I was wondering if anybody in here run their own business? I've been thinking of starting my own company in a couple of years, but I haven't really done any planning yet.

Is it hard to start a smaller company, one of those LLC's? Or whatever they are called, I can't remember right now what the acronym stands for.

:hmm:

It's easy to start a business. The hard part is working it so that it is profitable. That's where the planning comes in.

And you are thinking of a Limited Liability Company (LLC) which is probably what you would want to use. Different states have different fees and requirements, but in Texas it costs about $200 to register as an LLC. An LLC, as the name implies, limits your liability in case of a lawsuit or bankruptcy. With this type of business, the company is considered a seperate legal entity, a seperate person, under the law.

You also have a choice of becoming a corporation. This may be a desired way to go if you want to sell stock or want to be more formal in your business proceedings (sometimes good for larger corporations). This has a lot of the same benefits of an LLC but is structured differently. For example, your liability is limited and it is considered a seperate legal entity apart from yourself, just like an LLC.

If you want to start cheaper, but assume more risk you could start by using a DBA (Doing Business As) also known as an Assumed Name. In Texas, it costs about $11 to pay your county clerk for a DBA/Assumed Name and you are in business. With this form of business (a sole-proprietorship) you assume 100% of the liability, because the business IS you.

Other than selecting a business structure, the key thing is that you develop a plan for your business, so you know how it will work and how it will make money. Ideally, the business plan should be written, but if you know the business like the back of your hand, having the plan in your head could work just as well. But it is better to have it in writing, especially if you are trying to get investors and if other people are going to help you run the business.

Hope that helps.

Disclaimer: The above should not be construed as legal advice and is based on publically available information. Consult local laws or an attorney before making an legal decisions.

IAFPO,

Thank you so much for your help. LLC, sounds like what I would want to do since a corporation would be too big for me. The DBA sounds pretty cheap, but it is also very risky. I wouldn't want to personally go bankrupt if the business goes bad.

Do you necessarily have to have a business when you sell your services? How about freelancers? And do you need a tax id, and file seperate taxes?

Thank you so much again IAFPO!!!

Well, depending on the state, both a corporation and an LLC can be formed with only one person. You really have to look at the long run, not just the short run. Decisions you make now will effect you inthe future, especially if you want to go public.

Well, if you are freelancing, you still need to form a business, unless you want to do business using the name on your driver's license. You are still a sole-proprietor, and you are treated the same as a DBA except you can't use any other name other than the one on your driver's license. A DBA/Assumed Name allows you to do business as something other than your name.

Now taxes is a different story. Here's a summary:

Freelancing Using Your Name
Report Taxes on Personal Income Tax as Business Income - 100% Liability - Must Use Name on Driver's License or Birth Certificate when doing business, Illegal to use any other name when conducting business.
DBA/Assumed Name
Report Taxes on Personal Income Tax as Business Income - 100% Liability - May uas an Assumed Name instead of or in addition to the name on your driver's license or birth certificate.
Corporation
Default is pay taxes on Corporate Income Tax, but you can elect to pay taxes on your Personal Income Tax as Business Income - Limited Liability.
Limited Liability Company (LLC)
Default is pay taxes on your Personal Income Tax as Business Income , but you can elect to pay taxes on Corporate Income Tax - Limited Liability.
So, there is a lot of flexibility in how you pay your taxes, you just have to set it up the appropriate way. Consult a tax accountant or CPA for advice.

Disclaimer: The above should not be construed as legal or tax advice and is based on publically available information. Consult local laws or an attorney, tax advisor or CPA before making an legal decisions.

IAFPO,

That's some really great information. Thank you for sharing your knowledge with the forum. I've also been wondering about these things, so it's really nice to know how it works.

JQ, think beyond yourself - even though you sell your services now, why couldnt you employ people in the future to sell you as well. Going bankrupt is no big deal, millions of people have done it! If you worry about the negatives, you'll never move ahead.

I have a belief - "You get what you focus on"

Think about that instead.

That is so true. :)

Think long term. The structure you put in place at the beginning of the business will effect your growth and prosperity.

IAFPO,

Thank you so much for your help. LLC, sounds like what I would want to do since a corporation would be too big for me. The DBA sounds pretty cheap, but it is also very risky. I wouldn't want to personally go bankrupt if the business goes bad.

Do you necessarily have to have a business when you sell your services? How about freelancers? And do you need a tax id, and file seperate taxes?

Thank you so much again IAFPO!!!

A corp is not any different in terms of cost than an LLC and you can start a corp by yourself. LLCs are generally used for doctors and lawyers and other professional types. You should read a little about it and think about what your end result is before you decide on a structure. Making the wrong choice can cost you a lot down the road. Robert Kyosaki (I'm sure I spelled that wrong) has a good book-I think it's called "Own Your Own Corporation" www.richdad.com You could also talk to a lawyer or accountant about it.

I am a business owner. In this time, it's no use working for someone else. It takes motivation and a certain mindset to make your business a success, but I think it is a wonderful ride and you can learn so much. I am enjoying every minute of it.

If you want to start a business, find out what are your passions and what you would enjoy doing, what gives you meaning and purpose and gets you excited. For example,my sister wants to have a spa. She loves cosmetics and pampering and she would love to have that kind of business. But what's holding her back is the high cost and the commitment. If you want to start a business, you have to be bold and JUST DO IT.

Get motivated and excited enough that the fire will take you through the hardest challenges.

Blesssings,
G.