So you’ve got a great idea and you’re working on starting a side business. We hear you. Owning and growing a small business is something that provides a lot of satisfaction, not to mention all the benefits that come with being your own boss. However, running a side business, or even a full-time business for that matter, is never as easy as it appears. So if you’re trying to decide the best way to go about making your good idea or hobby into a side business we’ve got 5 simple steps that will make your side business dreams into a reality.
Start out Simply
It all comes down to one simple question. Can you sell this to one person? If the answer is yes and you actually have – congratulations! Now it’s time to get moving on to the next step of making your side business idea a reality. If you haven’t asked yourself this question yet, it’s time get real. Instead of jumping ahead and investing cash into website, organizing an LLC, and marketing your products try selling your goods and services to one person, like a family member or friend. If you’re really looking to see if this venture will work, ask them for feedback on what caught their eye or how you could improve your product.
Once you’ve sold it, it’s time to set up shop. Still keep it simple. Starting a corporation or even an LLC takes more time and money that it may be worth at this point. Keep things easy by moving forward with your business as a sole proprietorship. Sell online. Operating at a smaller cost not only saves you money but gives you time to make the much needed cash you’ll be investing back into your business to make it grow.
Name Your Side Business and Check on Trademarks
Start thinking of names for your business. Make sure that your name makes sense and makes it clear to prospective customers what your business is or does. If you’re choosing a name that doesn’t clearly state what you do, consider adding a tagline, icon, or strategy that will help make it clear. Before you fall in love with your business name, do some research. Check out your business name against the Trademark Database at the US Patent and Trademark Office. Every state also has a government web page and most provide a business entity search. It will take a little research, but you’ll want to check both locations to make sure you’re name doesn’t infringe on an already existing business.
Make it Legal – State Filings and Business Licenses
No matter what your side hustle is, you’ll want to be sure you’re following the rules set by your state and county. You’ve probably already come across it, while researching for your business name and trademarks, but make sure to find out what’s required and complete the paperwork. Many new businesses start out as sole proprietorships, but now is a great time to consider the other business formation types, check what is required in your area, and decide if that’s the best fit for your venture.
Get Set up for Taxes
No business is successful if there isn’t some type of tracking system in place. At the very least you’ll need to set up some financials so you can rest assured that you’re ready to pay taxes on your earnings. Simple spreadsheets will do – simply track your business income and expenses, keep receipts, and check on the process of filing quarterly estimated taxes. You might even want to get an EIN from the IRS.
Make sure to put enough away for your taxes – we suggest between 15-25% of your net earnings.
Open an Business Account
This goes hand in hand with keeping financial records and being prepared for taxes. Although it’s not necessary for some business types, it keeps things simple and easy to follow. Business expenses and earnings always stay in one account while your personal finances are separate in a different account. That way when you’re filing taxes it will be easy to sort and provide proper paperwork to the IRS or the accountant you’ve hired to file your taxes. Not sure what makes a business banking account different than personal account? Do a little bit of research online and you’ll be able to compare different business account offerings and find one that fits your needs.
Once you’ve completed these steps, you’re a bona fide side business owner.
