Business 101: How Do I Start?

Where Do I Begin?

For solopreneurs and authors—if you're going to create a business for yourself—there are a few key legal steps to put into place to start. Needs for nonprofits are a bit more involved but certainly critical before jumping into your mission of service. These suggestions are based on business and tax structure in the United States - your country may vary.


Special thanks to Julia Taylor, Founder of Geek Pack, for an email newsletter reminding me of the value of these basics that are by no means intuitive. 

Choose Your Business Structure
LegalZoom would love to have you hire them to set your business up. There are a variety of services out there happy to do so. For many, the steps are basic enough you can really handle them yourself. 

Basic options to choose from. Click on the tabs of each type on the LegalZoom website for a quick reference of what may suit you. 

• LLC (Limited Liability Company): For many solopreneurs or authors, an LLC is sufficient.
• Corporation: Those with employees, hiring subcontractors, or generating sufficient income to want tax breaks, paying yourself a salary, and funds available for retirement savings, a Corporation or S-Corp may be beneficial. 
• DBA (Doing Business As): DBA may be useful if you may create a few businesses under the umbrella of an LLC. 
• Nonprofit: Organization based in giving to society much of what is taken in; eligible for grants and funding resources not available to others. Tax breaks and even tax exemption are available but there are many strict administrative regulations to be compliant. 

Register with the State
Once you select your business style, it's time to research legal requirements and where/how to file for that business structure. For an LLC, the fees are fairly small with possibly a bit of additional small cost if you decide to also register a DBA. You may benefit from hiring assistance for a Corporation or Nonprofit. 

I was able to do an easy search for what agency in my state handles these matters and follow pretty straightforward prompts to create an LLC and DBA. My LLC is LMA Services and DBA is Read. Write. Engage. This gives me the option in the future to create a different business under my LLC. All of this information becomes public record. 

Get an EIN
For those of us in the U.S., an EIN (Employer Identification Number) is a number unique to your business for tax purposes and separate from your personal information. You are able to use this number to refer to your business rather than your social security number for a bit of privacy and separation. You will typically be filing separate tax documents annually for your business. The business structure creates a little liability buffer from your personal finances. This process is through the IRS.

Open a Business Bank Account
This further creates a buffer between your personal family finances and your business finances. You are better able to track purely business income and expenses. It legitimizes your business practice. There are some tax deductions available under the business umbrella. This gives you a way to bill for your services, deposit income, and make purchases that are strictly for your business. The U.S.'s IRS has deemed 3-5 years as reasonable for your business to be seen as a business endeavor making a profit vs a "hobby." They also want to make sure your business isn't being used as a way to deduct loss for years, encouraging you to make an effort.

Job vs Business
Lowell Rex, Founder of Epic Business Mentors, has defined a "job" as something one person does where the business is entirely reliant on the effort put in by that one person. If work is not done, there is no income. This typically is something most will never sell to a different business or pass to a family member in inheritance as a complete business or at least client list.

A "business" grows larger to hire others and can support itself or grow without the owner being the one to necessarily do the daily work. 

How is Your Progress?
If you're considering creating a business for yourself, hopefully these basic points get you started. If you created a business some time ago, any suggestions to add for those starting out? 

I look forward to answering questions or walking through the process if useful - Let's Chat or message me on LinkedIn!

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