t create a separate business structure; if you want to protect personal assets from business liabilities, choose a single-member LLC or S-corp. However, Sscorps have stricter requirements than LLCs.
Most small employers (less than 500 employees) structure as S corporations, although multi-member
LLCs and partnerships aren’t uncommon. Structuring as an S-corp allows you to receive both salary and dividends as the business owner. Partnerships offer a simpler business structure but higher risk for general partners who have full liability. Certain types of businesses, however, can form limited liability partnerships.
This covers the basics, but ultimately, how to structure your business is a decision you’ll want to make with your attorney. If you don’t have an attorney, now’s the time to start looking.
How to Build the Website
From what type of business website you need to how to actually get it up and running, website development is full of questions the average business owner is ill-equipped to answer.
How to Find a Workspace
A home-office is cheap, and many businesses get their start in spare rooms and converted garages. However, is a home office right for your business? If you need to project a professional image to clients,
a home-based office could hold you back.
Another option is renting commercial real estate, but that can get expensive and complicated. If your business is small, you may end up paying for more space than you need.
For a cost-effective alternative that won’t sacrifice professionalism, rent office space in a business incubator. With cost-effective rates, networking opportunities, and access to business development resources, an incubator is the ideal home base for your budding business.
How to Pay for It All
Now for the big question: how to pay for everything when your business has yet to earn its first dollar. Startup funding is the major sticking point for most small business owners. Since it’s difficult to get loans for a business without a track record, traditional small business lending options are unavailable to many first-time entrepreneurs.
Many entrepreneurs bootstrap, or self-fund, their small business. This can come in the form of savings, home equity, personal loans, and loans or gifts from friends and family. However, you shouldn't stop there. Get creative with alternative funding sources like crowd funding, nonprofit micro-loans, and peer-to-peer lending.
These are only a few of the questions you’ll have to answer as you solidify your business plan and prepare for opening day. The good news is that you don’t have to do it all alone. For help launching your business, reach out to your local small business development center.
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Chelsea Lamb has spent the last eight years honing her tech skills and is the resident tech specialist at Business Pop. Her goal is to demystify some of the technical aspects of business ownership.